Page 27 - ACAMS-Today-V20N3

• Payment pattern: Their payment pattern almost always shows high velocity and money being forwarded to individual accounts across borders. Sometimes some money trickles back to investors, but always less than what they paid to invest. A good Ponzi scheme can continue, only for as long as investors have the illusion that they can get their investment out at any time.
• Employee payments: Proceeds of crime may appear as payments to different “employees” and may be veiled as salaries, commissions or “website maintenance” costs.
With the bitcoin price just recently having reached an all-time high (it crossed $63,346 per one bitcoin on April 16, 2021), there are always some who are looking for cheaper alternatives to enter the market when the “price is right.” That is, if the recent radical price fluctuation of popular cryptocurrencies doesn’t scare people off.
Accessibility
The innovation with investments
has meant more people are
vulnerable to falling victims to
fraud, scams or simply not understanding legitimate
products being offered. With
anxiety rising during lockdown,
less human contact with
younger and more critical loved
ones, as well as free funds left
over from missed travels and
spending, elderly and other
vulnerable persons are increasingly falling victim to various scams. From fake supermarket vouchers to fraudulent TV licensing emails, scammers are striking at a time when the public may be slightly more suscep- tible to a hoax. At the end of April 2020, the U.K.’s Action Fraud, the police’s fraud team, reported more than 2 million pounds ($2.79 million) had been lost by the public to certain scams circulating over the last period of a few weeks.15
Vulnerability also means not having investment knowledge, which depending on the nature of the investment, could be extremely risky and result in loss or may even be a scam in and of itself. The impact of complex investments being offered to vulnerable and/or inexperi- enced investors has highlighted that increased efforts need to be undertaken by firms to educate consumers. In 2020, a 20-year-old investor using Robinhood, a commission-free trading app, committed suicide after believing his complex options trade resulted in a loss of over $700,000. In fact, this negative balance was only temporary while other investments settled into the account.16 It begs the question: Why was a young adult offered access to investment activity in the hundreds of thousands in the first place?
In this case, there was no scam involved but it highlights that inexperienced investors can be targeted through claims of significant returns. They believe that if they invest early in certain innovative industries, like crypto or a tech unicorn, they will make a large profit but instead they lose significant sums of money.
[ AML CHALLENGES ]
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