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Brazilian fraud ring steals $3.75 billion as fraud risk becomes new treasury frontline

The World Cup is not the only thing that has been going on in Brazil. For the past two years, fraudsters exploiting Brazil’s popular boleto payment method are believed to have stolen nearly US$3.3.75 billion. 

The boleto system, the second most popular payment method in Brazil, accounted for about 18 percent of all Brazilian spending in 2012. The system uses merchant-generated invoices (called boletos) for retail and business-to-business payments. Boletos are used to complete online purchases via bank websites, but unlike credit card transactions, boleto payments are not subject to chargebacks and can only be reverted by bank transfer.

Malware (known as “Eupuds”) was inserted into thousands of Brazilians’ browsers and it even turned off the security Apps issued by the banks. The unknowing victim submits the transfer for payment and the malware modifies the request by substituting a recipient account controlled by the fraudsters who had set up 8,000 separate accounts to receive stolen funds. Although the individual amounts have been small, the overall impact has been huge.

Managing and reporting cyber risk

Companies need to set up systems and procedures to stop internal and external fraud, using many different techniques, such as those recommended in these items:

  • how to deal with occupational (internal) fraud, see
  • 10 steps to prevent cyber security from UK’s GCHQ, see
  • top 6 things you need to ask your bank, see 
  • new cyber security model, see.

Nevertheless, not only do companies need have systems to prevent internal and external fraud, they also make sure that they report the fraud accurately and in a timely manner. The Securities and Exchange Commission (SEC) in the USA is pursuing a multi-front investigation of recent cyberattack incidences on companies. The study is to examine the internal controls of affected companies for protecting data, how those companies responded to attacks and the extent of breach disclosure to investors.

CTMfile take: There are now many different types of fraud which can affect the overall future of companies and groups. Corporate treasury has an important role in fraud prevention, not just with treasury transactions but also with the systems and procedures through the supply chain.  

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