KTT Loan Scams: How “Ghost‐Funders” Steal Up-Front Fees

A contractor e-mails us last week: “We signed for $150 million from a Zurich funder. They want a KTT transfer —my bank said they can ‘receive any incoming funds.’ Is this normal?”
Two months earlier, a renewable-energy start-up asked whether IPIP “server-to-server” funding was faster than SWIFT.
In both cases the answer is the same: the money will never arrive, because it was never sent.

Step-by-Step Anatomy of the Scam

1. Hook: Shady “funder” targets sponsors lacking legal counsel, dangling nine-figure loan tickets at single-digit rates.
2. Agreement: Borrower signs a glossy loan contract—sometimes drafted in Word—with impressive seals and no mention of the funder’s balance-sheet.
3. Up-Front Fee: Funder demands due-diligence money—$25k, $50k, sometimes $250k. Up-front fees are legitimate in real deals, so the victim pays.
4. Exotic Transfer Method: Contract specifies KTT, IPID, DTC “cash wire” or SEPA Direct Debit B2B for $200 million. Responsibility for “clearing” sits with the borrower.
5. Ghost Funds: Funder sends a forged telex, a doctored SWIFT PDF or nothing at all. The borrower’s bank sees no incoming value. Weeks pass, excuses mount, fees vanish.

Why the Money Can’t Be Cleared

• No Correspondent Network: The “sending” entity is often a non-bank finance company in a lightly regulated jurisdiction—no nostro, no Fedwire, no SWIFT membership.
• Fake Instruments: KTT keys, IPIP codes and “server-to-server ledger transfers” are relics or fabrications. Modern clearing relies on SWIFT MT 103/202, Fedwire, CHIPS or TARGET2—full stop.
• Bank Ambiguity: Front-desk staff tell clients, “We can accept anything as long as it is properly confirmed,” unaware the counterparty lacks the rails to transmit funds.

Conversation That Sinks the Victim

Borrower to Bank	Bank’s Generic Reply	Funder’s Spin
“Can you receive a KTT for $300 m?”	“If funds are authentic and cleared, we will credit your account.”	“See? Your bank is ready—send the due-diligence fee today.”

The bank did not promise the KTT would clear—only that bona-fide funds would credit. The scammer twists this to close the fee.

Red Flags—Every Time

• Loan decision in days, based solely on a PDF business plan.
• Transfer methods limited to KTT, IPIP, IPID, DTC cash, SEPA B2B for hundreds of millions.
• Funder refuses to disclose source of funds or audited statements.
• Payment responsibility pushed entirely onto borrower: “Talk to your bank—clear it yourself.”
• Legal counsel discouraged: “Too slow, we’ll lose the window.”

How Legitimate Capital Is Raised

Serious sponsors hire a boutique investment bank or placement agent —yes, we charge retainers because underwriting consumes analyst, legal and compliance hours. We prepare a full data pack: audited accounts, model, permits, offtake contracts. Commercial banks (or credit funds) conduct due diligence, then advance funds via standard rails: SWIFT MT 103/700/760, fed-member wires, or agency escrow. Turnaround is measured in weeks to months—never hours.

Practical Advice for Sponsors

• Ask for the funder’s last three audited financial statements. No audits, no deal.
• Insist on escrow: fees released only when your bank confirms receipt of good funds.
• Verify transfer method with your operations desk, not the lobby greeter.
• Engage counsel—retainers are cheaper than losing six figures to fraud.
• Walk away from any KTT/IPIP/IPID loan promise. The format alone is the giveaway.

Information herein reflects typical scam patterns observed by Financely Group and should not substitute for legal advice. Always engage licensed counsel before remitting due-diligence or commitment fees.