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COVID-19 Outbreak gives rise to international scammers

Business risk and compliance experts at GWCI believe the pandemic could leave businesses vulnerable to scams

Global risk and compliance experts GWCI have urged businesses to be on their guard against international scams that may arise from trading with unfamiliar companies.

As the Coronavirus pandemic continues to bring conventional supply chains to a standstill, GWCI has stressed the importance of businesses performing the appropriate due diligence when venturing into unfamiliar markets to source stock.

GWCI predicts that severe supply shortages that have resulted from the pandemic’s knock-on effects may give rise to fraudulent companies seeking to exploit importers that are forced to pursue alternative markets in their efforts to keep their production lines moving.

The Covid-19 pandemic has placed unprecedented pressure on supply chains throughout the globe and with entire populations currently in the midst of nationwide quarantines, demand for certain items has skyrocketed, and subsequently plummeted for others as access to parts, supply and labour declines on a daily basis.

Such demand has given rise to international scammers who have already begun targeting businesses, with reports ranging from companies ordering stock and reporting nothing arriving and requests of upfront fees to be paid prior to large orders.

Graham Welland, CEO of GWCI has stressed the importance of being vigilant throughout the Coronavirus outbreak as international fraudsters look to exploit further consequences of the pandemic – leaving businesses exposed to serious financial losses.

Graham said: “In light of recent events we urge businesses should be watchful against scams when trading overseas we may see a spike in fraudulent activity from dubious companies as supplies become harder to come by over the next coming months.

“As the panic sets in due to severe supply shortages companies may be vulnerable to scams, especially if the contracts appear lucrative.

“We understand the temptation but would urge businesses to conduct the necessary due diligence before embarking on any new business transactions to safeguard themselves against any substantial financial losses to fraud.

“Only recently we worked with an organisation which was running dangerously low on their stocks of alcohol, a key product in their normal manufacturing process. The world demand for hand sanitisers was certainly having an impact and so they found themselves being forced to source supply from an unconventional overseas source due to severe disruptions to their usual supply chain. They found a supplier but the demand for an up-front payment was a big red flag and prompted them to seek our advice as to the steps they should be taking to determine whether this was a legitimate business. 

We advised them to undertake at least a desktop due diligence exercise as  a bare minimum by identifying where the company was registered and trading from, the structure of the business, who they engage with, the types of services and products they provide and a general search of the internet to identify any adverse media associated with them.  

“The importance of ensuring that there are processes in place before branching into new markets or trading with unfamiliar organisations is crucial and was a key determiner for the business not to pursue the relationship with the new supplier in order to protect their reputation.

“To help reduce such risks GWCI can assist in providing a level of transparency that will inform you on who you are trading with and the associated risks – protecting your business against any financial damages that could materialise if you are found to be trading with enterprises or individuals who aren’t legitimate.”

 

 

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