Cross-border trade allows businesses to expand into new markets, diversify suppliers, and strengthen global partnerships. At the same time, it introduces risks that are less common in domestic transactions. Differences in legal frameworks, communication practices, and verification standards create opportunities for fraudsters to exploit trust between international trading partners.
This article examines a well-documented cross-border business scam pattern, explains how it typically unfolds, and highlights practical lessons that organizations can apply when engaging in international trade.
Case Study Overview: Overseas Supplier Payment Diversion Fraud
One of the most frequently reported cross-border scams involves payment diversion through impersonation of a legitimate overseas supplier. This fraud type has been widely reported by financial institutions, law enforcement agencies, and international trade bodies.
Scenario Summary
A North American company imports specialized components from a supplier located overseas. The two parties have worked together for several years, with payments routinely made by international wire transfer. Communication is largely conducted via email.
Shortly before a scheduled payment, the buyer receives an email appearing to come from the supplier’s finance team. The message explains that the supplier has changed banks and provides updated wire transfer instructions for future payments. The invoice amount, formatting, and reference numbers appear consistent with past transactions.
Assuming the change is legitimate, the buyer updates the banking details and sends the payment. Several weeks later, the supplier reports that the funds were never received. The payment has been transferred to a fraudulent account and cannot be recovered.
How This Type of Scam Typically Works
Payment diversion scams rely on a combination of technical compromise and human behavior. While the details may vary, the underlying process is often similar.
Initial Access or Monitoring
Fraudsters gain visibility into email communications, either by compromising an email account or closely monitoring exchanges between trading partners.
Credible Impersonation
Messages are sent from email addresses that closely resemble legitimate domains, or directly from compromised accounts, making detection difficult.
Manipulation of Routine Processes
The scammer introduces a request that appears routine, such as a bank change, while avoiding anything that might immediately raise suspicion.
Rapid Movement of Funds
Once payment is sent, the funds are quickly transferred across multiple accounts, often in different countries, to prevent recovery.
The Federal Bureau of Investigation has identified business email compromise as one of the most financially damaging fraud categories affecting global trade.
Why Cross-Border Transactions Face Higher Risk
International trade creates additional exposure because of structural and operational challenges.
Limited opportunities for face-to-face verification.
Different banking systems and compliance expectations across jurisdictions.
Delays caused by time zone differences, which slow confirmation.
Language and cultural nuances that can affect interpretation of requests.
Legal complexity when attempting recovery across national borders.
Fraudsters are well aware of these challenges and intentionally target cross-border payment workflows.
Common Red Flags Observed in This Case
While no single indicator confirms fraud, several warning signs frequently appear together.
Requests to change bank details shortly before a payment deadline.
Instructions delivered only by email, without supporting documentation.
Subtle differences in email tone, spelling, or sender address.
Messages that emphasize urgency or discourage additional verification.
The absence of formal contract amendments or signed confirmations.
Even long-standing supplier relationships should not be exempt from scrutiny when these indicators appear.
Prevention Practices for Businesses Engaged in International Trade
Guidance from regulators and trade authorities consistently emphasizes layered controls rather than reliance on trust alone.
Independently verify any change to payment instructions using a second communication channel, such as a known phone number.
Implement segregation of duties so no single employee controls vendor changes and payment approvals.
Require formal documentation and management sign-off for banking changes, regardless of supplier history.
Provide regular training so employees understand common cross-border scam patterns and evolving tactics.
Use secure systems, such as ERP platforms or vendor portals, to manage sensitive financial information where possible.
In practice, these measures reduce both the likelihood and the impact of payment diversion fraud.
Key Lessons for International Businesses
Cross-border business scams rarely rely on technical sophistication alone. More often, they succeed because they exploit routine, trust, and operational complexity. Treating payment instruction changes as high-risk events, maintaining disciplined verification processes, and fostering awareness across teams are critical steps in protecting international transactions.
Businesses that embed these practices into their cross-border operations are significantly better positioned to prevent losses and respond effectively when suspicious activity arises.
References
Federal Bureau of Investigation. (2023). Business email compromise: The $50 billion scam. https://www.ic3.gov/Media/Y2023/PSA230406
Organisation for Economic Co-operation and Development. (2021). Consumer policy and fraud: Cross-border challenges. https://www.oecd.org/consumer
Royal Canadian Mounted Police. (2022). Business email compromise fraud. https://www.rcmp-grc.gc.ca
U.S. Cybersecurity and Infrastructure Security Agency. (2022). Protect your business from payment diversion fraud. https://www.cisa.gov