Table of contents
- CEO Fraud: what is it? And why is it so dangerous?
- How a CEO fraud attack works
- Concrete examples of CEO fraud
- The economic damage of CEO fraud
- How to prevent a CEO fraud attack
- Technologies to support defense
With the globalization of business, a new type of threat is spreading with increasing intensity: CEO fraud.
Also known as CEO fraud or CEO scam, it is a sneaky and sophisticated form of social engineering that particularly targets companies through their email inboxes and top management.
Cybercriminals, using the authority of a high-level executive such as the CEO, manipulate employees into making unauthorized money transfers.
In this article, we will delve into what CEO fraud is , how it works, what damage it can cause, and how to protect yourself with solid security awareness and the right cyber security strategies.
CEO Fraud: what is it? And why is it so dangerous?
CEO fraud is a particular type of cyber fraud classified among business email compromise (BEC) attacks . It consists of deceiving a company by sending a spoofed email, which simulates the identity of a CEO or other high-level executive.
The message is addressed to an employee in the administrative or financial area, with an urgent order to make payments or transfer money to a foreign bank account.
This scam is based on social engineering , that is, the attacker’s ability to induce the victim to perform malicious actions by exploiting psychological factors such as urgency, authority and trust.
It is therefore not malware or a virus, but a perfectly targeted action , carefully constructed after careful collection of sensitive information about the company.
How a CEO fraud attack works
CEO fraud attacks are divided into several phases:
- Information gathering
Attackers study targets through corporate social networks, websites, press releases, and sometimes through phishing techniques . They find out who is in charge of the company, who has decision-making power, and who manages bank accounts or financial operations. - Email address spoofing
They create an address very similar to that of the real CEO (e.g. mario.rossi@abcgroup.com becomes mariorossi@abgroup.com) or, in more advanced cases, they directly violate the executive’s email inbox - Execution phase
They send a fraudulent email to the employee in charge of payments, urgently requesting a transfer to an account controlled by cybercriminals. The message often contains phrases such as: “This operation is confidential, do not involve anyone,” increasing the psychological pressure. - Withdrawing your money
Once the transfer is made, the funds are immediately moved to other accounts, often in tax havens or countries where legal recovery is difficult, such as Hong Kong or mainland China.
Concrete examples of CEO fraud
A case in point is the one involving a large European manufacturing company in 2020. The company received a spoofed email from a fake executive ordering an urgent payment of €2.5 million to a supplier based in Hong Kong.
Only days later did they realize that the email address was not the CEO’s authentic one, but too late: the money had already been lost.
Another scam was discovered in an Italian SME that received instructions via email to transfer €120,000 to a foreign bank, supposedly for a business investment.
Again, the request appeared to come from the company’s founder, and the employee, accustomed to trusting his instructions, made the transfer without further verification.
Which companies are most at risk?
It is not only large multinationals that are targets of cyber attacks of this type. Even small and medium-sized businesses are vulnerable, precisely because they often do not have security awareness protocols or resources dedicated to cyber security.
Companies operating in the financial, commercial or consultancy sectors are particularly at risk, as are those that handle frequent international payments, where a transfer to a new IBAN may not arouse suspicion.
The economic damage of CEO fraud
The main damage caused by the CEO scam is economic , with losses that can easily exceed millions of euros. However, this is not the only consequence:
- Reputational damage
Public exposure of the scam can damage the company’s image. - Disruption of operational flows
Time spent on internal investigations, complaints and communications with banks can slow down operations. - Internal crisis of trust
The employees involved often suffer a significant psychological backlash.
How to prevent a CEO fraud attack
Preventing CEO fraud involves a mix of training , technology , and internal procedures . Here are the main strategies:
1. Continuous training and security awareness
Every employee, especially those who handle payments and bank accounts , must know what CEO fraud is and recognize the signs of an attack. Periodic phishing attack simulations and security awareness courses are essential tools to strengthen human resistance.
2. Two-factor verification and sender authentication
Implementing multi-factor authentication (MFA) for accessing email inboxes is a must. Additionally, email security tools with SPF, DKIM, and DMARC verification help detect spoofed email addresses .
3. Payment validation procedures
Any payment order, especially if urgent or outside the normal process, must be verified through alternative channels (e.g. internal phone call). The principle of “double check” can be a lifesaver in these cases.
4. Limit the disclosure of sensitive information
Attackers base their plans on data accessible online. Reducing the amount of sensitive information posted on LinkedIn, company websites, or press releases reduces the risk of targeted attacks.
Technologies to support defense
There are software solutions that can help combat CEO fraud , including:
- Advanced email filtering with artificial intelligence
- SIEM (Security Information and Event Management) to track anomalies in flows
- DLP (Data Loss Prevention) to protect corporate data
- Monitoring Compromised Accounts on the Dark Web
Conclusion: proactive protection, not reactive
CEO fraud is an attack that aims to manipulate trust and business operations. For this reason, the best defense is always prevention , which is achieved with widespread security awareness , solid internal policies and an integrated vision of cyber security . No technology will ever be sufficient without the direct involvement of every human resource in the company.
We invite readers to tell us if they have ever faced similar episodes or to share useful suggestions in the comments form below.
Questions and answers
- What is CEO fraud?
It is a cyber scam in which an attacker impersonates a company executive to trick an employee into transferring money to foreign accounts. - How do you recognize CEO fraud?
It often looks like an urgent and confidential email from an address that looks very similar to the CEO’s. - Who are the main targets of the CEO scam?
Administrative or financial employees who have access to company funds and payment instruments. - What does BEC mean?
BEC stands for Business Email Compromise, a type of attack in which a business email account is compromised or impersonated. - Are SMEs at risk?
Yes, they are often more vulnerable because they are less structured in terms of cyber security. - What are the economic consequences?
Financial losses, reputational damage and operational disruptions. - Is it possible to recover stolen funds?
Rarely. Funds are quickly moved to untraceable accounts. - How to prevent CEO fraud?
Staff training, payment verification, email protection, and ongoing monitoring. - What role does social engineering play?
Fundamental. The attacker manipulates the victim by leveraging trust, urgency, and hierarchical obedience. - Is Hong Kong really a hotspot for these scams?
Yes, many of the fake accounts used in fraudulent transfers are located in Hong Kong due to the difficulty in tracking them internationally.
