Trust account activity should be closely monitored to minimize the fraudulent activity involving stolen and altered cheques being cashed on business bank accounts. The use of online banking, a service provided by most banks, speeds up the bank reconciling process since the broker would be able to verify deposits and disbursements as they occur. In this regard, month-end closing can be streamlined and more relevant as it can be done in a more timely manner.
The scheme usually involves cheques being intercepted and stolen in transit. The payee is changed as well as the amount in many cases and the cheques are presented for payment at another bank, sometimes in another province or even another country. In some cases, the fraudsters have incorporated companies and opened bank accounts under that corporation for the sole purpose of perpetrating the scheme.
Trust cheques representing monthly insurer payments are the most common cheque used in this scheme, intercepted en route to the insurer. In many cases, electronic imaging equipment has been used to reproduce several cheques and “second” attempts to cash such cheques have been reported up to a year after the first incidence.
As an extra precaution, firms are urged to use a secure method of payment delivery on all cheques to insurers or other large amount payees.