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The Cybersecurity and Infrastructure Security Agency (CISA) and the Biden Administration have issued a “Shields Up” warning to U.S. businesses regarding the increased threat of cyberattacks related to Russia’s invasion of Ukraine earlier this year.
“Evolving intelligence indicates that the Russian Government is exploring options for potential cyberattacks,” the CISA’s warning reads. “Every organization—large and small—must be prepared to respond to disruptive cyber incidents.”
The CISA has provided Shields Up Guidance for All Organizations, including steps to reduce the likelihood of a damaging cyber intrusion, how to quickly detect a potential intrusion and how to ensure that the organization is prepared to respond if an intrusion occurs.
Wire fraud
These cybersecurity concerns are supported by data that shows that wire fraud risk remained at heightened levels in Q1 2022. According to a Q1 analysis by MISMO-certified wire and prevention fintech FundingShield, over one in three real estate transactions had elements of wire or title fraud risk, with data inaccuracy, incorrect wire accounts for non-licensed parties, transactions not properly filed in the system of the title insurers and other considerations.
“Wire fraud risk remained at heightened levels with several cybersecurity risk events during Q1 2022, as well as a heightened level of overall data and transaction security risk post the Russian invasion of Ukraine,” FundingShield CEO Ike Suri said. “We see persistent levels of data irregularities, licensing issues, issues with transaction registration and data consistency between lender, consumer facing, title and insurer systems.”
Cyber crime
According to the FBI Internet Crime Complaint Center’s (IC3) Internet Crime Report 2021, over the last five years, the IC3 has received 2.76 million total complaints, totaling $18.7 billion in losses.
Phishing, business email compromise and smishing (phishing via text message) were the majority of reported crimes to the IC3. The vast majority of dollar losses and risk in this category pertain to real estate and mortgage closings.
Per FundingShield, there are several reasons that real estate and mortgage closings are considered high-risk for business email compromise and fraud by the FBI, insurance providers and investors. Those reasons include data quality, self-attested representations of good standing, no ongoing transactional diligence and unmonitored access to recordable instruments.
Suri said that FundingShield’s data show that the majority of wire fraud events are underreported or never disclosed at all. With ongoing gaps in insurance coverage, digital vulnerabilities and heightened costs for cyber insurance, crimes policies and other defensive tactics, loss prevention is the way to go, he said.
“Lack of a preventative plan or plan to adopt change is time-consuming and costly for lenders leaving room for reputation harm in a challenging mortgage market with compromised margins, lower volumes and higher risk,” Suri said. “Lenders are seeking wire fraud prevention solutions such as our suite at FundingShield as seen in adoption of our products.”
To read FundingShield’s full Wire and Title Fraud Index for Q1 2022, click here. For historical quarterly reports or more information, reach info@fundingshield.com.
