One of the most common threats associations face during construction is business email compromise. In these schemes, criminals impersonate trusted vendors or professionals, sending emails that appear legitimate and request changes to payment instructions or urgent transfers. The messages may reference real projects, invoices or deadlines, making them difficult to spot without proper verification procedures. They may also include invoices that look legitimatek
but have fraudulent routing and account numbers in the payment information.
Check fraud and ACH fraud also increase during high- payment periods. Fraudsters may intercept checks, alter payee information, or use stolen banking credentials to initiate unauthorized electronic transfers.
The hidden risk of
process breakdowns Not all fraud stems from sophisticated cybercrime. Sometimes the risk comesk
from internal process gaps that emerge when workloads increase.
Associations managing large-scale repairs may temporarily loosen controls to keep projects on schedule. Approval thresholds may be bypassed. Verification steps may be skipped. Board members or community association management (CAM) staff mayf
rely on email instructions without confirming changes through another channel.
It’s important to keep in mind that even well-intentioned shortcuts can expose associations to significant losses.
Practical steps to
reduce risk The good news is that most construction-related fraud is avoidable with strong controls, awareness and collaboration among boards, management companies and banking partners.
First, associations should implement strict verification protocols for anyr
banking changes should ever ber A call-back tok y
a known, verified phone number shouldr
received via email should require a phone call to the vendor to verbally confirmy
importantly, that the payment routing and account numbers are correct.
Second, maintain a clear separation of duties. No single individual should have the authority toy
initiate and approve
large transactions. Dual controls and layered approvals add friction for criminals while protecting associations.
Third, invest in ongoing training. Board members and CAM staff should receive regular education
r familiarity arey often used as weapons. on how tow identify phishingy
emails, spoofed domains and social engineering tactics. Fraud preventionismost effectivewhen everyoneinvolved understands that urgency andy
20 | COMMON INTEREST® • Fall 2026 • A Publication of CAI-Illinois Chapter
y changes to payment instructions. No vendor accepted via email alone. be
mandatory before processing updates. Similarly, every invoicey not just the invoice amount but, more
DISCOVER A PASSION FOR ANSWERS that has earned a client retention rate of over 95%.
For more than 40 years, we’ve provided over 1,300 Chicago-area HOAs and Condominium Association boards of directors with state-of-the-art audit, review and compilation reporting services to help prepare more accurate annual budgets, make more informed operating decisions,
Fourth, work closelyk offer toolsr
y with your bank.r
Many financialy tools like Positive Pay, call-back verificationk
institutions
such as transaction alerts, automated fraud detection and customizable
approval thresholds. These services create additional checkpoints before funds leave the association’s accounts.
Finally, consider cyber insurance coverage. Cyber insurance can help offset financial losses related to fraud, data breaches and cyber incidents, but coverage varies widely. Associations should review policies carefully to understand what is covered and where gaps may exist.
Staying vigilant throughout the project
lifecycle Major construction projects are critical milestones for community associations, but they also represent periods of heightenedf
shouldbe viewed asan essentialpart of projectf alongside contractor oversight and budgeting.
financial risk. Protecting association funds management,
Strong internal controls, informed decision-makers and trusted banking relationships can significantly reducey
Fraudsters thrive in moments of transition and urgency. Associations that slow down, verify and communicate clearly arey
far less likely toy become their next target. risk.
Cukierski & Associates LLC CERTIFIED PUBLIC ACCOUNTANTS
3850 N. Wilke Rd. Ste. 100, Arlington Heights, IL 60004 847-496-7180 | |
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