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Defendant Sentenced to 48 Months Imprisonment for Defrauding American Express of More Than $4.7 Million

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On August 5, 2022, defendant Jasminder Singh of Freemont, California, was sentenced to 48 months for bank fraud and money laundering. According to evidence presented at trial, Singh created four businesses and used ten American Express credit cards in those entities’ names to purchase thousands of Apple iPhones. He sold the devices overseas for millions of dollars. 

Between November 2017 and December 2019, Singh misrepresented to American Express his inability to repay over $4.7 million in charges from his purchases. To conceal the money he obtained from selling iPhones, the defendant “used a series of financial transactions.” The proceeds of his fraudulent scheme were used to pay for personal expenses and buy luxury items, including a $1.3 million home and a luxury vehicle.

In addition to his prison sentence, Singh was ordered to pay restitution to American Express in the amount of $4,651,845.08 and forfeit $3,018,602.22.

First-party fraud

Singh’s scheme is an example of first-party fraud, where an entity knowingly misrepresents its identity or gives false information for financial or material gain. According to consumer credit reporting company Experian, first-party fraud can occur at three times the rate of third-party fraud.

Types of first-party fraud include:

  • Creating a synthetic, or fictitious, identity that is used to access credit or other financial services
  • Allowing credit loans to intentionally default to avoid payments
  • Opening several new accounts after building a good credit history and then ceasing to make payments

FinCEN’s AML/CFT National Priorities

On June 30, 2021, the Financial Crimes Enforcement Network (FinCEN) published the first US government-wide list of national priorities for anti-money laundering and counter-terrorism financing (AML/CFT) and the Bank Secrecy Act (BSA). In this list, combatting fraud is highlighted as a priority because crimes that involve fraud generate the most significant volume of illegal proceeds. These include bank fraud, consumer fraud, health care fraud, payment fraud, and tax fraud

Also of principal concern to FinCEN is deterring internet-based fraud, including fraud related to synthetic identities and other forms of identity theft. More information on the risks linked to these typologies can be found in the 2022 National Money Laundering Risk Assessment

Key takeaways

Compliance teams should ensure their fraud and AML operations are aligned. By coordinating the two functions and analyzing the intersection between fraud and money laundering, financial institutions can reduce false positives, increase the speed of customer onboarding, and better identify potential risks earlier in the customer lifecycle. Learn more about the convergence of fraud and money laundering here.

Additionally, compliance staff should be aware of the possible increase in first-party fraud owing to inflationary pressures on household budgets. Ensuring compliance tools are calibrated to detect common first-party fraud red flags is crucial to combat this growing typology. 

 

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On August 5, 2022, defendant Jasminder Singh of Freemont, California, was sentenced to 48 months for bank fraud and money laundering. According to evidence presented at trial, Singh created four businesses and used ten American Express credit cards in those entities’ names to purchase thousands of Apple iPhones. He sold the devices overseas for millions of dollars.  Between November 2017 and December 2019, Singh misrepresented to American Express his inability to repay over $4.7 million in charges from his purchases. To conceal the money he obtained from selling iPhones, the defendant “used a series of financial transactions.” The proceeds of his fraudulent scheme were used to pay for personal expenses and buy luxury items, including a $1.3 million home and a luxury vehicle. In addition to his prison sentence, Singh was ordered to pay restitution to American Express in the amount of $4,651,845.08 and forfeit $3,018,602.22.

First-party fraud

Singh’s scheme is an example of first-party fraud, where an entity knowingly misrepresents its identity or gives false information for financial or material gain. According to consumer credit reporting company Experian, first-party fraud can occur at three times the rate of third-party fraud. Types of first-party fraud include:
  • Creating a synthetic, or fictitious, identity that is used to access credit or other financial services
  • Allowing credit loans to intentionally default to avoid payments
  • Opening several new accounts after building a good credit history and then ceasing to make payments

FinCEN’s AML/CFT National Priorities

On June 30, 2021, the Financial Crimes Enforcement Network (FinCEN) published the first US government-wide list of national priorities for anti-money laundering and counter-terrorism financing (AML/CFT) and the Bank Secrecy Act (BSA). In this list, combatting fraud is highlighted as a priority because crimes that involve fraud generate the most significant volume of illegal proceeds. These include bank fraud, consumer fraud, health care fraud, payment fraud, and tax fraud Also of principal concern to FinCEN is deterring internet-based fraud, including fraud related to synthetic identities and other forms of identity theft. More information on the risks linked to these typologies can be found in the 2022 National Money Laundering Risk Assessment

Key takeaways

Compliance teams should ensure their fraud and AML operations are aligned. By coordinating the two functions and analyzing the intersection between fraud and money laundering, financial institutions can reduce false positives, increase the speed of customer onboarding, and better identify potential risks earlier in the customer lifecycle. Learn more about the convergence of fraud and money laundering here. Additionally, compliance staff should be aware of the possible increase in first-party fraud owing to inflationary pressures on household budgets. Ensuring compliance tools are calibrated to detect common first-party fraud red flags is crucial to combat this growing typology.    [cta_card title="Spotlight on Financial Crime" cta_img="" category="" bodytext="Stay on top of regional trends and novel criminal techniques so you can protect your business from financial crime." cta_text="Download now" cta_url="https://complyadvantage.com/insights/the-state-of-financial-crime-2022/"]

Originally published August 12, 2022, updated August 12, 2022

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