Pub. 14 2019-2020 Issue 4

WWW.NEBANKERS.ORG 26 T HE FBI ISSUED A WARNING RECENTLY ON A NEW VERSION OF AN advance fee scheme, which involves a letter of credit. The scamcould have a substantial impact on banks, especially smaller banks. The scam is especially dangerous because the control of the transactions and the red flags of the scammay occur outside of the bank. The scam involves a money mule, or an unsuspecting inter- mediary acting as an accomplice, making a request to a law firm, CPA firm, or any other financial services company. The firm or company is led to believe that they can issue a letter of credit without substantial risk due to the nature of the transaction. The accomplice will provide a false background of their company and may provide fictitious invoices or bills of lading to prove their business transactions are legitimate. The scam usually involves trade with China but could include trading with another overseas partner as a need for a letter of credit. The requestor or sender will ask if the firm is willing to is- sue a letter of credit for the company for overseas trade. The requestor or sender will offer that they have plenty of money through the backing of a wealthy benefactor, but because they cannot use the U.S. dollars in international commerce, they Letter of Credit Scams Bob Kardell, JD, MBA, CISSP, CPA, CFE, CFF, Baird Holm LLP