Question: What steps are involved for a person to wire money, and what information needs to be provided?
Answer: In today’s heightened regulatory environment, both the sender and receiver typically must have a checking or savings account to transfer funds via wire. The sender must have the receiver’s name, account number, bank’s name and bank’s location.
Q: What costs are involved in wiring money?
A: Fees will vary depending on the amount of the transfer and whether the transfer is being sent domestically or internationally. Costs can range from $20 to $100 at some banks.
Q: Once money is wired, how does a person know it was received?
A: A sender must rely on confirmation from the receiver that the wired funds were received, similar to sending a fax to someone. The sending bank can send a “tracer” upon request to confirm receipt; however, this service is usually provided for an additional fee, and the response is not instantaneous since the tracer has to travel the same payment path as the original transfer.
Q: We hear a lot about scams when people are asked to wire money. Can the person on the receiving end be traced?
A: The person receiving the wire transfer can be traced; however, once funds are credited to an account, they may be immediately withdrawn at will by the account holder. That is exactly what happens in a fraudulent transaction, and by the time a wire transfer is recalled, the funds are not available for return and the fraudster is nowhere to be found.
Q: In the University of Hawaii case involving the ill-fated Stevie Wonder concert, how could it happen that the person receiving the $200,000, plus $50,000 from the local promoter, couldn’t be traced?
A: Without knowing the details of the Stevie Wonder concert incident, it’s difficult to respond directly. However, in general, the sender’s bank knows which bank received its wire transfers, and the receiving bank should have documentation on the identity of its account holders. In a fraudulent wire transfer transaction, the question is where is that person who withdrew the funds, which is a matter for law enforcement and outside of the wire transaction.
Q: What documentation does a person have to provide to open an account to receive money?
A: Requirements vary from bank to bank; however, accounts are rarely opened just to receive wires. Banks opening accounts are interested in facilitating a full banking relationship and perform due diligence to determine the type of account needed (business or personal), the customer’s business, the expected transaction volume and dollar activity, the expected source of funds and so on. The prospective customer must provide documentation to authenticate his or her identity plus documents such as corporate resolutions, etc., if the customer is a business.
Q: Obviously there are all types of scams. What is one type of common scam that involves wiring money?
A: A scam that we see quite frequently starts with a person coming into contact with a fraudster via the Internet. In the guise of a “work at home” opportunity, the person is recruited to receive money, typically a counterfeit check, into his or her account and wire the majority of the funds to the fraudster’s account while keeping the difference as “wages” or a “commission.” By the time the owner of the account that was used for the counterfeit check realizes that they did not write that check, the fraudulent transaction has been completed. It is important to note that the persons conducting the transaction are liable for their participation in the fraud even if they did not know about the fraudulent intent. Banks will usually assist in retrieving stolen funds as a result of fraud; however, they are not obligated to do so and may not bear the expense to assist or cover the loss.
