Cheque Fraud Is on the Rise

Outdated payment processes expose condo corporations to fraud, financial losses, and legal risks, making it crucial to understand how fraud occurs and implement key protective strategies.

The Current State of Cheque Fraud

According to a 2023 report by the Association for Financial Professionals, cheque fraud remains one of the most prevalent types of payment fraud, accounting for nearly 66% of reported incidents. The relatively simple nature of cheque manipulation, combined with outdated practices, makes it an attractive target for fraudsters.

Despite the risks being publicized for years, condo

corporations often issue a significant number of cheques to contractors, service providers, and utility companies. While this may seem straightforward, the inherent vulnerabilities of cheques make them a risky choice. Fraudsters can alter the payee’s name, modify amounts, or even counterfeit cheques outright. These attacks are often sophisticated, leveraging stolen chequebooks or exploiting relaxed oversight during the approval process.

Unfortunately, many directors believe that cheques are protected by their bank or that the presence of a signature ensures there is no unauthorized release of the condo’s funds. In most cases, this is simply not true, and the banks do not provide protection against cheque fraud. This is demonstrated by a business that experienced repeated cheque fraud incidents that the bank could not stop. The result was over half a million dollars in losses, failure of the business and a lawsuit against the bank. In another case, a condo in BC experienced $50,000 in cheque fraud, and their bank admitted they “do not look at names or signatures on cheques”.

Cheque fraud thrives on weak or nonexistent approval processes.
Despite years of warnings, many condo corporations still rely on cheques—making them easy targets for fraudsters.

2. Implement Approval Workflows:

Fraud often exploits weak or nonexistent approval processes. Condo corporations should enforce strict dual-approval workflows for all payments, ensuring no single individual has unilateral control over funds. Modern digital payment platforms allow for the seamless integration of approval workflows, enabling transparency and accountability at every step.

3. Conduct Regular Bank Reconciliations:

The timely reconciliation of bank statements can help detect irregularities early. Assigning this responsibility to an independent party, such as a third-party property management firm, ensures an additional layer of oversight and reduces the risk of insider fraud.

4. Educate Board Members and Staff:

Knowledge is a powerful tool in preventing fraud. Regular training sessions on common fraud tactics, warning signs, and best practices can empower board members and staff to act as the first line of defense.

Staying Ahead of Financial Threats

The financial and reputational stakes are too high for condo corporations to ignore the risks associated with cheque fraud. By embracing digital payment technologies, strengthening internal controls, and fostering a culture of vigilance, condo boards can protect their communities from the devastating consequences of fraud.

Transitioning to secure, automated payment systems

can transform the financial operations of organizations. Beyond reducing fraud risk, these tools enhance efficiency, transparency, and trust—qualities that every condo corporation should strive for.

In a world where financial threats continue to evolve, staying ahead requires proactive measures and a commitment to modernization. Safeguarding your condo corporation’s funds isn’t just about preventing losses; it’s about preserving the integrity and trust that strengthen the communities we call home.