Protecting real estate assets from sophisticated bank fraud

In 2023, reported losses to the FBI’s Internet Crime Complaint Center (IC3) exceeded $12.5 billion, with real estate fraud alone accounting for an estimated $145 million of that total. As fraudsters evolve, they increasingly exploit financial systems using AI-generated forgeries and deepfake technology to carry out sophisticated scams.

Modern cybercriminals can now manipulate transaction approvals, forge identity verification documents, and even impersonate executives to authorize fraudulent fund transfers. The 2024 Graceland Deed Fraud Incident, where scammers attempted to seize ownership of Elvis Presley’s mansion using AI-generated documents, demonstrates the escalating risk and urgent need for businesses to fortify security measures.

Real estate companies are particularly exposed to financial fraud due to their complex financial structures and decentralized banking operations. With multiple entities managing separate accounts that are frequently opened and closed, these firms are at a heightened risk of fraud. Additionally, reliance on physical mail for financial documents exposes sensitive banking details, such as account and routing numbers, making these companies prime targets for account takeover schemes.

The Modern Solution: Financial Automation Platform

Implementing a financial automation platform to automate your accounts payable process in real estate is like installing a state-of-the-art security system in a high-value property. Just as an advanced system deters intruders, a financial automation platform helps safeguard financial transactions by centralizing and automating business processes while embedding multiple layers of fraud prevention.

Financial Automation Platform for Accounts Payable Processing

Enhanced Security Features

• Assigns alternate account and routing numbers to mask your actual banking information.
• Implements multiple layers of vendor verification, including rigorous address validation, to prevent unauthorized access.
• Employs AI-powered fraud detection systems that continuously monitor for suspicious activities and anomalies.
• Helps real estate firms stay compliant with industry regulations and evolving fraud prevention standards.

Improved Financial Management

• Provides real-time visibility into banking and billing operations, allowing for rapid fraud detection and response.
• Automates tracking of uncashed checks and sends alerts to prevent financial oversight.
• Oversees comprehensive payment processing with transaction validation for improving accuracy and compliance.
• Implements best practices for real estate online banking security and reduces time investment and financial risk.

Beyond adopting technology, routine security protocol reviews reinforce financial oversight and strengthen trust with investors, shareholders, and financial institutions.

Online Banking Best Practices Checklist

To mitigate the risks of bank fraud, real estate companies should adopt stringent online banking security measures. Implementing proactive best practices can significantly reduce vulnerabilities and strengthen financial oversight. Below is a checklist of strategies to enhance security and prevent unauthorized transactions.

• Regularly update security settings across all accounts.
• Conduct penetration testing and vulnerability assessments.
• Restrict fund transfer permissions to authorized account signers exclusively.
• Conduct frequent reviews of user access levels.
• Implement dual control mechanisms including requiring two-person authorization for high-risk transactions.

Account Closure Protocol

Verification Steps

• Confirm the account's closure status is properly reflected in the online banking system.
• Conduct a thorough review to verify all accounts receivable and accounts payable associated with the account are properly closed.
• Securely destroy all physical checks and related documents through proper disposal procedures, like shredding.

Documentation

• Develop and maintain a detailed checklist documenting all systems and processes where the bank account information has been used.
• Establish robust internal control procedures to verify all closure steps have been properly executed and documented.

Protecting your real estate company from bank fraud requires a comprehensive, multi-layered approach. While the initial investment in security measures and systems may seem substantial, the cost of a security breach can be devastating.

We Can Help

At Elliott Davis, we specialize in helping real estate companies fortify their defenses against bank fraud. Our dedicated team delivers customized solutions—from in-depth security assessments to innovative, technology-driven strategy recommendations—designed to help you protect your financial operations.

Contact us today to schedule a comprehensive assessment of your accounts payable systems and processes, and discover how implementing technology and best practices allows you to safeguard and efficiently process the flow of your transactions.

The information provided in this communication is of a general nature and should not be considered professional advice. You should not act upon the information provided without obtaining specific professional advice. The information above is subject to change.