Fed Chair Powell Responds to Congressional Letter on Wire Fraud
July 16, 2019
Federal Reserve Chair Jerome Powell responded July 9 to a letter from 43 members of Congress on real estate wire fraud. The letter—authored by Rep. Brad Sherman (D-Calif.) and David Kustoff (R-Tenn.)—asked Powell about the Fed's efforts to increase awareness of wire fraud, protect the payments system and whether the government would consider adopting a payee matching system for wire transfers.
In the letter, Powell discussed the difficulties the Fed would face in instituting a payee matching system like the one currently being developed in Great Britain. As Powell notes, a payee match requirement would conflict with the uniform commercial code that provides the governing law for wire transfers. Additionally, according to the letter, a payee match system would create operational hurdles. Most banks use automated means to process wires. These systems are based on an outdated messaging system that provides limited characters for account names—meaning most matches would have to be done manually.
Sens. Jim Moran (R-Kan.) and Chris Van Hollen (D-Md.) are working on their own letter to Powell on the subject. That letter will seek more information about the work the Fed is doing to protect the wire system from fraud.
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