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When we talk about combating financial-economic crime, we usually tend to keep our eyes closed to two aspects, namely proportionality and the (political) protection of the stakeholder(s). An example is the commotion around the so-called Bulgarian’s fraud in the Netherlands. Dozens of Eastern-Europeans made use, or misuse if you want, of administrative shortcomings in the allowance system, which has been placed with the Dutch tax authorities. We are talking about several hundred euros per person.
At the same time, tens of billions of euros were flowing and flying across the oceans to tax havens. The same tax authorities adopted a strict formal stance and presupposed the good intentions of dearly paid tax lawyers and civil-law notaries. Obviously paid by ‘neat’ agencies, created by the Ultimate Beneficial Owners (UBOs), but it was often not clear who they actually were, especially if they could ‘enjoy’ certain forms of political protection. For the sake of convenience, we will leave out everything that has to do with ‘ruling’.
Think of the Payvison affair, which took quite some effort – especially of ING. Think also of the role that neat banks in Hong Kong play in financial crime. We can conclude that the saddest part of such financial crime is that all too often the 'protective' government – in this case the police – does not give up legislation. In many cases, the judiciary left the victims behind.
Neither any communication nor meeting
In the recent case of Payvision, the operating companies (merchants) of the fraudulous online trading scams have been shell companies with nominee directors and nominee shareholders. Although the majority of contracts between Payvision and the companies operating the scams were signed by these straw men, according to the statements made in the interrogations of these people, there was neither any communication nor meeting between them and Payvision. All communication, as well as agreement was directly with the UBOs behind the scams.
Perfect grounds for immense fraud activities
In another case, different organizations that represent the interests of victims of financial crime saw more than thirty Europeans with severe cases joining in no time. They were victimized by highly sophisticated and devious boiler room scams, which were coming from China – especially from its financial center, namely Hong Kong. The scammers routinely abused the reputation of this Asian financial metropolis.
By doing some research on this kind of scams, we noticed that by being a wonderful gateway between mainland China and the rest of the world and a well-known prospering investment place for Chinese technology companies, Hong Kong clearly set the perfect grounds for immense fraud activities at the expense of unsuspecting Europeans for many years now. Hundreds, if not thousands of Europeans have been transferring millions, if not billions of their life-time savings to Hong Kong banks, trusting in a safe and developed banking environment. Media reports about this kind of fraud occurring in Hong Kong date back to 2015.
The role of gatekeepers
The ease of forming companies in Hong Kong, of accessing mainland Chinese people who sell their identities and of account openings at reputable Hong Kong banks are obviously facilitators for this type of fraud scheme. However, the criminals would hardly have success if they could not take advantage of the negligent handling of the money laundering law and compliance rules by the involved Hong Kong banks.
In recent years, the financial damage caused in Europe due to this fraud scheme is estimated to be beyond EUR 100 million. European countries affected by this financial fraud are Austria, Belgium, Germany, Italy, the Netherlands and Switzerland.
It is clear that this type of large-scale fraud makes the role of gatekeepers even more important. Therefore, the question is: are money laundering and terrorist financing reports being made and if so, by whom?
Victims would do whatever they could to find ways to identify and recover their losses
Despite many attempts from both the victims and the lawyers to get the police and prosecutors to take on the cases, oftentimes a letter from the Court was received after many years. Apparently, solving this type of fraud was considered of no importance to society. With such letters, the victims got the impression that the hunting season for scammers was facilitated, by which they could attack innocent investors.
After being let down by the police and prosecutor, victims would do whatever they could to find ways to identify and recover their losses. The authorities seemed to have other priorities. In general, banks seemed not as eager to solve such matters and to reply accurately, using standard text emails and hiding behind insufficient protocols of privacy and KYC.
By means of private investigators, internet searches and through social media victims could find out that there were more victims out there and that this ‘disease’ of professional and large scale fraud has spread throughout Europe and most likely throughout the whole world, similar to COVID-19. Now, it is up to different lobby groups to represent the interest of victims and take charge.
About the authors: Dina-Perla Portnaar is responsible for senior editing, PR, podcasts and vodcasts and international sales at the Risk & Compliance Platform Europe. Michel Klompmaker is the publisher of the Risk & Compliance Platform Europe. He is responsible for managing all markets and people involved, for senior editing and a large scale of activities that the platform offers its clients and audiences.
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