The call comes on a Friday afternoon, three days after closing.
The municipal advisor had just completed a $45 million bond issuance for a water infrastructure project. Everything went smoothly. The underwriter wired the proceeds to the trustee's account on Tuesday morning. The wire confirmation matched the account details the trustee had provided by email. The trustee's logo was correct, the signature looked right, even the reference to the bond series number was accurate.
Except the email wasn't from the trustee. And now $45 million in bond proceeds has vanished.
Here's where the story splits into two very different versions. In one, the advisor spends the weekend coordinating emergency calls with the issuer, the underwriter, and law enforcement while preparing for what will become months of investigation, potential litigation, and regulatory scrutiny. In the other version, the municipal advisor makes a phone call. Insurance coverage is confirmed. A claims specialist is assigned. Within days, the bond proceeds are restored. The infrastructure project moves forward. The advisor spends Sunday watching football.
The difference between these two outcomes isn't security technology or better training. It's one very simple thing: who holds the liability.
The Numbers Tell the Story
This isn't a hypothetical problem. According to the FBI's Internet Crime Complaint Center, business email compromise attacks resulted in $2.77 billion in losses across 21,442 reported incidents in 2024 alone. Even more sobering, nearly $8.5 billion in BEC losses were reported to the FBI between 2022 and 2024.
For public finance professionals managing bond proceeds and municipal funds, these statistics represent more than numbers. They represent constituents' tax dollars, critical infrastructure projects, and public trust.
The recovery outlook makes the picture clearer. Industry research shows that only 19% of organizations that suffered financial losses from wire fraud were able to recover all of the stolen funds. And timing matters: security experts note that recovery success rates drop to low single digits after 24 hours.
This creates a straightforward risk management question: when recovery is unlikely and the window for action is measured in hours, who should bear that risk?
The Insurance Question Nobody Asks Until It's Too Late
When you're sitting in a conference room presenting the annual budget, nobody asks about wire fraud insurance. They ask about revenue projections. Market expansion. Operational efficiency. The question about who bears liability for a misdirected payment feels theoretical.
Until it's not theoretical at all.
Here's what makes transaction insurance different from every other line item in your risk management budget: it doesn't just reduce your exposure or make a loss slightly less painful. It can eliminate your exposure almost entirely. When there's a policy covering a transaction, the liability for that transaction transfers from your organization (and from every individual who touched that transaction) to the insurance carrier.
Think about what that means. Who owns this problem? Is it the municipal advisor who coordinated the closing? The issuer's finance director who verified the account? The underwriter who executed the wire? The trustee whose account details were spoofed?
When everyone followed protocol but fraud still occurred, these questions get messy. Multiple parties could be implicated. Legal exposure spreads across the entire transaction chain.
But with transaction insurance, if you followed protocol, the policy owns the problem. The insurance bears the liability, not the individuals or organizations who exercised due diligence.
Understanding the True Cost of Retained Liability
Let's talk about what happens without transferring that liability, because this is where smart risk management begins.
A wire fraud loss doesn't just cost you the amount of money that disappeared. Research shows that nearly half of U.S. companies that experienced fraud lost more than $10 million when you factor in all the associated costs. Here's what drives that number:
Investigation and Response. Your team shifts from regular operations to incident response. Every email gets examined. Every procedure gets documented. Senior management time alone can run $50,000 or more before any recovery effort begins.
Legal and Regulatory. When funds go missing, clarity around liability becomes crucial. Multiple parties may need counsel. Auditors want enhanced procedures. Regulators may require explanations. What starts as a single incident can affect your organization's risk profile for years.
Operational Continuity. In public finance, transparency isn't optional. These incidents become part of the public record, potentially affecting credit ratings and capital market access. The reputational dimension extends far beyond the immediate financial loss.
Transaction insurance shifts this entire burden to a party whose expertise is managing exactly this type of event.
The Insurance Liability Shield That Changes Everything
Now consider the alternative scenario. Your organization has transaction insurance covering wire transfers above a certain threshold.
If fraud occurs, here's what changes:
Your team can focus on prevention and process improvement rather than liability and blame. The insurance carrier handles investigation and recovery as part of their standard process. Legal, regulatory, and reputational challenges become the insurer's responsibility. The organization maintains operational continuity while the claim gets resolved.
The question transforms from "Who failed and how do we assign blame?" to "What happened and how do we prevent it next time?" Those are very different conversations with very different outcomes.
The Math That Sells Itself
This is where the business case gets interesting, because you can actually quantify this.
Transaction insurance for high-value bond disbursements typically costs a small fraction of the transaction value. Most finance leaders stop there and think about it like any other insurance: Is the premium worth the unlikely payout?
But that's the wrong calculation. The right question is: What's the cost of retaining liability compared to the cost of transferring it?
Consider what you're buying with transaction insurance:
Zero liability exposure for the covered transaction.
Elimination of multi-party disputes where everyone sues everyone else to avoid responsibility. These disputes often cost more than the original loss.
Protection for every individual involved in transaction approval and execution. This includes people who might not have adequate personal liability protection.
Immediate claims payment without having to prove someone else was negligent, which is often impossible in sophisticated fraud schemes.
Professional claims handling by people who do this for a living, not by your already-stretched finance team.
When you compare a modest premium against the potential exposure of a multi-million dollar transaction (plus investigation costs, legal fees for multiple parties, regulatory response, and reputational impact), transaction insurance becomes one of the most efficient risk transfers in your entire portfolio. You're paying a fraction of a percent to eliminate 100% of the liability.
What Finance Leaders Miss with Transaction Security
Here's the insight most finance leaders overlook: You already have excellent transaction security. You've got dual approval workflows. You've got segregation of duties. You've trained your team on business email compromise. You've implemented verification callbacks. You've done everything right.
And you're still somewhat exposed.
Because even perfect processes executed perfectly can't eliminate determined, sophisticated fraud. The criminals know your processes. They've studied them. They've figured out exactly what verification looks like and how to fake it.
But here's what changes the equation: transaction platforms that provide documented, transparent guardrails at every step. When your security procedures are formalized through a platform rather than relying on informal processes or email chains, two things happen. First, the risk actually goes down because there's less room for human error or missed steps. Second, liability becomes quantifiable because you can demonstrate exactly what protocols were followed.
This is why security measures and insurance work together. Your security reduces the probability of loss. Transaction insurance eliminates the liability when that loss occurs anyway. But when security is built into a documented platform, insurance carriers can better assess and price the risk, which means better coverage terms for you.
Security and insurance aren't competing strategies; they're complementary. Security protects transactions. Insurance protects people and organizations. You need both.
Making the Case for Insurance to Boards and Auditors
When you present transaction insurance to a board or an audit committee, lead with liability, not probability.
Don't talk about how likely fraud is. They already know fraud happens. Don't talk about the sophistication of modern scams. They've read the headlines.
Lead with this:
Our current approach to transaction security puts individual liability on every person involved in approving and executing payments. It creates legal exposure for management, operational exposure for the company, and reputational exposure for the organization. Transaction insurance transfers that entire liability to a carrier who specializes in absorbing and managing this specific risk.
Then add the hard numbers. The FBI reported that in 2024, while their Recovery Asset Team successfully froze $561.6 million in fraudulent transactions, this represented only a fraction of the $16.6 billion in total cybercrime losses that year. Even when funds are frozen, full recovery remains elusive. The window for action is measured in hours, not days.
Follow with this:
When funds are misdirected, every participant in the transaction chain becomes a potential defendant. The bank, the beneficiary, the internal approvers, the management team. Everyone lawyers up. The actual loss becomes the smallest part of the total cost. Transaction insurance eliminates that cascade by putting one party (the insurer) on the hook for the entire claim.
For auditors, the case is even simpler: Transaction insurance converts an unquantified, unlimited liability into a known, fixed cost. That's exactly what auditors want to see: risks that are identified, quantified, and appropriately managed.
Transaction Security That Transfers Liability
Municipal and public finance leaders trust Basefund to secure their high-value transactions. Our platform combines rigorous transaction verification with integrated insurance coverage, so you're protected at every step.
Every verified transaction through Basefund comes with built-in insurance protection. No separate policies to manage. No additional vendors to coordinate. Just comprehensive coverage that activates automatically when you need it most.
For municipal advisors, finance directors, and bond counsel managing high-value public transactions, Basefund offers what traditional payment systems can't: the certainty that if something goes wrong, liability transfers immediately to us.
Ready to protect your next transaction? Schedule a demo to see how Basefund's integrated transaction insurance works, or contact our team to discuss coverage for your specific needs.
Because the best time to transfer liability is before you need to.
