Page 28 - ACAMS-Today-V20N3

[ AML CHALLENGES ]
What can law enforcement do to fight investment fraud?
It is key that law enforcement continues to educate the public on emerging risks. Increased public awareness will make it harder for bad actors to perpetrate their crimes. Another tool at law enforcement’s disposal is knowing how to act when approached by the victim of investment fraud. Time is very much of the essence as fraudsters will do all in their power to move victims’ funds between accounts and very likely to another jurisdiction. FINRA has published extensive guidance about what to do if someone finds themselves to be the victim of fraud.17 What this guidance misses is that financial institutions (FIs) are often the best placed in preventing the victims’ funds from leaving their systems. Law enforcement should also be mindful of this and if approached by a victim ensure they guide them to contact their FI as an immediate first step. This notification could be the trigger for the investigation by the FI and may protect the victim and future victims from losing their money. Only after this step does it make sense for law enforcement to collect the information to pursue an investigation. The best outcome for the public is one in which the victim recovers their money and the fraudster can be prosecuted.
Conclusion
Increased access to investment services means fraudsters can target a wider array of individuals than ever before. It is not just the traditionally vulnerable, but also young or inexperienced individuals looking to make returns through fintech-like investment activity or by investing in a pre-IPO for a brand they like. This excitement and inexperience may mean an individual’s guard is down when a seemingly sophisticated fraudster approaches with a real website, along with apparently real documentation and even several third parties backing up claims of the firm’s success.
Both pre-IPO and ICO scams are here to stay. Unfortunately, individuals’ digital life only furthers the access to get-rich-quick schemes. The plethora of seemingly adequate “advisers” or “reviewers” often promote schemes where they conveniently “forget” to disclose their affiliates. Both young and old investors may lose their savings, and in the worst case their lives, when they realize they were only pawns for elaborate fraudsters.
Kristi Raffai, fincrime product compliance manager, Estonia, Kristi.Raffai@wise.com Danielle Herndon, fincrime product compliance lead, FL, USA, Danielle.Herndon@wise.com
1 Maggie Fitzgerald, “A large chunk of the retail investing crowd started during the pandemic, Schwab survey shows,” CNBC, April 8, 2021, https://www.cnbc.com/2021/04/08/a-large-chunk-of-the-retail-investing- crowd-got-their-start-during-the-pandemic-schwab-survey-shows.html
2 Jeff Cox, “Investors have put more money into stocks in the last 5 months than the previous 12 years combined,” CNBC, April 9, 2021, https://www.cnbc.com/2021/04/09/investors-have-put-more-money-into- stocks-in-the-last-5-months-than-the-previous-12-years-combined.html
3 Diana B. Henriques, “Bernard Madoff, Architect of Largest Ponzi Scheme in History, Is Dead at 82,” The New York Times, April 14, 2021, https://www.nytimes.com/2021/04/14/business/bernie-madoff-dead.html
4 “Coronavirus: Investment scams quadruple since virus lockdown,” BBC, November 30, 2020, https://www. bbc.com/news/business-55126228
5 “Investor Alert: Pre-IPO Investment Scams (Updated),” Investor.gov, April 24, 2012, https://www.investor. gov/introduction-investing/general-resources/news-alerts/alerts-bulletins/investor-alerts/investor-48
6 Thomas Brewster, “Fraudsters Made $2 million In 4 Months Selling Fake Airbnb, Uber And Lyft Shares, DOJ Claims,” Forbes, November 15, 2019, https://www.forbes.com/sites/thomasbrewster/2019/11/15/ fraudsters-made-2-million-in-4-months-flogging-fake-airbnb-uber-and-lyft-shares-doj- claims/?sh=77396ec952cb
7 “How Big Tech Got Even Bigger,” The Wall Street Journal, February 6, 2021, https://www.wsj.com/articles/ how-big-tech-got-even-bigger-11612587632
8 “Financial advisers register,” Moneysmart.gov.au, https://moneysmart.gov.au/financial-advice/ financial-advisers-register
9 “BrokerCheck by FINRA,” BrokerCheck, https://brokercheck.finra.org/
10 “Welcome to the Financial Services Register,” Financial Services Register, https://register.fca.org.uk/s/
11 “Co-Founder Of Cryptocurrency Company Pleads Guilty For Role In ICO Fraud Scheme,” The United States Attorney’s Office Southern District of New York, June 16, 2020, https://www.justice.gov/usao-sdny/pr/ co-founder-cryptocurrency-company-pleads-guilty-role-ico-fraud-scheme
12 “Founder of International Cryptocurrency Companies Indicted in Multi-Million Dollar Securities Fraud Scheme,” The United States Attorney’s Office Eastern District of New York, February 23, 2021, https://www. justice.gov/usao-edny/pr/founder-international-cryptocurrency-companies-indicted-multi-million- dollar-securities
13 “Serbian Founder of Digital-Asset Companies Indicted in International Cryptocurrency Scheme,” The United States Department of Justice, February 23, 2021, https://www.justice.gov/opa/pr/serbian-founder- digital-asset-companies-indicted-international-cryptocurrency-scheme
14 “SEC v. PlexCorps, Dominic LaCroix, and Sabrina Paradis-Royer,” U.S. Securities and Exchange Commission, https://www.sec.gov/divisions/enforce/claims/plexcorps.htm
15 Sian Traynor, “These are 7 of the biggest scams targeting vulnerable people during lockdown,” Edinburgh Live, May 16, 2020, https://www.edinburghlive.co.uk/news/7-biggest-scams-targeting-vulnerable-18261767
16 Sergei Klebnikov and Antoine Gara, “20-Year-Old Robinhood Customer Dies By Suicide After Seeing A $730,000 Negative Balance,” Forbes, June 17, 2020, https://www.forbes.com/sites/sergeiklebnikov/ 2020/06/17/20-year-old-robinhood-customer-dies-by-suicide-after-seeing-a-730000-negative- balance/?sh=49ac74411638
17 “A Recovery Checklist for Victims of Investment Fraud,” Financial Industry Regulatory Authority, https:// www.finra.org/investors/insights/investment-fraud-awareness
28 [ JUNE–AUGUST 2021 ]