An employee of a local trading company received an e-mail last month, seemingly from her director, to transfer US$205,000 (S$277,300) to a business partner in Malaysia.
Believing it to be true, she transferred the funds.
The transaction drew the attention of OCBC Bank's fraud surveillance unit, as it did not fit the client's usual patterns and the beneficiary was a new payee.
OCBC staff alerted the company director, who confirmed that he did not ask for the transfer.
The OCBC team then liaised with the Malaysian bank concerned and recovered all the funds by the next morning.
For their initiative, the OCBC staff were awarded the Public Spiritedness Award by the Singapore Police Force yesterday at the Police Cantonment Complex.
Mr David Chew, director of the Commercial Affairs Department, said the bank had no legal obligation to rectify the scam transaction.
"The bank did not have to do this, but it did," he said. In general, he added, chances of retrieving money that has left Singapore are slim.
This case was one of 94 business impersonation scams that took place between January and last month, resulting in losses of $15.8 million - $4.5 million more than the same period last year.
Losses from such scams have doubled since 2016, according to figures from the police, rising from $25 million to $57.9 million last year.
The highest loss from such a scam this year was at least $4 million.
Mr Francisco John Celio, OCBC's head of corporate security, said fraud detection has become more challenging as more customers make digital transactions.
That is why OCBC has invested millions of dollars in a fraud surveillance system to monitor transactions in real time, he said, adding that the system can track corporate and consumer transactions across multiple channels, including online banking and ATM transactions.
Last year, OCBC recovered roughly $8 million and prevented $20 million worth of fraudulent transactions, the bank said.
Police suspect these scammers are hackers who monitor e-mail exchanges between businesses and their suppliers.
The hackers then use the information obtained to send payment instructions through "spoofed" e-mail accounts that closely resemble the suppliers'.
Mr Chew said that the commitment and vigilance of financial institutions are "important weapons in our fight against business impersonation scams".
He also called on businesses to do their part to avoid falling victim to such scams.