Cross Border Transaction Frauds and Strategies to Avoid Them

What is a cross border transaction?

In simple words, a cross border transaction means sending money to a recipient in a different country. In today’s world, cross border transactions are an important part of life for everyone, whether an individual who needs to send funds to a family in another country or a business owner who needs to send shares to a business partner. International transactions are commonly made via bank transfers, international wire transfers, global ACH, electronic funds transfers, credit cards, or online platforms.

All international businesses operate on the foundation of cross border transactions. Where international transactions have made it convenient for businesses to move into the global market, they have added the burden of complicated transfer processes, high fees, and prevalent risks.

Why is there a higher risk of fraud in cross border transactions?

The opaque and convoluted process of cross border transactions makes them an easier target for scams and frauds. Unfortunately, the surge in fraudulent activities in recent years has made cross border payments increasingly challenging for everyone, hindering international payments and consequently impacting the global economy.

Reducing the risk of these threats is challenging, but it is possible with practical strategies and security measures. First, let’s explore the potential fraud risks to learn how to protect your every cross border transaction effectively.

Cross border transaction fraud and scams

False Documentation

Cross-border transaction frauds often occur using fake or altered documents, such as counterfeit invoices or contracts. Fraudsters use these documents to facilitate illegal transactions, deceiving businesses and financial institutions. This kind of fraud can be challenging to detect due to language and distance barriers, but chances of fraud can be reduced by verifying the authenticity of documents.

Transaction Laundering

Transaction laundering involves processing illegal transactions through legitimate business accounts. Fraudsters set up front companies and use their business accounts, making it hard to detect illegal activity. This kind of fraud affects victim businesses as well as financial institutions, and it is important to implement a rigorous monitoring process to detect fraudulent activities.

Cybercrime

Cybercrimes are becoming very common these days. From hacking to identity theft, we have seen different types of fraud using technology worldwide. Unfortunately, cross border transactions are also no longer safe from cybercrimes. Fraudsters often exploit the vulnerabilities of international payment systems and steal money and sensitive data. Therefore, you need to have robust cybersecurity measures to detect and protect against potential breaches.

Malware

Malware or malicious software can be used to disrupt your cross border transaction and alter payment details. This type of fraud can be prevented by employing antivirus and anti-malware solutions. Moreover, businesses should ensure regular system scams to detect threats.

Synthetic Identity Theft

One common type of identity theft is synthetic identity theft, which involves creating a fake identity using both real and made-up details to open an account or carry out fictitious cross border transaction. All banks should use biometric authentication to identify synthetic identities.

Advance Fee Fraud

The scammers target individuals and businesses by asking for an upfront fee for any product or service. Once you send the payment, the fraudster disappears with your money. Due to distance, unfamiliarity with international dealings, and language barriers, you cannot detect or track them easily. To reduce the risk of such scams, verify the legitimacy of any company or service before making transactions.

Strategies to protect your cross border transactions

To protect yourself against cybercrime, you need to have cybersecurity measures in place, like firewalls or encryption.
Always verify the true identity of the individual or business you are dealing online with, including contact details, address, and so on.
Avoid replying or even opening unsolicited emails or messages requesting payments.
Use a secure and reputable platform for cross border transactions that uses security measures to protect your payments.
Always verify and double-check payment details and invoices.
Regularly monitor your business and personal accounts for any unauthorised transactions.
If you suspect any suspicious activity, report it to the bank, company or local authorities right away.

These kinds of scams and frauds are very common nowadays, so it is better to be careful and ensure implementation of security measures to protect yourself from them.

Looking for a reliable platform for cross border transactions?

Linea Global is the best and most reliable choice for your international payments. How? Well because, at Linea Global, we prioritise the security of your transactions by implementing robust measures such as advanced verification systems to detect suspicious activities and cybersecurity measures to protect your sensitive information and employ rigorous due diligence and monitoring to make sure your every cross-border transaction is fully protected from threats and frauds. Our 24/7 support ensures our customers feel secure and valued with our services!