How Criminals Used COVID-19 Sales Pitch to Defraud, Launder Money
As the world is working hard to contain the spread of the COVID-19, criminals continue to take advantage of the pandemic. They are devising sophisticated methods to defraud people and launder the criminal proceeds using the financial system. The latest in the news is a sophisticated international fraud scheme using compromised emails, advance-payment fraud and money laundering. Involving financial institutions and authorities across Germany, Ireland, the Netherlands and the UK, the case was coordinated by the INTERPOL. Leading to the arrests of two people in the Netherlands, it sparked further investigations across Europe and more arrests expected in the coming days.
Unmasking the Scheme
According to a narrative by the INTERPOL, the criminals capitalized on the increasing demand for face masks as a large number of countries were going into lockdown in mid-March due to the coronavirus outbreak. Here’s what happened.
- German health authorities, who were following new leads, contracted two sales companies in Zurich and Hamburg to procure EUR 15 million worth of face masks. They were unable to procure from usual business channels due to a global shortage of medical supplies.
- To secure the deal, criminals created a fake company website that appeared to be linked to a legitimate company in Spain selling face masks. Using compromised legitimate email addresses, they started email correspondence claiming they have 10 million masks in stock.
- When the delivery fell through, the criminals referred the buyers to a ‘trusted’ dealer in Ireland. The Irish middleman promised to procure 10 million masks from a different supplier in the Netherlands. The parties agreed on an initial delivery of 1.5 million masks for an upfront payment of EUR 1.5 million.
- The buyers initiated a bank transfer to Ireland and prepared for the delivery from the Netherlands to Germany.
- Just before the delivery date, the buyers were informed that the funds had not been received and required an emergency transfer of EUR 880,000 straight to the Dutch supplier to secure the merchandise. The Dutch company existed, but their website had also been cloned. There was no official record of the order.
- The criminals sent nearly EUR 500,000 of those funds to the UK, all of which were destined for an account in Nigeria.
Following the Money Trail
When the German buyers understood they had been defrauded, they contacted their bank in Germany, which in turn contacted INTERPOL. The international agency contacted Irish authorities who were able to freeze the initial transfer of EUR 1.5 million and identify the Irish company involved. Meanwhile, the Dutch authorities tracked down the EUR 880,000 transferred from the German company. Criminals had already sent EUR 500,000 of those funds to a bank in the UK. Following INTERPOL’s intervention, the UK bank could recall the amount, thanks to an alert raised by investigators.
“Those arrested in this case had no connections to the medical equipment industry. They were simply experienced fraudsters who saw an opportunity with the outbreak of COVID-19, said Jürgen Stock, INTERPOL Secretary General. “They adapted their sales pitches to take advantage of strained supply chains and generate huge profits,” he added.
Public, Banks Need to be Vigilant
INTERPOL has warned that the public need to remain vigilant as organized crime cells continue to adapt their criminal activities to benefit from the crisis. As there are a number of pandemic-related factors contributing to the expected crisis within financial services, financial crimes pose a serious threat to their business. Financial institutions and their compliance teams are already facing a multitude of operational difficulties due to the pandemic. Compliance failures, though expected during a crisis like this, can be curtailed to a great extent with the use of the right technology. Modern technology can not only help mitigate risk, but it can augment process efficiency significantly to levels where financial institutions may be able to face similar crises smoothly.
A recognised, award-winning Regtech, Tookitaki offers machine-learning-powered solutions to financial institutions to build futuristic compliance programs. Our machine learning models learn from multiple customer interactions and apply ensemble learning techniques to predict customer behavior with accuracy. This gives a 360-degree view of the customers and their transactions along with incremental actionable insights into anomalous behavior, helping detect hidden criminal networks and dynamic transaction paths. Our solution offers the world’s most comprehensive repository of money laundering patterns that we identified from financial institutions and developed in-house with a number of third-party collaborations. Our mammoth library of money laundering patterns will make sure banks don’t miss any suspicious banking activity. Our proven solutions will help financial institutions be crisis-ready and continue with their complex AML compliance processes with improved productivity and enhanced risk cover. To know more about our anti-money laundering solution and book a demo, please visit our website.
Leave a Comment
Need for New Customer Risk Rating Models: Not All Customers Are Created Equal
Being estimated at between US$800 billion to US$2 trillion every year, money laundering is a serious problem for the global economy. While regulators and financial institutions are working hard to prevent and reduce the crime, launderers are becoming...
Is AML Compliance Heading for a New Normal in the Age of Digital Payments?
Increased digitization has influenced various businesses and brought in a paradigm shift in the way they create business models and approach growth opportunities. Moving away from conventional transaction modes such as cash and checks, banks and FIs ...
Excel to AI: How Reconciliation Tools Evolve for Better
In the world of finance, reconciliation is the process of comparing two related sets of records or two accounts at the end of a specific accounting period to find out if account balances are matching in both records. Periodic reconciliation of accoun...
Lessons Not Well Learned: 2020 AML Fines Cross 2019 Total
If research is to be believed, institutions across the globe have not done enough in the anti-money laundering (AML) compliance area. Data from consultancy Duff & Phelps revealed that AML fines in the first six months of 2020 reached US$706 milli...
Exploring AML Risks in COVID-Era and the Ways to Address Them
The world continues to battle the COVID-19 pandemic and the crisis it brought in is unprecedented in the history of humankind. While there are a number of pandemic-related factors contributing to the expected crisis with financial services, financial...
AML Amid COVID-19: Watch out for These FBI-listed Fraud Schemes
There has been a rise in the number of cybercrimes and fraud schemes across the globe ever since the proliferation of the COVID-19 pandemic. Criminals, in general, are taking advantage of people’s scare, helplessness, and the need for immediate fin...
OCC Spring Risk Perspective: 5 Takeaways on Compliance Risk
Despite its general strength, the US federal banking system is apparently susceptible to the ongoing economic weakness caused by the rampant spread of coronavirus. Earlier this month, The US Office of the Comptroller of the Currency (OCC) published i...
How Criminals Used COVID-19 Sales Pitch to Defraud, Launder Money
As the world is working hard to contain the spread of the COVID-19, criminals continue to take advantage of the pandemic. They are devising sophisticated methods to defraud people and launder the criminal proceeds using the financial system. The late...
5 Top Myths and Facts about AI Implementation in AML Programs
We are more confirmed about the power of Artificial Intelligence (AI) to transform lives and businesses now. There are countless possible applications of AI and machine learning at present, and we see and hear exciting ways how these modern technolog...
Typology Repository Management: Solving AML Problems Via Collective Intelligence and Continuous Learning
Despite its general strength, the US federal banking system is apparently susceptible to the ongoing economic weakness caused by the rampant spread of coronavirus. Earlier this month, The US Office of the Comptroller of the Currency (OCC) published i...
Money Laundering Amid COVID-19: What Regulators Across Globe Say
As the world continues to fight against the COVID-19 pandemic, there are reports that criminals are taking advantage of the difficult situation. They are seizing the moment to proliferate their criminal activities, earn undue profits and transfer of ...
How will Art Cease to Be a Preferred Money Laundering Vehicle?
Money laundering via high-end art and antiquities is not new yet it is difficult to detect. Art-related money laundering amounts to about US$3 billion per year, according to this blog, quoting the United Nations Office on Drugs and Crime. Criminals o...
Beware! Money Mules in Demand amid COVID-19. Here’s an Effective Cure
If reports are to be believed, cybercrooks are taking advantage of the COVID-19 situation. They are targeting people who were laid off or working from home due to the pandemic to work for them as money mules. For those who are new to the term, money ...
Roundtable Rewind: Embracing Next-gen Tech & Collaboration Key to Sustainability
As a regtech player with a vision to enable sustainable compliance programs in financial institutions, Tookitaki organized a first-of-its-kind industry roundtable in Charlotte, NC, USA to discuss opportunities to innovate current AML programs and mee...
Tookitaki Appoints Industry Veteran Joe Friscia as Advisor
Tookitaki Holding Pte. Ltd. appointed industry veteran Joe Friscia, former President of NICE Actimize and BAE Systems as Advisor to the Company’s Advisory Board. Joe brings over 25 years’ extensive experience in the financial crime and enterpris...
Tookitaki Raises Another US$11.7 million in Series A; Closes Round at US$19.2 million
– by Abhishek Chatterjee, Founder & CEO The Tookitaki team and I are excited to announce that we have raised an additional US$11.7 million in Series A funding, taking the total investment in the round to US$19.2 million. The current round w...
30 Years of FATF: Notable Facts About Global AML Watchdog
The Financial Action Task Force (FATF), the intergovernmental body formed in 1989 to combating money laundering, is celebrating its 30th anniversary this year. Since its inception, the global agency played a key role in identifying and preventing the...
Tookitaki Joins Aite Financial Crime Forum as Sponsor
Technological advances have fundamentally changed the operational landscape of financial institutions. However, there are also new risks emerging in forms of sophisticated financial frauds and complex money laundering patterns. These risks can signif...
Will Machine Learning Replace Compliance Professionals?
The impact of modern technologies such as artificial intelligence (AI) and machine learning on job security has been a widely discussed topic today. Of course, AI has advanced very quickly in the last few years and evolved to outperform humans in a n...
6 Most Prevalent Cyber-Laundering Methods in APAC
Despite being a medium to exchange information in real-time and with scale, the Internet is being misused in several ways. Among the slew of financial crimes facilitated by the Internet, money laundering draws importance due to its gigantic size and ...
ABA Regulatory Compliance Conference: 10 Sessions You Can’t Miss
The 2019 edition of the American Bankers Association (ABA) Regulatory Compliance Conference is a few more days away. Organized by the Washington, D.C.-based trade association, the conference is touted as the “one-stop shop to discuss today’s—an...
Tookitaki AMLS Wins SBR Technology Excellence Award 2019
Tookitaki’s Anti-Money Laundering Suite (AMLS), an end-to-end machine learning-powered transaction monitoring and names screening solution, has bagged the inaugural Singapore Business Review Technology Excellence Award 2019 in the category R...
Watchdogs Grow Optimistic about AI Prospects at Banks
Proper regulation of banking operations is important as any failure in the banking system would affect the wider economy. Therefore, banking is one of the most regulated industries across the globe. Financial regulators ensure that services to the cu...
Pitfall of Black Box AI at Banks: Explaining Your Models to Regulators
The use cases of artificial intelligence (AI) and machine learning in front-office, middle-office and back-office activities at banks are growing slowly but steadily. The major areas of AI play include customer service (virtual assistants, chatbots, ...
AI for Regulatory Compliance at Banks: 4 Assessments Before You Okay the Solution Proposal
Banking is one of the industries where artificial intelligence and machine learning find their applications at a rapid pace. Regulatory compliance within banking is an area which has become a costly and inefficient affair due to complex and never-sta...
Compliance Functions in Need of a Technological Overhaul. Can Machine Learning be the Game-Changer?
McKinsey in its latest compliance benchmarking survey found that compliance function at financial institutions has reached “an inflection point” and current compliance standards are in an “inchoate state”. The firm has suggested five critical...
Tookitaki Raises US$7.5 mn Series A from Global VCs to Transform Regulatory Compliance
Tookitaki, a regulatory technology company that aims to enable financial institutions to develop sustainable compliance programs, has raised US$7.5 million in Series A round. The round was co-led by London-based Illuminate Financial, an early-stage e...
From Wachovia to Danske Bank: Biggest Money Laundering Cases in Recent Times
Money laundering – the criminal activity of processing criminal proceeds to disguise their origin – is one of the gravest problems faced by the global economy, and its size is growing rapidly. It is estimated that 2- 5% of the global GDP, or US$8...
A Modern Approach to Address the Reconciliation Challenges of Financial Services
Reconciliation of transactions is deemed critical for the smooth running of every financial institution. The speed and accuracy of data reconciliation can distinguish a successful institution from its counterparts. The process is primarily used to id...
Busting a Myth: Compliance Officer’s Job is All About Risk
Regulatory compliance has become a dreadful task for banks after regulators across the globe set stricter norms in the aftermath of the 2008 financial crisis in an effort to prevent financial crimes such as money laundering. Rules have been changed t...
Attending ACAMS Conference in Singapore? Tookitaki Awaits You with Its Disruptive AML Solution
“In today’s era of volatility, there is no other way but to re-invent. The only sustainable advantage you can have over others is agility, that’s it.”- Jeff Bezos Singapore is hosting ACAMS’ 11th Annual AML & Financial Crime Conference ...
MAS’ Stress on Transaction Monitoring for Effective AML/CFT Compliance and Machine Learning is the Answer
Singapore is known for its top-notch AML/CFT regime created through up-to-date legislation, stringent policy and uncompromising supervision to safeguard against the abuse of the city state’s financial system for criminal activities. The country’s...
Mifid II and the Pressing Need for a New Reconciliation Approach
The financial services industry in the EU has been confused with the introduction of a revamped version of the Markets in Financial Instruments Directive (Mifid II). The ambitious regulatory reforms that took almost seven years to be materialized wer...
Is Automated Reconciliation Next to Impossible in Today’s Complex Financial World?
The 2008 global financial crisis and fairly new regulatory requirements like Basel III asked financial institutions (FIs) to cut operating costs and adopt a lean operations structure, pushing FIs to rethink on current reconciliation measures. Most of...
Modern Tech to Reshape US AML Compliance with Regulators’ Recent Handshake
George Bernard Shaw once said: “Those who cannot change their minds cannot change anything.” The past week has seen a significant change of mind from financial regulators in the US in their ardent attempt to combat and prevent financial crimes, e...
Skills Development: We Have Talents and We Strive to Multiply Them
“Mastery lies on an infinite continuum, and as a result, we will never reach the end. We can, however, see to it that we are as far along that continuum as our circumstance allows.” ― Chris Matakas Having continuous learning as one of its core...
It’s Our Fourth Founding Day; Taking a Pause to Cherish Our Simple but Awesome Journey
Today, as we step into our 4th year of foundation, I feel proud and honored to be leading Tookitaki that has been successful in creating added value to all its stakeholders. I was never a CEO and Tookitaki is my first company. I had the passion and d...
Tookitaki Expands into the US with New Office in Charlotte
SINGAPORE, Sept. 24, 2018: Tookitaki Holding Pte Ltd, a leading regulatory technology company, is pleased to announce the official opening of its North American office in Charlotte, NC, in the United States. This new location will serve as the comp...
5 Methods That Modern Money Launderers Use To Beat Detection
Society prepares the crime, the criminal commits it. DID YOU KNOW? Every year, an estimated amount in the range of US$800 billion-US$2 trillion (2-5% of global GDP) is being laundered globally Regulators across the globe imposed US$1.7 billion in fin...
Risk Management Conference: Positive Vibes from All Corners
The Risk Management Association’s (RMA) premier annual event, the Risk Management Conference, came to an end on 6 November, and Tookitaki had the privilege to attend the event which we believe was a success in a number of ways. As a modern-era tec...
Singapore Fintech Festival: Tookitaki to showcase advanced machine learning solutions in financial services
Singapore is assured of the Fintech world’s unwavering attention next week, as the city state, is hosting this year’s Fintech Festival during 12-16 November. Touted as the world’s largest platform for the global FinTech community, the event att...
The RMA Clarion Call to Address Risks and the Tookitaki Way
Risk officers, doing your best today is good while preparing hard for tomorrow is extraordinary. Risk management at banks has become difficult due to operational and regulatory changes. The Risk Management Association’s (RMA) premier annual event, ...
Typology Repository Management: Solving AML Problems Via Collective Intelligence and Continuous Learning
Despite its general strength, the US federal banking system is apparently susceptible to the ongoing economic weakness caused by the rampant spread of coronavirus. Earlier this month, The US Office of...
MAS’ Stress on Transaction Monitoring for Effective AML/CFT Compliance and Machine Learning is the Answer
Singapore is known for its top-notch AML/CFT regime created through up-to-date legislation, stringent policy and uncompromising supervision to safeguard against the abuse of the city state’s financi...
Singapore Fintech Festival: Tookitaki to showcase advanced machine learning solutions in financial services
Singapore is assured of the Fintech world’s unwavering attention next week, as the city state, is hosting this year’s Fintech Festival during 12-16 November. Touted as the world’s largest platfo...
