Glossary

Funds transfer fraud

Crime coverage for money taken from your bank account by a fraudulent instruction to your bank that you did not send or approve.

Also called: fraudulent instruction coverage, funds transfer fraud coverage, wire fraud coverage

Funds transfer fraud is an insuring agreement in commercial crime policies. In the ISO commercial crime form (CR 00 20), it pays for loss of money or securities from your account at a financial institution resulting directly from a fraudulent instruction directing that institution to transfer, pay or deliver funds. The instruction must purport to come from you but have been sent by someone else without your knowledge or consent, or be a forged or altered written instruction.

Picture a criminal who obtains your online banking credentials and wires funds out, or who phones the bank posing as your controller. The bank was told to move the money, and you did not tell it to.

That wording is why the coverage often fails in business email compromise. When a fraudster impersonates a vendor and your employee initiates the payment, the instruction to the bank was authorized by someone at your company, so insurers have denied claims on the basis that it was not sent without consent. Closing that gap takes a social engineering fraud endorsement, with its own sublimit and verification conditions. The FBI's IC3 reported about $3.05 billion in BEC losses for 2025. Check that your crime and cyber policies fit together. See business email compromise and funds transfer fraud coverage, social engineering fraud: cyber policy or crime policy? and the computer fraud entry.

Last reviewed October 10, 2026

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Related terms

Computer fraud A crime-policy coverage for money, securities or property lost when someone uses a computer to fraudulently move it out of your premises or accounts. Social engineering fraud Fraud that tricks an employee into voluntarily sending money or data by impersonating a vendor, executive or client, rather than breaking into systems. Business email compromise (BEC) Fraud in which a criminal impersonates an executive, vendor or client by email to trick an employee into sending money or changing payment details. Forgery and alteration A crime coverage that pays when a check, draft or promissory note you issued is forged or altered, plus the cost of defending a suit over it. Employee dishonesty Crime coverage for money, securities or other property lost through dishonest acts by your own employees, intended to harm you and benefit them.

Related guides

Business email compromise and funds transfer fraud coverage A hijacked mailbox can cost you stolen payments, a data breach and a customer's misdirected invoice. Which parts a cyber policy pays and where the gaps are. Commercial crime insurance: what it covers and what it excludes Crime insurance reimburses a business for employee theft, forgery, burglary and fraudulent transfers. How the insuring agreements, triggers and exclusions work. Deepfakes and AI-driven fraud: what cyber and crime policies cover How AI voice and video impersonation is used to move money, which policy answers a deepfake loss (crime, cyber or neither), and the controls insurers expect. Social engineering fraud: cyber policy or crime policy? Where fake-vendor and fake-CEO payment scams are covered: crime policy impersonation cover, cyber policy sublimits, verification conditions and overlap.

Related industries

Financial advisor insurance What RIAs, planners and broker-dealer reps need: advisory E&O, FINRA fidelity bonds, ERISA bonds, cyber under Regulation S-P, crime for client funds and a BOP. Law firm insurance What law firms need: lawyers professional liability (claims-made), the state malpractice and disclosure rules, cyber, crime for client funds, EPLI and a BOP. Real estate agent insurance What agents and brokerages need: E&O (mandatory in states such as Colorado, Idaho, Iowa and Kentucky), wire-fraud cyber and crime, GL, hired auto and the BOP.