State of Financial Crime 2023 Report

$130 Million Seized from Cybercriminals in Global INTERPOL Police Operation

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INTERPOL’s latest police operation to tackle online fraud has seen 975 arrests and the seizure of virtual assets worth almost $130 million. Codenamed Operation HAECHI-III, the 5-month-long joint task force targeted a specific range of cyber-enabled financial crimes, including voice phishing, sextortion, romance scams, investment fraud, and money laundering associated with illegal online gambling.

The operation’s participating countries included Australia, China, Japan, Korea, Malaysia, the Philippines, Singapore, and Thailand. 

Operation HAECHI-III follows two other INTERPOL-coordinated operations that also focused on tackling online fraud. In May 2021, Operation HAECHI-I resulted in more than 1,600 frozen bank accounts and 585 arrests. Over six months, the police intercepted $83 million in illicit funds transferred from victims to the perpetrators of cyber-enabled financial crime. 

In November 2021, Operation HAECHI-II saw police arrest more than 1,000 individuals and intercept nearly $27 million of illicit funds.

Operation HAECHI-III 

During the operation, investigators reported a significant rise in fraudulent investment schemes carried out through instant messaging apps – where encrypted information is exchanged to promote the use of cryptocurrency wallets for payment. Other emerging online financial crime trends discovered included variations on impersonation scams, romance frauds, and sextortion. 

In one investigation linked to the operation, police arrested two fugitives suspected of defrauding 2,000 Korean victims of approximately $28 million in November. The two suspects were involved in an international Ponzi play that ran via social media chat rooms to promote a pyramid scheme that encouraged users to join and invite others between 2016 and 2020

Global Asset Recovery Initiatives 

Speaking at the FATF-INTERPOL Roundtable Engagement (FIRE) in September 2022, the Financial Action Task Force (FATF) announced the launch of a new joint initiative with INTERPOL to prioritize cross-border tracing, seizure, and confiscation of criminal assets. 

Currently in its pilot stage, INTERPOL’s Anti-Money Laundering Rapid Response Protocol (ARRP) was particularly lauded by the roundtable delegates. Utilized in Operation HAECHI-III, the ARRP enables police agencies from different countries to work together and handle requests to trace, intercept, or provisionally freeze illicit proceeds of crime. Deployed for the first time in early 2022, the ARRP was initially developed alongside the police in South Korea to fight cyber fraud. 

According to INTERPOL, since January 2022, the ARRP has helped member countries recover more than $120 million in criminal proceeds from cyber-enabled fraud.

Going forward, the FATF noted the importance of strengthening its standards so that countries are better equipped to act effectively at every stage of the asset recovery process. Across the two-day conference, delegates also discussed the need to:

  • Promote national policies and actions that prioritize the tracing, seizure, and confiscation of criminal assets
  • Enhance operational cooperation at national, regional, and international levels
  • Increase effective information sharing among public authorities and the private sector

Red Flags and Behavioral Indicators

In April 2022, AUSTRAC issued guidance on Preventing the Criminal Abuse of Digital Currencies to help financial service providers identify, target, and disrupt transactions associated with financial crime and money laundering using digital currencies. According to the guidance, over 10,000 reports of digital currency-related scams, including romance scams, were filed in 2021, with losses totaling over $129.4 million. 

The guidance also includes a list of behavioral indicators linked to cyber scams, including:

  • Customers that do not fit the usual profile of a digital currency trader/investor (e.g., a vulnerable customer or someone with limited knowledge of digital currency)
  • Elderly or financially vulnerable customers engaging in high-volume digital currency transactions
  • Customers that advise they are using their digital currency to participate in an investment opportunity
  • Customers that demonstrate limited knowledge of digital currency during the onboarding stage but purchase digital currency quickly and transfer the funds to another digital currency address
  • Customers that advise they are employed to purchase digital currency on behalf of another individual or company
  • Customers that acknowledge they are sending funds to a friend or family in a high-risk jurisdiction

The Monetary Authority of Singapore (MAS) likewise addressed the live issue of crypto fraud in a recent reply to a parliamentary question on current measures being implemented to prevent crypto investment companies laundering money and committing fraud. In the regulator’s reply, MAS highlighted its close work with the police to combat cryptocurrency scams. Public advisories related to the topic have also been issued by MAS, alerting consumers to guard against fraudulent websites soliciting cryptocurrency investments.

Firms should ensure their compliance teams are well-trained in recognizing the red flags and behavioral indicators associated with cyber-enabled crime. Organizations may also consider reviewing their ongoing monitoring measures to ensure their system can detect and prevent fraudulent transactions within specific cybercrime scenarios. To stay on top of any emerging trends identified as inherent risks in a firm’s Enterprise Wide Risk Assessment (EWRA), compliance teams should review their system’s effectiveness to build new rule-based risk scenarios promptly. 

Originally published December 1, 2022, updated December 2, 2022

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