With the FCA pushing hard to tighten the noose on regulations surrounding crypto firms and cryptoasset providers, the crypto space has been the forefront of very interesting discussions about opportunities for money laundering through these decentralized forms of exchanges. At the same time, contemporary issues regarding the risks of fraudulent activity have once again captured the attention of the relevant authorities. Below are just a few standout examples of recent headlines showing how money laundering and fraud represent a danger to organisations and individuals alike. They help evidence why these topics stay firmly on the radar of the regulators.
Former Apple employee defrauds the tech giant for more than $10million
A 52-year-old employee who spent 10 years working as a buyer in Apple’s Global Service Supply Chain Department has been charged with defrauding the firm of over $10 million. Federal prosecutors claim that he managed to accomplish this over the period of his employment by “taking kickbacks, stealing equipment, and laundering money”.
Dhirendra Prasad is accused of abusing his position to defraud the company in several ways, such as “stealing parts and causing the company to pay for items and services it never received.” He is facing charges of engaging in a conspiracy to commit fraud, money laundering and tax evasion.
Two owners of Apple vendor companies have also admitted to having collaborated with this employee to commit fraud and launder money. It will be interesting to see, as this case progresses, if more vendor companies or Apple employees become embroiled in these charges.
US Treasury sanctions Russian-based darknet market
Aiming to curb and combat the growth of malicious cybercriminal activities, the US Department of the Treasury’s Office of Foreign Assets Control (OFAC) has sanctioned the world’s largest darknet market. Known as Hydra Market, it is based in Russia, and has actively aided and abetted criminals by providing a platform for cybercrime services, drugs, and illicit trade.
Darknet markets do not operate in the surface web, which is considered the safer place for users to explore and interact with. Instead, they operate in the dark web, which is a net hidden from search engines that requires a special browser and software with a decryption key to gain access and use. The growth of these markets is mind blowing, with Hydra’s revenue to have risen from under $10 million in 2016, to over $1.3 billion in 2020.
The large-scale operation that took place and involved a number of law enforcement organisations demonstrates the willingness and capacity of law enforcement to act within a space that was considered previously impossible to police. Hydra servers located in Germany have also been shut down and $25mil worth of Bitcoin seized.
Oxford University reveals potential £37 billion in Covid support schemes fraud from public funds
University of Oxford analysis indicates that a tenth of the total cost of the Covid Support schemes could have been taken fraudulently. This amounts to a staggering £37 billion taken right out of the public purse.
Criminal organisations who were committing fraud even prior to the pandemic soon became aware of the “reckless lack” of anti-fraud measures implemented by several public bodies. Consequently, huge amounts were siphoned from initiatives such as the Bounce Back Loan Scheme and Eat Out To Help Out in 2020 and 2021.
It is anticipated that 374 of these schemes were introduced by different government departments during 2020 and 2021, which the National Audit Office’s Covid Tracker is estimating to have cost £370billion to implement. Now, at least 10% of this value at around £37billion (or approximately one third of the NHS’s annual budget) is likely to have been lost to fraud.
FIAU fines Malta firm €94,000 over inadequate money laundering checks
N Trust, a Malta based financial services provider whose core business is the incorporation and administrative support of corporate structures, has been fined by the Financial Intelligence Analysis Unit (FIAU), after a suspicious investment setup was uncovered.
The investigation disclosed that seven customer records of the firm all had the same three beneficial owners, with a fourth added in 2019—and this fourth had no direct involvement in the customer companies and did not financially contribute to the investments. Moreover, N Trust did not carry out the necessary checks to monitor these business relationships and their client’s source of wealth and failed to provide proof of the origin of funds.
The number of red flags raised by the FIAU demonstrated a lack of robust anti money laundering procedures in the company’s framework, resulting in the fine.
London lawyer forged letter and tipped off client during probe
A solicitor has allegedly tipped off a client regarding the Serious Fraud Office’s plans to launch an investigation under the proceeds of crime act. The senior partner at London Law firm Osmond & Osmond, William Osmond, (who founded the firm in 2002), was charged with forging a legal letter and tipping off a client as to the contents of a pending SFO notice.
Anti-Financial Crime Support – How can Complyport Help?
Our experienced Financial Crime and Forensics team led by Martin Schofield—one of the world’s leading specialists in the field—brings a wealth of experience to every project we are engaged in. Our highly experienced financial crime professionals and forensic experts, in subjects such as anti-money laundering, counter terrorist financing, anti-bribery and corruption and fraud and regularly help our clients navigate the complexities of the financial crime and money laundering environment. Services offered by Complyport include:
- Financial crime health checks and audits,
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- Assistance in identifying Politically Exposed Persons (PEPs),
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- Support with preventing market abuse and insider dealing,
- Expert Witness in Financial Crime cases
- Forensics and Investigations
- Design and/or delivery of online or face to face financial crime training
If this article has raised any questions, or you think your firm may require assistance, please contact either Martin Schofield via martin.schofield@complyport.co.uk or Jan Hagen via jan.hagen@complyport.co.uk to book in a free consultation.
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