Every year, businesses lose billions to transaction fraud. The natural response is to reach for better tools — stronger encryption, smarter fraud detection, more advanced identity verification. But here's the uncomfortable truth: most transaction failures aren't caused by a lack of technology. They're caused by a lack of structure.
The financial industry has spent decades bolting security features onto a transaction process that was never designed to be secure in the first place. Wire instructions still travel over email. Account ownership is rarely confirmed before funds move. And the people involved in a transaction — from the buyer to the title agent to the lender — are often operating in silos, with no shared understanding of where things stand or what needs to happen next.
What's missing isn't a better mousetrap. What's missing is a framework, and you can start building one today.
The Problem With Piecemeal Security
Consider how a typical high-value transaction works today. A real estate closing, a corporate acquisition, a cross-border vendor payment ...each of these involves multiple parties, multiple steps, and multiple handoffs. At every handoff, there's an opportunity for error, miscommunication, or fraud.
Most organizations address these risks reactively. They add a verification step here, a compliance check there, maybe a callback procedure for wire transfers above a certain threshold. The result is a patchwork of safeguards that varies from company to company, transaction to transaction, and even person to person within the same firm.
This piecemeal approach creates two problems. First, it leaves gaps; if your fraud prevention depends on an individual remembering to make a phone call, it will eventually fail. Second, it creates friction without clarity. Participants don't know what's been verified, what hasn't, or what stage the transaction is actually in.
If any of this sounds familiar, here's where to start.
Four Things You Can Do Right Now
A secure transactions framework starts from a different premise: that security isn't a feature you add at the end — it's an architecture you design from the beginning. You don't need to overhaul everything at once. These four shifts can fundamentally change your organization's exposure to transaction risk.
1. Replace vague statuses with defined transaction stages
Most teams track transactions with labels like "in progress" or "pending." These labels tell you almost nothing. Is the deal waiting on document review? Has the account been validated? Has anyone actually confirmed the recipient's identity?
Instead, define deliberate stages for your transactions — setup, active coordination, funding readiness, and completion — and assign specific entry criteria to each one. A transaction shouldn't advance to "ready to fund" until identity verification, account validation, and document review are all complete. Write these criteria down. Make them non-negotiable. When every participant can see exactly what stage a transaction is in and what's blocking it from moving forward, you eliminate the ambiguity that both fraudsters and honest mistakes thrive in.
2. Formalize who has authority over what
When a fraudster impersonates a CFO and requests a wire transfer, it works because most organizations lack formal transaction governance. The request "seems right" because there's no defined process to measure it against.
Fix this by documenting explicit authority for every transaction type your organization handles. Who can initiate a transaction? Who can modify payment details? Who can approve the final movement of funds? These shouldn't be informal assumptions, they should be defined roles tied to specific people. Go further: require that any change to payment instructions triggers a re-approval from a second authorized party. This single step would prevent the majority of business email compromise losses.
3. Map every participant...not just the counterparties
Transactions involve more people than the sender and receiver. There are coordinators, compliance officers, legal counsel, signers, and observers. Most organizations don't formally track who these people are or what they're responsible for.
Start by creating a participant roster for every high-value transaction. For each person, define their role (coordinator, reviewer, approver, funder), their contact information verified through a channel other than email, and their specific responsibilities. Share this roster with all participants at the outset. When everyone involved knows who else is involved and what their role is, it becomes much harder for a bad actor to insert themselves into the process undetected.
4. Link dependent transactions together
In the real world, transactions rarely happen in isolation. A single deal might involve an earnest money deposit, a down payment, a loan disbursement, and a final settlement — each dependent on the others. But most organizations process these as separate, disconnected wires.
Start treating related transactions as a chain. Document the dependencies explicitly: Transaction B can't fund until Transaction A is confirmed complete. Transaction C requires sign-off from both the buyer's attorney and the lender. When you model these dependencies, you create a built-in safeguard. Funds can't move prematurely based on fraudulent or incomplete information upstream.
What This Looks Like in Practice
Consider a commercial real estate closing: a buyer, a seller, two sets of attorneys, a title company, a lender, and a broker — seven or more parties, each with different responsibilities.
Without a framework, coordination happens through email threads and phone calls. Wire instructions get forwarded from one inbox to another. Someone asks, "Has the lender funded yet?" and the answer depends on who you ask. A fraudster who compromises a single email account can intercept wire instructions, swap in their own account details, and disappear with the proceeds.
Now imagine the same closing with these four practices in place. The transaction moves through defined stages — document collection, review, approval, funding — each with clear entry criteria. The title company is the designated coordinator; attorneys review, the lender and buyer fund. Payment details are tied to validated accounts, not email attachments. The funding stage can't begin until every upstream condition is satisfied. No single participant can unilaterally change payment details without triggering re-verification from a second authorized party.
The fraud vector that worked so easily in the first scenario doesn't exist in the second. Not because of a cleverer detection tool, but because the structure itself eliminated the vulnerability.
Start With One Transaction
You don't need to redesign your entire operation overnight. Pick your highest-risk transaction type — probably the one that involves the most parties, the largest dollar amounts, or the most handoffs — and apply these four practices to it. Define the stages. Document the authority. Map the participants. Link the dependencies.
Once you've done it for one transaction type, you'll see the gaps in every other process you run. That's the point. The financial industry is at an inflection point where the tools available to fraudsters — AI-generated voices, deepfake video, compromised email — are evolving faster than any single security product can keep up with. The only durable response is to change the underlying architecture of how transactions work.
That starts with a framework. And a framework starts with your next transaction.
Basefund is building the infrastructure for secure, structured transactions. To learn more about how we're rethinking the way money moves, visit basefund.com.
