HOW YOUR SOCIAL MEDIA ACCOUNTS LEAVE YOU OPEN TO CRIMINALS.

HOW YOUR SOCIAL MEDIA ACCOUNTS LEAVE YOU OPEN TO CRIMINALS.

In this post we will examine real cases where social media has been exploited by criminals. A couple of types of exploitation are social engineering and criminal intelligence gathering. We will explore both and also establish links to money laundering and white collar crime.

It is estimated criminals earn over $3 billion annually from exploiting social media. From extortion of people through the threat of uncovering personal sexual behaviour to using the platforms to research potential victims, criminals are active searching your profiles.

In the immediate aftermath of the Boston bombing 125 charities emerged claiming to raise funds for victims – criminals seeking to quickly capitalise on a tragic event. This is the power and danger of Social media. The speed with which it can be utilised for harm.

We are too quick to tweet, post, pin and share practically everything with practically anyone. The habit for sharing so much and not always knowing who the recipient is can get us into trouble. The more information you post, the larger the dossier of information available to set the stage for a compromise- such as password cracking, identity theft, and more. One of the most common methods criminals use to gain access is spear phishing, and the fact that we often share too much information makes it fairly easy for an attacker to gather enough material on you to conduct a successful spear phishing scam. You may think it’s your “friend” sending you that cute picture, but it may be a criminal looking to get you to click on it so he can infect your machine and steal your data. This is particularly relevant with mobile communications like ‘Whatsapp’. The volume of images and videos shared has exploded throughout the Coronavirus pandemic. The problem is the downloading of a video that has been shared millions of times could infect your device even though it has come to you innocently from a friend. It is that easy to be infected. Symantec report 43% of attacks via social media relate to malware and ransomware. Be careful what you download!

Add to this the very personal nature of what you post and the human instinct to create memorable passwords. Maybe a favoured sports star? Or a pet/child’s name. Or let’s think about birthdays. They are all used extensively by people on social media and easily identified by criminals looking to hack your accounts. Add to this ‘the post moaning about the bank’, effectively giving the criminal what bank you are with and it isn’t hard to see a pattern developing.

Russian FBI arrest.

Social media is used extensively by criminals. The recent arrest of ‘PlinOfficial’ a Russian rapper shows how social media is used in money laundering. Real name Maksim Boiko, a 29 year old Russian with no describable education or talent is pictured repeatedly with wads of cash in Instagram posts. Some might say this is a related cultural thing as he tries to imitate US rappers. But the story goes much deeper than that. Boiko is an interesting character. Raised in Serbia from a working class family, he has traveled extensively as can be seen from his social media presence. Paris, New York, China.

Boiko had expensive tastes. He drinks Moet, drives a Mercedes and wears a Hublet watch. All of which could be either fake or of course rented/loaned, but what stands out from his profiles is a propensity to like the finer things in life while simultaneously not having an income to support it – and yet support it he does.

While in Paris he posted on several job websites looking for work with a friend, “Two, strapping lads (21 & 22 years old) in search of work in the European Union. Currently we are in France but we’re prepared to go wherever there is a reasonable offer. No bad habits. We are open to any employment offers.”

It would appear this post changed his life dramatically. Probably picked up by an OCG and then he was ensnared in crime. He re-appears in China. It is suggested he was working as a ‘middle-man’ in the trade of goods between China and Russia but the movement of funds suggest otherwise. In one ‘cash’ transaction he sent his parents a ‘package’ that contained 1.5 million Roubles, given to them by an ‘associate’.

“Lots of people ask me, what am I doing in China and where does all the money come from,” (we bet they do!) Boiko wrote on VKontakte. He explained he had become a trading rep which for 10% commission he supplied Chinese goods to Russia. Boiko assured his readers the commissions were the source of his limitless and legal “hustle” – slang for making a profit.

However, the owners of the Russian company paying the commission were reluctant to state Boiko was an employee of theirs. They agreed he was in China and had done some work but distanced themselves from saying he worked for them. The volumes of cash he was being imaged with do not align with trading commission as an ‘ad-hoc’ employee – and why cash when clearly the business would be online international payments? Sometimes suspicion isn’t hard to find.

His arrest by the FBI has revealed much deeper links to the criminal underworld and a network that laundered over $4 billion. He was linked via social media and email to an organised criminal gang who’s stock-in-trade was fleecing Crypto currency (among other more traditional crime). The FBI have since linked him digitally to the group through iCloud, email accounts and images. Digital is frequently the investigators choice for evidence. Unlike traditional crime there is no DNA, fingerprints and trace evidence of a physical nature that links individuals. It is, to a large degree, painstakingly detailed digital investigation.

The above story details the use of digital communications and social media that organised criminals make. They also scan social media for intelligence on possible victims.

Social Engineering

Sean O’Neill is a fraud and security advisor with Bedfordshire Police.

‘I’ve visited people who have lost all their ISAs,’ O’ Neill says. ‘They are often in debt after the attack, after falling in love with somebody online. The average loss is £70,000.’

He refers to the scam of online love. A tactic used to lure vulnerable people into parting with cash in the hope of a lasting romance.

But social engineering isn’t the skill used to conduct the criminal act. It is the skill of identifying the victim. Criminals will scan through social media looking for the right ques to identify a lonely or vulnerable individual. Getting this first bit right helps them save wasted time trying to scam people who are more robust in their ability to spot a fraud and more able to withstand the torrent of lies.

Ques like age, wealth, single/divorced, posts indicating a search for love, an illness, bereavement or other life trauma, images of family and friends, places and people – all used to lure the victim in and create a back story for the criminal.

Don’t click it!

Shortened web links on social media can be dangerous. Criminals use these to get you to click and visit the malicious website, that will then infect your device. According to Websenses threat report, 32% of malicious links on social media are shortened URLs. Be careful what you click!

In more serious cases, criminals have used social media to lore people to locations that they wouldn’t have gone to and then sexually abuse or even murder them. A recent study of 61 homicides revealed startling detail of how predators lore victims, one as young as 12, to their death through creating false social media accounts and eventually engineering a meeting to violently attack the victim. Using direct references to sex or tactics seeking ‘pity’ from the potential victim are all used.

A study in 2011 identified that men looking to groom a child via the internet and social media, are generally under 30, white, single, employed and without a criminal record. Not someone that would ‘stand out in a crowd’.

A 2015 study identified homicides specifically facilitated through Facebook. The authors identified six personas for the suspects;

  • Reactors – Use an event to socially engineer the victim
  • Informers – Lore people by helping them.
  • Fantasists – Completely fabricated account.
  • Imposters – Posing as a friend in a hacked/cloned account
  • Predators – typically a male who has a ‘female’ facebook account.
  • Antagonists – An escalating argument that ends in a physical meeting.

In this post we have identified many forms of criminality that is enabled by Cyber and social media in particular. We have also briefly discussed what law enforcement do in terms of tracking digital evidence. Here at CYW Solutions we are working on a platform for the financial industry. This will network intelligence between institutes but also, crucially, use social media and the science of psychographics to identify links between people, entities, transactions and crime. We believe the use of this intelligence, appropriately graded will make the financial industry much safer and reduce significantly the options for crime. it would certainly have flagged Boiko much earlier in his alleged criminal pursuits.

Talk to us today to get an insight on what we are doing. And please do share and like this article if you found it interesting.

How to Technologically Enhance Money Laundering – to make it harder to trace illicit cash.

Technology enhanced money laundering

We’ve noticed that despite our target audience being the financial compliance industry, when we post with a heading to attract criminal attention, it gets read more!

So welcome to this post. In it we will discuss the steps that criminals take to use technology to hide their assets.

Firstly, a basic understanding of Placement, Layering and Integration are needed, you can find that here if you do not understand these three steps.

In the main, technology aids steps two and three. It helps criminals to layer their asset with repeated levels of trade of one sort or another. It then helps them to ‘cash out’ in the integration stage.

We do not make a distinction between a money launderer (professional) or a criminal (commits the predicate offence) other than simply. Similarly, with something like 150 definitions of an organised criminal or their enterprise, this post sets out to use the terms colloquially, inasmuch as any one of the three can act in any capacity so it’s fair to call them all criminals.

Europol define organised crime, not on a personal level as to state the activity of a single individual, but as to the commodities, groups and hubs that make up an OCG (Organised Criminal Gang). In the UK, the definition (loosely termed) relates to activity of a group rather than an individual or specific crime type. It more relates to criminals acting as groups at level two and above (above ‘street’ level crime and cross regional/international).

Money laundering is characterised as a secondary offence to the predicate offence that generated the illicit funds. It is a dynamic and flexible process with launderers actively adapting to fluctuating situational conditions. It is these dynamics that make it difficult to define, describe and prosecute. The levels of convictions are pitifully low globally and this is one area FATF are starting to push with the move to ‘Outcome’ based mutual evaluations at the national level.

As in our post describing the links between Nations that are high on the Corruption index and Bitcoin pricing, the links between laundering and regions that have lax controls and high levels of corruption are sought out by organised criminal groups to layer their transactions to conceal the real origin of the revenue. A research paper into Money Laundering has described it as the third largest industry globally, only oil and agriculture generate more revenue, this indicates just how professional the ‘sector’ is and the sometimes insurmountable odds the industry, regulators and prosecutors face.

Indeed it is these odds, and a nascent belief that the financial sector is inextricably and on occasion corruptly linked to OCGs that is forcing the political agenda to get tougher with sanctions and fines for firms that transgress and get caught. Certainly there are more huge fines than there are ‘bellies against the charge desk’ as I used to say in a former career.

I am going to deliberately steer away from the more obvious routes to launder money. This site covers the more obvious routes in other posts (search for money laundering in our search box and posts will come up). Instead I hope to show you more nuanced methods that a ‘professional’ launderer would use and hopefully point to ways for firms to identify those efforts.

It is obvious that the nearer the point to the actual criminal predicate offence, the more risk there is to laundering cash. The further the cash is layered, actually or digitally, the harder it is for an investigator to track the asset backwards. This is especially true of asset that moves across borders. It is also evident that the regulated sector, spends most of its time trying to detect this first placement into the system. Defeat the placement stage and the professional launderer has the odds stacked in his favour.

The key to laundering is therefore, the successful first step. To conceal it the launderer needs a Trojan horse. Digital transactions and cryptography along with ‘straw-men’ hide the identity of the original criminal. Again, in nations that have a large populous of poor communities, people are prepared to have their identity used as a placement vehicle; this influences the regional choices of OCGs. There are also cases showing more ‘middle class’ white collar workers prepared to lend their identities to support business transactions involving laundering transactions further into the layering process – this includes allowing legitimate business be used to clean money. It is these reasons that money laundering causes capital flight from an economy, investors fearful of the instability and risk attached to the market.

The Trojan Horse

Photocopier

A simple use of technology, a photocopier. Used in high value sales around the globe to prove the outlet checked the identity of the person purchasing- especially when paying in cash. It is a simple task to obscure the image of a passport, make it too dark or otherwise unidentifiable to help the launderer evade any future scrutiny. Purchasing gold, jewels and other high value goods.

Intelligent Deposit Machines

These machines were used to great effect in Australia where a gang used them to launder tens of millions of AUD. Enabling placement and movement of cash through the machines even when the banks were closed. The gang used a network of the machines at lower than threshold amounts to avoid suspicion.

e-commerce and mobile payments

OCGs setting up online storefronts that trade in transactions and not goods to help the launder layer his transactions in what appear genuine stores. No goods are actually moved. This problem is set to get worse as more fintechs operate in this space with a ‘less than conservative approach’ to regulations. One that shall remain unnamed even switched off its transaction monitoring for several months because it was alerting too much (!!)

Virtual World

An International internet payment provider was suspected of laundering on an industrial scale. Implicated were digital currency exchanges, precious metal dealers and more. The OCG had effectively infiltrated the entire system to move large sums in apparent legitimate trade.

Online Betting

An OCG used online betting and internet payment system to launder the proceeds of narcotic dealings. The gang used the two services to receive transactions and then move the funds offshore. In an investigation, it was found that two of the enterprises had the same registered physical address (our intelligence system would flag this as the transaction processed – even across institutional business lines). The gang transferred revenue acting as a remittance service and this disguised the origin of the transaction when the bank conducted the transactions. The gang also used the accounts to simply store funds, making passwords widely known so multiple members could draw on the accounts.

Sales Registers and CCTV

A nightclub had CCTV all over its premise except in the VIP lounge for ‘privacy reasons’. That lounge was then used to till up huge sums of cash transactions as ‘revellers’ purchased $800 champagne in huge quantities. Not so elaborate but an easy way to place cash into the legitimate system through bogus purchases of high value goods/services.

An old colleague of mine filmed a car wash over aperiod of several months to prove vehicles were indeed never washed there, helping to secure the conviction for the predicate offence and ML.

Elaborate ways to facilitate the first stage of money laundering are constantly evolving. As we have stated this is the most risky part of laundering. Not only because it’s the first and easy to trace back to the predicate offence, but also because policy focuses compliance agent attention on this first stage through transaction monitoring and identity checks.

Placement of the cash is the most risky stage of laundering

It is also likely the algorithms being adopted through machine learning technology are focusing on this ‘thick edge’ of transactions. At the front of the process. The more involved and professional launderer will adopt moving and flexible processes to move the money many times over, using no set pattern and through many jurisdictions, transaction types and institutes. This way, unless the whole financial sector had one Ai system, the individual systems in each firm will fail to spot the patterns of transactions/behaviour.

Other technologies are also being used by OCGs. From encrypted communications to virtual services and products and the darknet facilitating on a huge scale the market-place for many OCGs and their gang members.

It is safe to say that criminal gangs have business processes very similar to legitimate businesses. They use highly skilled financiers and skilled business people to move money and assets around as we have discussed previously in our post about cyber crime and money laundering.

This post only details a few examples of ‘how’ criminals use technology. It explains ‘why’ they use it. There is a much bigger study currently ongoing to identify the methods regulators, policy-makers and the industry can use to identify how to combat the professional OCG by understanding their methods. Unfortunately, my experience in these matters tends to lean me towards the opinion that this will be mostly wasted effort. The reason I say this is because;

  1. OCGs will know the models adopted before they are launched – they will almost certainly have informed people on the inside.
  2. The policy-setters will take far too long through bureaucratic channels to put something live.
  3. OCGs will adapt and change and this requires not a look to the past but an accurate prediction of the future to enable swift machine learning from new sets of learning data.

Here at CYW we are developing a networked system that will, for the first time, link the institutes intelligence together. With over 300 metrics to monitor from outside the sector, we will merge data and intelligence to pass it at the speed of transactions to enhance red flags and reduce false positives.

This is essentially providing public level enforcement typologies to the private sector to provide more effective and efficient means to stop transactions and put the onus on the criminal to prove it is innocent. It is our view this is the only way the industry can proceed to force change, cause reductions in criminal use of the financial system and increase the amount of seizures being made. stand alone transaction modelling, even with machine learning functionality, will be hampered by the lack of full data as money moves outside their dataset and comes back in again through different entitites/routes. The firm would have no way of tracking it outside of their own institute.

If you think this post is worthy of a like or a share we would really appreciate you taking the time to do so. We need more readers to influence the agenda.

Thank you.

See How Bitcoin and Corruption are linked.

See How Bitcoin and Corruption are linked.

In 2008 (yes only 12 years ago), Satoshi Nakomoto proposed a new electronic form of value that would allow two parties to exchange that value without the need for a financial institute to act as an intermediary.

Bitcoin was born.

There are of course lots of speculators that link Bitcoin to corruption, criminality and money laundering. But is anything they say backed up by actual evidence?

In this post we review a paper that compares the price of bitcoin and the traders within nations with high levels of corruption and lack of economic freedom. Is there a link? Read on to find out.

The author tested the hypothesis in 17 countries that rank highly for corruption in the Corruption Perception Index, lack of economic freedom in the index of economic freedom and changes in economic certainty in the economic certainty index. These measures are respected globally as a good indicator in their respective metric.

The period under examination ran from April 2017 to September 2018 and this gave the price of Bitcoin plenty of market movement, during the period Bitcoin valued at a high of $19000 in the US.

Of course the digital currency has had its fair share of controversy, not least the seizure of Bitcoin held by the infamous ‘Silk Road’ dark website, the rise and fall of Bitcoin exchange Mt Gox which filed for bankruptcy and other thefts of the currency, reported globally.

Clearly, because it provides anonymity, criminals are going to use it to transfer value secretly and help to clean their assets. But this paper posits the relationship to crime goes deeper.

The results of the study show a positive and significant link to traders being prepared to pay over the market value for Bitcoin in nations that are scored highly for corruption and lack of financial freedom. As corruption level goes up, so does the price and conversely, as corruption goes down, so does the price traders are willing to pay.

This is something which you could say is intuitive but it provides some empirical evidence that crime and Bitcoin are linked. The paper also uncovers, through prior research, that the prices for Bitcoin go up when the exchange requires less identification than one that completes more through CDD. This is probably due to supply and demand with the demand from criminal entities being more likely and willing to pay a higher cost and offset that loss as a cost to doing illegal business. This is one way to understand the link between the above cost of Bitcoin in markets in countries that suffer higher levels of Corruption.

Whether this provides regulators with a method to interrogate exchanges more thoroughly based on their locality is debate-able. With a new travel rule method apparently agreed it looks like virtual currencies and more specifically exchanges are set to be more transparent if they are to remain a viable medium of exchange. It would appear the best place to commence this would be in those high ranking corruption index nations.

Read the paper in full, the details of it are cited below.

Johnson, J. (2020). Bitcoin, corruption and economic freedom. Journal of Financial Crime, 27(1), 58-66.

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60 Best Money Laundering Research Papers, Books and web links.

60 BEST ANTI-MONEY LAUNDERING AND COUNTER TERRORISM FINANCING RESOURCES GLOBALLY

Research into money laundering goes deeper than reading ACAMS or Linkedin. Here we have provided links to the 60 Best Money Laundering Research Papers, books and web articles.

In the coming weeks we will be blogging about these articles and what they mean to the industry. Stay tuned and register with the site (bottom of the page) if you want to get our posts via your inbox (sent once a month only – no spam!)

We would really appreciate you sharing this resource if you find it useful – it took a long time to research!! Thank you. Simply use one of the sharing links or copy the web address and post about it.

NB: Scroll left and right for small screen views

Title & LinkAuthor & Link to BibliographyDescription
(scroll to left to read)
Money launderingM Levi, P Reuter – Crime and Justice, 2006 – journals.uchicago.eduTechniques for hiding proceeds of crime include transporting cash out of the country, purchasing businesses through which funds can be channeled, buying easily transportable valuables, transfer pricing, and using “underground banks.” Since the mid-1980s …
 Dirty money: The evolution of money laundering counter-measuresWC Gilmore – 1999 – ncjrs.govThe first chapter provides an overview of the problem, as it notes that estimates of money from criminal activities range from 300 to 500 billion US dollars annually, money that is available for laundering. Such quantities of money, often linked with organized crime …
How big is global money laundering?J Walker – Journal of Money Laundering Control, 1999 – emerald.comKnown incidents of money laundering involving large amounts of money generated from crime are of tremendous public interest and are consequently given wide publicity. A wide range of national and international agencies have attempted to quantify organised crime …
 Macroeconomic implications of money launderingPJ Quirk – Washington, Fondo Monetario Internacional, WP, 1996 – elibrary.imf.orgThis paper reviews the main analytical, empirical, and policy issues related to the macroeconomic implications of money laundering. The paper discusses, first, how money laundering can be measured, given that it is unobservable, and reports cross-section …
 Chasing dirty money: The fight against money launderingP Reuter – 2005 – books.google.comOriginally developed to reduce drug trafficking, efforts to combat money foundering have broadened over the years to address other crimes and, most recently, terrorism. In this study,[the authors] look at the scale and characteristics of money laundering, describe and …
 Money laundering: a new international law enforcement modelG Stessens – 2000 – books.google.comThis book gives a broad analysis of the legal issues raised by the international fight against money laundering. It offers an extensive comparative research of the criminal and preventive law aspects from an international perspective. Stessens portrays money laundering as a …
Money laundering: muddying the macroeconomyPJ Quirk – Finance and Development, 1997 – search.proquest.comIMF staff went to a small island country to assess economic developments. As they walked around the capital, they noticed a surprisingly large number of small banks (more than 100 in a country of less than 100,000 people). A year later, it was revealed that many of these …
Money laundering and its regulationM Levi – The Annals of the American Academy of Political …, 2002 – journals.sagepub.comThis article examines definitions of” money laundering” and the conceptual and actual role its regulation plays in dealing with drug markets. If laundering is prevented, incentives to become major criminals are diminished. It identifies and critiques three aspects of harm …
Money laundering: the economics of regulationD Masciandaro – European Journal of Law and Economics, 1999 – SpringerEconomic research has not yet systematically undertaken the analysis of the existing interactions between criminal economy and financial markets. The present work belongs to a research field increasingly interested in such issues and focuses on the economic analysis of money laundering …
Money laundering: some factsF Schneider, U Windischbauer – European Journal of Law and Economics, 2008 – SpringerThis paper tackles the quite difficult topic of money laundering. After defining money laundering, and after explaining the three stages (steps), placement, layering and integration, the paper tries a quantification and estimation of the volume and development of …
Money laundering and the international financial systemV Tanzi – 1996 – ideas.repec.orgThe IMF Working Papers series is designed to make IMF staff research available to a wide audience. Almost 300 Working Papers are released each year, covering a wide range of theoretical and analytical topics, including balance of payments, monetary and fiscal issues …
Measuring Global Money Laundering:” The Walker Gravity Model”J Walker, B Unger – Review of Law & Economics, 2009 – degruyter.comMeasuring global money laundering, the proceeds of transnational crime that are pumped through the financial system worldwide, is still in its infancy. Methods such as case studies, proxy variables, or models for measuring the shadow economy all tend to under-or …
Money laundering—a global obstacleB Buchanan – Research in International Business and Finance, 2004 – ElsevierOne of the biggest obstacles to maintaining an effective operating international financial system is money laundering. A global phenomenon and international challenge, money laundering is a financial crime that often involves a complex series of transactions and …
An inquiry into money laundering tools in the Bitcoin ecosystemM Möser, R Böhme, D Breuker – 2013 APWG eCrime …, 2013 – ieeexplore.ieee.orgWe provide a first systematic account of opportunities and limitations of anti-money laundering (AML) in Bitcoin, a decentralized cryptographic currency proliferating on the Internet. Our starting point is the observation that Bitcoin attracts criminal activity as many …
 Black finance: the economics of money launderingD Masciandaro, E Takats, B Unger – 2007 – books.google.com” The recent dramatic wave of terrorist attacks has further focussed worldwide attention on the money laundering phenomena. The objective of this book is to offer the first systematic analysis of the economics of money laundering and its connection with terrorism finance …
 Critical reflections on transnational organized crime, money laundering and corruptionME Beare – 2003 – books.google.comTransnational crime, organized crime, money laundering and corruption are four concepts that have gained and continue to gain an international and domestic profile. Is the information given to the public concerning these concepts distorted by the vested interests of …
 The amounts and the effects of money launderingB Unger, M Siegel, J Ferwerda, W de Kruijf… – Report for the Ministry of …, 2006 – ftm.nl0.4. The amount of money laundered is sizeable 0.5. Where is the criminal money being laundered and placed? 0.6. The Netherlands are a transit country of crime and criminal money 0.7. What are the effects of money laundering? 0.8. The long term dangers of money  …
The consequences of money laundering and financial crimeJ McDowell, G Novis – Economic Perspectives, 2001 – ncjrs.govMoney laundering is seen as critical to the effective operation of transnational and organized crime. However, money laundering effects a country’s economy, government, and social well-being. This article briefly reviewed both the economic and social costs of money laundering …
 Money laundering: A guide for criminal investigatorsJ Madinger – 2011 – books.google.comMany changes have occurred in the twenty-five years that have passed since the enactment of the Money Laundering Control Act of 1986. The law has been amended, new underlying crimes have been added, and court decisions have modified its scope. The Act remains an …
 The hawala alternative remittance system and its role in money launderingPM Jost, HS Sandhu – 2000 – peacepalacelibrary.nlThe components of hawala that distinguish it from other remittance systems are trust and the extensive use of connections such as family relationships or regional affiliations. Unlike traditional banking or even the’chop’system, hawala makes minimal (often no) use of any …
The fight against money launderingH Geiger, O Wuensch – Journal of Money Laundering Control, 2007 – emerald.comPurpose–To provide an economic view on the costs and benefits of anti‐money laundering (AML) efforts. Design/methodology/approach–Based on a international, comparative study conducted in Switzerland, Singapore and Germany, the authors outline the impact of AML …
Bitcoin and money laundering: mining for an effective solutionD Bryans – Ind. LJ, 2014 – HeinOnlineTechnology forges ahead at a rapid pace, whether we like it or not. Criminals recognize this inevitability and use technological improvements to advance their craft,’committing crimes from half a world away in real time. Meticulous criminals also use technological …
Corruption and money laundering: a symbiotic relationshipD Chaikin, J Sharman – 2009 – Springer
 Financial havens, banking secrecy and money-launderingJA Blum, M Levi, RT Naylor, P Williams – 1998 – amnet.co.ilThe major money laundering cases coming to light in recent years share a common feature: criminal organizations are making wide use of the opportunities offered by financial havens and offshore centres to launder criminal assets, thereby creating roadblocks to criminal …
A typological study on money launderingP He – Journal of Money Laundering Control, 2010 – emerald.comPurpose–The purpose of this paper is to make objective descriptions on various money‐laundering techniques and to put forward countermeasures in order to combat money laundering more effectively and efficiently. Design/methodology/approach–This paper …
 Reference guide to anti-money laundering and combating the financing of terrorismPA Schott – 2006 – elibrary.worldbank.orgThis second edition of the Reference Guide is a comprehensive source of practical information on how countries can fight money laundering and terrorist financing. Aimed at helping countries understand the new international standards, it discusses the problems …
 Money laundering policyPC Van Duyne – Fears and Facts, 2003 – petrusvanduyne.nlIt is difficult to argue about the nature of smells. Some of them do not even have names. But one kind of smell has certainly been nominated and changed in our appreciation: the ‘moral smell’of money. Today the adage ‘money does not smell’does not apply any more. Now we …
Responding to Money LaunderingE Savona – 2005 – books.google.comResponding to Money Laundering has its origin in the International Conference on Preventing and Controlling Money Laundering and the Use of Proceeds of Crime: A Global Approach organised by ISPAC, the International Scientific and Advisory Board of the United …
 Dirty money: the evolution of international measures to counter money laundering and the financing of terrorismWC Gilmore – 2004 – books.google.comThis is the third edition of this publication which explores key issues in the fast evolving field of money laundering and terrorist financing, and which has been restructured so as to fully reflect the high international priority given to tackling the financing of terrorism since …
Money laundering and globalizationP Alldridge – Journal of law and society, 2008 – Wiley Online LibraryThe article traces the various imperatives generated by the combination of the money laundering panic of the late 1990s with the advent of globalization. If there is to be an attempt legally to regulate laundering, it (laundering) must be a relatively serious offence …
Money launderingN Morris-Cotterill – Foreign Policy, 2001 – JSTORFrom Moscow to Buenos Aires, money laundering scandals sap economies and destabilize governments. Policymakers blame crime cartels, tax havens, and new techniques like cyberlaundering. But dirty money long predates such influences. Without unified rules …
The economics of crime and money laundering: does anti-money laundering policy reduce crime?J Ferwerda – Review of Law & Economics, 2009 – degruyter.comAnti-money laundering policy has become a major issue in the Western world, especially in the United States after 9-11. Basically, all countries in the world are more or less forced to cooperate in the global fight against money laundering. In this paper, the criminalization of …
 Dirty dealing: the untold truth about global money laundering, international crime and terrorismP Lilley – 2003 – books.google.comPraise and ReviewsEntertaining, well written and well presented.JOHN MULQUEEN, The Irish TimesPaints an alarming picture of the power and scale of todays crooked and corrupt financial world. Lilley has done his homework.THE IODS DIRECTOR MAGAZINESChoice of …
System and method for analyzing and dispositioning money laundering suspicious activity alertsBJ Kloostra, C Dalvi, BN Behm – US Patent App. 12/258,784, 2009 – Google PatentsA system and method for analyzing, dispositioning, recording, reviewing, and managing potentially suspicious financial transactions. In some cases, the system models the steps taken by a subject matter expert to reach a conclusion so that a novice can follow similar …
A theory of “Crying Wolf”: The economics of money laundering enforcementE Takáts – The Journal of Law, Economics, & Organization, 2011 – academic.oup.comThe article shows how excessive reporting, called “crying wolf”, can dilute the information value of reports and how more reports can mean less information. Excessive reporting is investigated by undertaking the first formal analysis of money laundering enforcement …
Power and discourse in policy diffusion: Anti-money laundering in developing statesJC Sharman – International Studies Quarterly, 2008 – academic.oup.comTwenty years ago not a single country had a policy against money laundering; currently, over 170 have very similar anti-money laundering (AML) policies in place. Why have so many countries with so little in common adopted the same policy so rapidly? This extensive …
 Global financial crime: terrorism, money laundering and offshore centresD Masciandaro – 2017 – books.google.comThe scope for financial crime has widened with the expansion and increased integration of financial markets. Money laundering, terrorism financing and tax crime have all changed in both nature and dimension. As new technologies reduce the importance of physical …
AI fights money launderingJ Kingdon – IEEE Intelligent Systems, 2004 – ieeexplore.ieee.orgThe bank had approached Searchspace, formed by re- searchers from the Intelligent Systems Lab at University College London in 1993. It applies adaptive and learning- systems approaches to a range of business and finance tasks. However, until then, we had principally developed …
 Transnational criminal organizations, cybercrime, and money laundering: a handbook for law enforcement officers, auditors, and financial investigatorsJR Richards – 1998 – books.google.comWRITTEN BY A LAW ENFORCEMENT PROFESSIONAL FOR OTHER LAW ENFORCEMENT PERSONNEL IN THE TRENCHES This book examines the workings of organized criminals and criminal groups that transcend national boundaries. Discussions …
Trade-based money laundering and terrorist financingJS Zdanowicz – Review of law & economics, 2009 – degruyter.comMoney laundering can be defined, generally, as the process of concealing the existence, illegal source, or application of income derived from a criminal activity, and the subsequent disguising of the source of that income to make it appear legitimate. Deception is the heart of …
The tenuous relationship between the fight against money laundering and the disruption of criminal financeMF Cuéllar – J. Crim. L. & Criminology, 2002 – HeinOnlineThis article examines the fight against money laundering as a case study of the separation between an enforcement system’s objectives and performance. To launder money is to hide its illegal origin. The fight against money laundering is supposed to disrupt laundering in its …
 Detecting money laundering and terrorist financing via data miningJS Zdanowicz – Communications of the ACM, 2004 – dl.acm.orgThe use of international trade to move money, undetected, from one country to another is one of the oldest techniques used to circumvent government scrutiny. Either overvaluing imports or undervaluing exports can achieve this transfer. If an imported prod- uct is overvalued, the foreign …
Money laundering regulation: the micro economicsD Masciandaro – Journal of Money Laundering Control, 1998 – emerald.comThe analysis of the interactions between the criminal economy and the financial markets has not yet been systematically studied by the economists. This study belongs to a current research interested in this area, ie the economic analysis of money laundering. The work is …
Money laundering: The crime of the’90sGR Strafer – Am. Crim. L. Rev., 1989 – HeinOnlineIn the Money Laundering Control Act of 1986,’codified at sections 1956 and 1957 of Title 18 of the United States Code, Congress for the first time attempted to define and prohibit a category of activity known colloquially as” money laundering.” During an election year frenzy …
Applying data mining in investigating money laundering crimesZ Zhang, JJ Salerno, PS Yu – Proceedings of the ninth ACM SIGKDD …, 2003 – dl.acm.orgIn this paper, we study the problem of applying data mining to facilitate the investigation of money laundering crimes (MLCs). We have identified a new paradigm of problems—that of automatic community generation based on uni-party data, the data in which there is no direct …
Turnover of organized crime and money laundering: some preliminary empirical findingsF Schneider – Public choice, 2010 – SpringerAfter a short literature review, the paper quantifies the turnover of organized crime with the help of a MIMIC estimation procedure for the years 1995 to 2006 for 20 highly developed OECD countries. The volume of turnover from organized crime was US-270billionintheyear1995forthese20OECDc …
Money laundering: an international challengeLA Barbot – Tul. J. Int’l & Comp. L., 1995 – HeinOnlineIn the words of South American drug barons,” dirty money is best passed through clean hands.” 1 Money laundering is often defined as” the process by which one conceals the existence, illegal source or illegal application of income, and then disguises that income to …
Money laundering and its regulationA Chong, F Lopez‐De‐Silanes – Economics & Politics, 2015 – Wiley Online LibraryThe recent wave of terrorist attacks has increased the attention to money laundering activities, and the role played by the regulatory frameworks controlling feeder activities. We investigate empirically the determinants of money laundering and its regulation in close to …
 Money laundering: a concise guide for all businessD Hopton – 2009 – books.google.comWorldwide, anti-money laundering regulations and legislation have become one of the weapons of choice of governments that are fighting global terrorism and criminality. In this updated edition of Money Laundering, Doug Hopton explains how The Money Laundering  …
Virtual money laundering: the case of Bitcoin and the Linden dollarR Stokes – Information & Communications Technology Law, 2012 – Taylor & FrancisThis paper presents an analysis of the money laundering risks of two virtual currencies, the Linden dollar, the in-world currency of the interactive online environment Second Life, and Bitcoin, an experimental virtual currency that allows for the transfer of value through peer-to …
 Anti-Money Laundering: international law and practiceWH Muller, CH Kalin, JG Goldsworth – 2007 – books.google.comAnti-Money Laundering is the definitive reference on money laundering and practice. First an outline will be given of the general approach taken by supra-national organisations like the United Nations and the European Council. Next the approach taken by international …
 Crime, illicit markets, and money launderingP Williams – Managing global issues: Lessons learned, 2001 – carnegieendowment.orgPhil Williams organized crime is perhaps best understood as the continuation of commerce by illegal means, with transnational criminal organizations as the illicit counterparts of multinational corporations. During the 1990s, transnational organized crime—and the …
 Criminal finance: The political economy of money laundering in a comparative legal contextK Hinterseer – 2002 – books.google.comLike it or not, money launderers are major players in the world’s economy. Their strategies constrain national economic policies and undermine financial institutions. With the advent of secure transfer technologies, and with the help of modern financial theories of derivatives …
A comparative guide to anti-money launderingM Pieth, G Aiolfi – 2004 – academia.eduMoney laundering is the process by which criminals attempt to conceal the source and ownership of the proceeds of their illicit activities; if successful, the criminal maintains control and access to these funds when and where he chooses. The efforts to combat this …
 Money launderingFAT Force – Policy Brief July 1999, 1999 – bahamasb2b.comThe goal of a large number of criminal acts is to generate a profit for the individual or group that carries out the act. Money laundering is the processing of these criminal proceeds to disguise their illegal origin. This process is of critical importance, as it enables the criminal to …
Money Laundering: The Scope of the Problem and Attempts to Combat ItS Sultzer – Tenn. L. Rev., 1995 – HeinOnlineMoney laundering is the process of taking the proceeds of criminalactivity and making it appear legal. Money laundering has been called the” lifeblood” of crime because, without cleansing the profits of crime, the criminal enterprise cannot flourish. While drug money  …
Money laundering law: Forfeiture, confiscation, civil recovery, criminal laundering and taxation of the proceeds of crimeP Alldridge – 2003 – Bloomsbury Publishing
Money laundering and financial means of organized crime: some preliminary empirical findingsF Schneider – Paolo Baffi Centre Research Paper, 2008 – papers.ssrn.comAfter giving a short literature review, the paper tries a quantification of the volume of money laundering activities, with the help of a DYMIMIC estimation procedure for the years 1995 to 2006 for 20 highly developed OECD countries. The volume of laundered money was 273 …
Money‐Laundering: Estimates in FogPC Van Duyne – Journal of Financial Crime, 1994 – emerald.comThe paper examines certain problems in determining the extent of money‐laundering. The author first discusses the methodological problems inherent in assessing its volume. He then discusses two methods to estimate the extent of money‐laundering. One method is …

Financial Crime Solutions

Financial Crime Solutions

What Financial Crime Solutions are Available?

The world of finance moves so fast with speed of light transactions how on earth can anyone counter financial crime? You’ve found the right place as we point to some detail to help you to fight financial crime and find the solution that meets your needs.

Preventing Financial Crime

We have written extensive mitigation controls to help our clients reduce the opportunity for financial crime occurring in their business. Talk to us to help you.

Improving Monitoring to Reduce Financial Crime

It’s not all about banking and transaction monitoring. The focus always goes to that. And yet the criminal knows it. Sophisticated criminals will get around transaction monitoring easily. You need to be smarter. Talk to us about how we can help you solve your issues.

Maybe the Solution is Internal?

Just take a look at the darkweb and you will see there is a volume of financial professionals working to clean dirty money and assets and selling their services to the highest bidder. We can route them out of your business. Forever.

Talk to us today to make your life less stressful – we have the financial crime solution for you.

AML-Resources U to Z

AML Resources U to Z

A to EF to JK to OP to TU to Z

Bring yourself up to date with this useful list of AML resources and help documents. We design training packages for your staff, the below is just a small section of our knowledge base. It is important to consider your requirement for bespoke training aligned to your risk.

See our training page to book some training

U

  • United Nations Convention Against Corruption
  • United Nations Convention Against Illicit Traffic in Narcotic Drugs and Psychotropic Substances
  • United Nations Convention for the Suppression of the Financing of Terrorism
  • United Nations Convention Against Transnational Organised Crime and the Protocols.

V

W

  • SEC Rules on Whistle-blowing
  • Wolfsberg Private Banking Principles. – The Principles were initially formulated in 2000 (and revised in 2002) to take into account certain perceived risks associated with private banking. Such risks continue to warrant appropriate levels of attention, no less today than ten years ago. Regulators continue to expect strong anti-money laundering standards, robust controls, enhanced client due diligence and suitable AML policies and procedures. The Wolfsberg Principles detail the groups considerations. –
  • Wolfsberg Guidance on Sanction Screening

X

Y

Z

A to EF to JK to OP to TU to Z

AML-Resources K to O

AML Resources K to O

A to EF to JK to OP to TU to Z

Bring yourself up to date with this useful list of AML resources and help documents. We design training packages for your staff, the below is just a small section of our knowledge base. It is important to consider your requirement for bespoke training aligned to your risk.

See our training page to book some training

K

L

M

N

  • New Zealand – Audit of AML/CTF programs and risk assessments

O

  • OECD – Standard for Automatic Exchange of Financial Account Information in Tax Matters
  • Organised Crime – United Nations Convention Against Transnational Organised Crime and the Protocols.-

A to EF to JK to OP to TU to Z

AML-Resources F to J

AML Resources F to J

A to EF to JK to OP to TU to Z

Bring yourself up to date with this useful list of AML resources and help documents. We design training packages for your staff, the below is just a small section of our knowledge base. It is important to consider your requirement for bespoke training aligned to your risk.

See our training page to book some training

F

G

H

I

J

A to EF to JK to OP to TU to Z

AML-Resources P to T

AML Resources P to T

A to EF to JK to OP to TU to Z

Bring yourself up to date with this useful list of AML resources and help documents. We design training packages for your staff, the below is just a small section of our knowledge base. It is important to consider your requirement for bespoke training aligned to your risk.

See our training page to book some training

P

  • PEPs. FATF guidance on PEPs –
  • POLICY – An Anti-Money Laundering and Terrorist Financing Policy is the document that guides all AML activity and helps your organization guide staff. It is a critical document that should detail a lead from the top of the organization. Below we provide three institutional policies for you to peruse contrast and compare (the first is a Real Estate policy, the second/third are banking policies) . We make no comment on the quality. We provide this service for you to reassure you, your policy will meet the required regulatory rigour.
  • AML/CTF Policies and Procedures template – Seek our advice before using this. –

Q

R

  • Real Estate Policy Template. NB: Seek advice this is a guide only.
  • Risk Assesment and AML/CTF program audits – New Zealand
  • Risk Assessment – BSA/AML Example – for a bank. We do not warrant the quality of this document. –

S

  • Securities Exchange Commission Rules on Whistle-blowing
  • Guidance on Sanction Screening from Wolfsberg –

T

  • Standard for Automatic Exchange of Financial Account Information in Tax Matters OECD
  • Template for AML program for a small firm – US centric NB- We do not warrant the quality of this document. You must seek our advice.
  • Template for AML/CTF Policies and Procedures – Seek our advice before using this. –
  • Template for Real Estate AML/CTF Policy. NB: Seek our advice this is a guide only.
  • Terrorism. United Nations Convention for the Suppression of the Financing of Terrorism –
  • Transparency International Exporting Corruption Report
  • Company Trusts. FATF guidance on Company formation agents and Trusts – A risk based approach to their work and the risk they face in the climate to remove hidden Beneficial Ownership. For a summary and the full report go here, or download the full report.

A to EF to JK to OP to TU to Z

What are the best Money Laundering Schemes?

Money Laundering Definition

What are the best Money Laundering Schemes?

Best money laundering schemes
Best money laundering schemes

To keep this post quick and easy to read we’ve put all the schemes we can think of in a table and provided links to more content to find out how they work.

We’ve also provided a column explaining how the authorities, or even the banks could find out money was being cleaned.

Read on to find out what are the best money laundering schemes…

SchemeResourcesSectorDetect itLearn more
Cum ExInvestment accounts. Claim tax back on dividend revenue more than once. InvestmentsTrack short selling and same buyer/seller chain repeatedly transacting. Link
Bitcoin or otherCrypto wallet. Wash asset through bitcoin tumbler repeatedly across exchanges and borders. CryptoVery difficult tracing. Repeat buying and selling of Crypto with fiat currency exchanged as cash out. Link
Gift CardPurchase Gift cards with dirty money and sell them on the darknet or on exchange sites for less, cashing out. RetailRepeat purchases of giftcards and cash out receipts into legit accounts.Link
Cash businessA restaurant, gas station, car cleaning business etc.RetailOver average business income. All cash deposits. Deposits from outside the business area. Link
SmurfingPeople to deposit cash.DepositsDeposits away from business area. Multiple under threshold deposits.
Black Market exchangeA currency exchange network. Give dirty money to the exchange who uses it to purchase legitimate business contracts in that country. Country of origin legit business then pays for the contracts in local currency. Exchanger then gives that clean local currency to the original criminal (usually drug trafficker in Sth America) CurrencyRepeat deposits from the same exchanger. Unregistered currency exchange. High cash turnover.
Hawala exchangeSimilar to the above. Unregistered usually Asian market. CurrencySimilar to the above.
Gig economyEmploy a Uber taxi or AirBnB owner to take bogus bookings for a fee. Keep the returned clean money. GigGig business depositing large amounts over their usual amount. Over average refunds from bookings. Vehicle tracking. Link
Service sectorSell bogus services that do not take place in return for dirty money. Service sectorUnusual high value receipts. Out of the norm deposits. Out of the norm business.
Trade businessA registered business. Under or over invoice to transfer cash without product or serviceBusinessPort data. Trading in risk geographies. Customs data. Credit note discrepancies. Out of sector business.Link.
TrustsRegister personal assets in the trust to avoid tax. Planes, yachts. Register in tax havens and do not declare to authorities. Hide as a business asset. BusinessAsset base of trusts registered by nominee or law firms to hide beneficial owner.
Shell companyRegister company and use just to move money through complex transactions and loan arrangements. Have nominee directors to hide your identity or create a chain of businesses to ‘won’ each other with shares below 25% to avoid registration requirements. BusinessComplex and repeated business transaction of high value between offshore business. No natural person identification.
LoansSet up a company offshore as your employer. All payments for your work through the company. Get paid as a loan that you will never settle. They can’t tax a loan. BusinessPayments from offshore business each month with no apparent business conducted.
Real EstateBuy real estate with dirty money and hide behind offshore business as the owner. Avoid tax and clean dirty money. Real EstateHigh cost property purchase for no apparent business reason by a business. Offshore business purchasing it. No absolute beneficial owner.
Rental or renovateBuy and sell real estate within a network to move money. Purchase price improved by ‘renovations’ . Rent it to non-existent people to clean income. Real EstateProperty in a geography nt conected to the business. Frequently offshore beneficial owner.
Private ATMUse dirty money in your atm. Withdrawals to the general public transfer the cash into banking deposits of clean money. BusinessOver average withdrawals. Over average cash deposits in the machine. Unexplained business ‘profits’.
CasinoBuy chips with dirty money, place one bet and cash out with clean. GamblingRepeat deposits from gambling business.
Mirror tradingBuy and sell the same shares through complex web of accounts to maintain net neutrality but spending dirty money and replacing with clean.InvestmentsRepeat spending and returns from brokers with little in terms of revenue difference. Short term investments in what should be a long term position. Link
Risk jurisdictional tradingReceiving or depositing assets in risk jurisdictions. Gold in a location that doesn’t mine it is one example. TradeFrequent transactions with ‘risk’ jurisdictions for no apparent business aim.
InvoicingCreate fake invoices to take legitimate cash out of a business and use personally. Replace with false sales coming in. BusinessRepeated deposits to the same ‘business’ account

Of course for all money laundering schemes there are various databases and tools to deploy to combat them. Be that a fraud or sector database. The key is to employ them in a whole solution so searches are conducted once and do not rely on human interaction to miss-spell or other.

There are many methods to hide dirty money in the legitimate economy. If you suspect someone is laundering money through your business talk to us to help you.