Economic journal

Laundromats are complex systems for moving money that allow corrupt politicians, organized crime figures, and wealthy business people to secretly invest their ill-gotten millions, launder money, evade taxes, and fulfill other goals.

OCCRP (Organized Crime and Corruption Reporting Project) has previously exposed such schemes.

RUSSIAN LAUNDROMAT

OCCRP exposed the “Russian Laundromat” – an immense financial fraud scheme that enabled vast sums to be pumped out of Russia. The money was laundered and moved into Europe and beyond through bribery and a clever exploitation of the Moldovan legal system.

OCCRP and Novaya Gazeta obtained detailed banking records for more than 120 accounts that made up the Laundromat. The results are “The Russian Laundromat Exposed” – a project which reveals far more about how the scheme worked and where the money went. The stories explain how more than $20.8 billion was taken out of Russia and laundered, who got the money, and why some of the world’s largest banks failed to shut the scheme down.

THE TROIKA LAUNDROMAT

OCCRP and its reporting partners reveal a unique new Laundromat, created by a prestigious financial institution. This time, the work shows not only its beneficiaries but also exposes its mastermind and operator — Troika Dialog, once Russia’s largest private investment bank.

The scheme was discovered in a large set of banking transactions and other documents obtained by OCCRP and the Lithuanian news site 15min.lt. The data, which was compiled from multiple sources, represents one of the largest releases of banking information ever, involving some 1.3 million leaked transactions from 238,000 companies.

The main purpose of the system we’ve named the Troika Laundromat was to channel billions of dollars out of Russia. But it was much more than a money laundering system: The Laundromat allowed Russian oligarchs and politicians to secretly acquire shares in state-owned companies, to buy real estate both in Russia and abroad, to purchase luxury yachts, to hire music superstars for private parties, to pay medical bills, and much more.

To protect themselves, the wealthy people behind this system used the identities of poor people as unwitting signatories in the secretive offshore companies that ran the system.

Troika Laundromat: Vast Offshore Network Moved Billions With Help From Major Russian Bank, 4 March 2019

At first blush, Ruben Vardanyan and Armen Ustyan have nothing in common beyond their Armenian roots.

Vardanyan is a wealthy Russian banker who once led Troika Dialog, the country’s largest private investment bank. He’s spoken at the World Economic Forum in Davos and spent tens of millions of dollars on philanthropic projects in his native Armenia. Ustyan is a seasonal construction worker who shares a chilly apartment with his wife and parents in northern Armenia when he isn’t renovating flats in Moscow.

But Ustyan’s signatures on documents he says he’s never seen draw a direct line to Troika — and to a financial Laundromat that shuffled billions of dollars through offshore companies on behalf of the bank’s clients, many of whom were members of Russia’s elite. The system enabled people to channel money out of Russia, sidestep restrictions in place at the time, hide their assets abroad, and launder money. It also supplied cash to Russian President Vladimir Putin’s friends and powerful oligarchs, and enabled criminals to mask the illicit origins of their cash.

Ustyan’s name and a copy of his passport appear in the bank documents for an offshore shell company that played a role in Troika’s system. The company was one of at least 75 that formed the complex financial web, which functioned from 2006 to early 2013. Over that period, Troika enabled the flow of US$ 4.6 billion into the system and directed the flow of $4.8 billion out. Among the counterparties on these transactions were major Western banks such as Citigroup Inc., Raiffeisen, and Deutsche Bank. The dozens of companies in the system also generated $8.8 billion of internal transactions to obscure the origin of the cash.

https://www.occrp.org/en/troikalaundromat/vast-offshore-network-moved-billions-with-help-from-major-russian-bank

Money Laundering Act 2020

QUICK OVERVIEW

5th Anti-Money Laundering Directive (Amendments to the 4th Anti-Money Laundering Directive)

​The 5th Anti-Money Laundering Directive, which amends the 4th Anti-Money Laundering Directive was published in the Official Journal of the European Union on 19 June 2018. The Member States should have been transposed this Directive by 10 January 2020.

These amendments introduce substantial improvement to better equip the Union to prevent the financial system from being used for money laundering and for funding terrorist activities.

These amendments will: – enhance transparency by setting up publicly available registers for companies, trusts and other legal arrangements; – enhance the powers of EU Financial Intelligence Units, and provide them with access to broad information for the carrying out of their tasks; – limit the anonymity related to virtual currencies and wallet providers, but also for pre-paid cards; – broaden the criteria for the assessment of high-risk third countries and improve the safeguards for financial transactions to and from such countries; – set up central bank account registries or retrieval systems in all Member States; – improve the cooperation and enhance of information between anti-money laundering supervisors between them and between them and prudential supervisors and the European Central Bank.

Here you can find the factsheet on the main changes of the 5th Anti-Money Laundering Directive: • increase transparency about who really owns companies and trusts to prevent money laundering and terrorist financing via opaque structures; • improve the work of Financial IntelligenceUnits with better access to information through centralised bank account registers; • tackle terrorist financing risks linked to anonymous use of virtual currencies and of pre-paid instruments; • Improve the cooperation and exchange of information between anti-money laundering supervisors and with the European Central Bank; • Broaden the criteria for assessing high-risk third counties and ensure a common high level of safeguards for financial flows from such countries.

Preventing money laundering and terrorist financing scheme across the EU

Resources on Sanctions

EU sanctions: https://www.sanctionsmap.eu/

North Korea

ACAMS Today: https://www.acamstoday.org/2020-un-north-korea-panel-of-experts-report-takeaways-for-financial-institutions/ 2020 UN Report:  https://undocs.org/S/2020/151

Inside the Crypto-Kingdom: The Genesis, Documentary – What is bitcoin? Going back to the day Satoshi Nakamoto proposed a radical new form of electronic money. In the wake of a devastating financial crisis, an ecosystem would soon emerge across the globe. – The current hype about bitcoin and other cryptocurrencies as millions are made and lost make for great headlines, but misses the far more interesting story about the technology that allows them to exist, namely, blockchain. Why we should all care about the new emerging technology? Just as it’s difficult to do anything without the internet today, in 10 years, we might very well be saying the same thing about blockchain. Some see it as a revolution, others see the prospect of great profits, and many get lost in between – prey to scams, hacks, or naiveté. We travel across Latin America and Asia in search of the truth behind the hype.

Drug trafficking is big business, bringing in a fifth of all profits from organised crime. It ravishes communities, endangers businesses, strains government institutions, and drags down the wider economy. https://www.europol.europa.eu/crime-areas-and-trends/crime-areas/drug-trafficking/

– COCAINE AND HEROIN With a retail market estimated to be worth at least EUR 5.7 billion annually, cocaine is Europe’s most commonly used stimulant. Use of the drug may be declining slightly, but availability may be increasing. Coca-bush cultivation appears to be on the rise in the only countries it is produced in: Colombia, Peru and Bolivia. Exactly how much cocaine is produced is not clear, with varying and sometimes mutually contradictory estimates being produced.

Cocaine is trafficked to Europe by both sea and air, primarily via Colombia, Brazil and Venezuela. The Caribbean and West Africa are important transit areas, while Central America appears to be becoming more important. Cocaine is also trafficked via routes for other drugs, such as cannabis via North Africa and heroin through East Africa. Cocaine is smuggled into Europe in many ways, from air couriers and express packages to private yachts and jets. The use of maritime containers is of increasing concern. A huge array of concealment methods is used, including those that require chemical extraction. https://www.europol.europa.eu/crime-areas-and-trends/crime-areas/drug-trafficking/cocaine-and-heroin

National risk assessment of money laundering and terrorist financing of Lithuania issued by Financial Crime Investigation Service the Ministry of the Interior of the Republic of Lithuania.

Please see below some highlights from the report.

The national risk assessment assesses the money laundering and terrorist financing risks affecting the internal Lithuanian market and cross border activities that are of priority concern in Lithuania.

Geographical environment Lithuania is the most populous country of the Baltic States (approx. 2.8 million), which are situated in the eastern shore of the Baltic Sea in Europe. Lithuania covers an area of about 65,286 km2. Lithuania lays on the east shore of Baltic sea and borders with Latvia in the north, Belarus in the east and south, and Poland and the Kaliningrad region of the Russian Federation in the southwest. Economic environment Since renewed independence in 1991 and transition from a centrally planned to a market economy, Lithuania has substantially raised well-being of its citizens. Thanks to a market-friendly environment, the country grew faster than most OECD countries over the past ten years. The financial system is resilient, and fiscal position stabilized after a long period of deficits and rising debt. However, wage and income inequality are high, fueling emigration. The population is ageing fast and declining, particularly because of emigration. Each year, the labor force shrinks by 1% due to the rapid ageing and high emigration, requiring a comprehensive approach to the economic consequences.

Since 2015, Lithuania jumped thirteen places (from 24th to 11th) in World Bank ease of doing business index, start-up category globally5. Gross domestic product (GDP) per capita in Lithuania is 81% of the European Union (EU) average of EUR 16,606.1 ($19,089.76). Lithuania attracts foreign investors because of its skilled workforce, reliable infrastructure and a larger domestic market than the other two Baltic States. However, Lithuania is dominated by low-income levels – the average monthly gross wage is EUR 1,3177 (or EUR 833 net).

The financial sector in Lithuania is bank-centric (79.2 % of the financial system assets) and is largely concentrated around three foreign-owned banks. The banking services are mainly traditional and include trade financing, loans and deposits. The number and the value of the payments is growing each year. Banks have been reducing their non-resident customer base for de-risking purposes, thus the number of higher risk non-resident customers appears to be very low. Lithuania has the lowest number of foreign nationals and corporate (non-resident) deposits in the Baltic region (Lithuania 2.5%, Latvia 20.3%, and Estonia 7.3%). 

Overview of organized crime and TF in Lithuania Regular monitoring and analysis of organized crime by Lithuanian Criminal Police Bureau revealed that in 2018 most of the organized crime groups (OCG) have been involved in illicit drug trafficking and smuggling, theft of transport vehicles, smuggling of excise goods, illicit possession of firearms, extortion, theft abroad and robbery (which generates the largest illegal proceeds). As in previous years, the proceeds of crime are mainly used to improve the welfare of perpetrators. Also, members of OCG invest in legal  business: real estate trading, various brokerage services, and trucking companies to legalize proceeds of crime. Organized crime operates locally in the major cities, but is also expanding its operations abroad. The most popular foreign countries where the Lithuanian organized crime groups operate are Spain, Scandinavian countries, Germany, Netherlands and Russia.

Over the last three years, 419 persons, involved in crimes committed as organized groups or members of a criminal organization, have been registered in Lithuania (in 2017 – 185, in 2018 – 133, in 2019 – 101)

The Government of the Republic of Lithuania has ruled a low level of terrorist threat in Lithuania (ruling No. 93, 2015). No organized groups motivated by extremist ideologies with the intent and capacity to commit terrorist acts have been identified in Lithuania in the last four years. No information has been received regarding the direct threat posed by international terrorist organizations to Lithuania, as well as publicly disseminated threats of terrorist acts or calls for their execution against Lithuania. No data is available on persons leaving Lithuania for conflict regions or on recruitment to participate in terrorist activities abroad.

Lithuania faces an indirect risk from international terrorism, which has remained as a serious threat in Europe in 2019. The main sources of threat are the terrorist organizations: the Islamic State of Iraq and Syria, Al Qaeda and the Islamist groups that support them, and individual radicals in EU countries. Terrorism tendencies in the EU countries do not have a direct impact on the situation in Lithuania, however the security situations of the EU member states are interrelated. Supporters of Islamist extremism make use of the opportunity to move freely within the Schengen area, at the same time increasing risks – in Lithuania as well – such as radicalization, extremism propaganda, organizing logistics and financing, recruiting and forming extremist clusters or organizing illegal migration. Extremists can use Lithuania for transit, hiding, and planning attacks against other countries.

The State Security Department of Lithuania (later – SSD) estimates that, taking into account the above information on the terrorist situation, the level of terrorist financing risk in Lithuania is assessed as low. Since 2015, when the State Security Department of Lithuania submitted information for national risk assessment, no cases of financing of foreign terrorist organizations and sponsors in Lithuania have been identified. However, the risk of terrorist financing may arise even in the countries where the terrorist threat level is low, as funds generated by performing lawful activities or crime may be used to support terrorists. Terrorist financing schemes can be difficult to track down, for example through social networks, crowdfunding, charity or NGO cover, cryptocurrencies, electronic payment instruments, complex chains of transfers of funds.

Overview of STRs

The number of suspicious transaction reports (STR) and cash transaction reports (CTR) has increased significantly since the first NRA. These reports, created by various financial institutions, obliged entities and foreign financial intelligence units, have been sent to Financial Crime Investigation Service under the Ministry of the Interior of the Republic of Lithuania (FCIS). 

Trends revealed after the analysis of the received STRs: – Social engineering fraud. –  Fraud using cryptocurrency. – Shell companies and suspicious cash operations. For many years, this type of fraud has maintained their high tendency. During the financial operations analysis, suspicious Lithuanian companies were detected. Such companies’ representatives withdrew significant amounts of money from their bank accounts. These companies often were newly created or their managers and shareholders had just changed. In all of the cases, there were one of few employees and the firm did not provide filled declarations, did not pay taxes and did not have a physical location. Money which was transferred to the company’s bank account was immediately transferred to other firms in the criminal chain or withdrawn from automated teller machines (ATMs) in Lithuania. Such firms include international transfer of cargo, construction work, consultations, vehicles repair and other. – Money transit transactions. Some offshore companies and natural persons use foreign financial institution accounts as transit passages to complicate the identification of their recipient and the real transaction purpose. The money is transferred for no apparent reason or economic background to foreign bank accounts, from which the payment is made to the real beneficiary. – “Money mules”. This is a typology when the persons involved in criminal offence find and recruit the persons for financial operations. The FCIS receive reports on the individual persons of the Republic of Lithuania and the foreign citizens related to the Republic of Lithuania receiving or transferring suspicious money through money transfer systems. 

Cash transaction reports (CTRs) According to the PMLTFL, FCIS is informed about cash transactions, when the  ransaction amount is, or exceeds 15 000 EUR, or is an equivalent amount in a foreign currency. Looking at 2016-2019, the number of such reports has increased by 89 %. CTRs in banking sector have risen even more.

The Lithuanian AML/CTF system consists of four interconnected components: 1. The FIU, which is the main institution coordinating the implementation of money laundering prevention measures in the Republic of Lithuania; 2. The law enforcement and other state authorities; 3. The supervision and regulation authorities; and 4. The financial institutions and other entities.

The Financial Crime Investigation Service (“FCIS”) is a law enforcement body, which mission is to protect the state financial system by disclosing criminal actions and other violations of law. FCIS implements AML/CTF measures in order to establish an effective national AML system and ensure its proper functioning, as well as conducts pre-trial investigation of legalization of the property derived from criminal activity.

More info on: http://www.fntt.lt/en/money-laundering-prevention/lithuanian-national-risk-assessment-of-money-laundering-and-terrorist-financing/228

Europol issued  European Migrant Smuggling Centre Report 2019 that looks at the operations supported in 2019 and the intelligence gathered to draw the possible evolution of these crime areas in the near future. Below see some highlights from the report.

Key findings in MIGRANT SMUGGLING: – Due to enhanced border control measures and travel restrictions put in place throughout the EU21 (Covid 19 impact), a shift of smuggling activities is visible: from air to land and sea routes, as exemplified by increased arrivals in the Canary islands and via the Central Mediterranean Sea; to an increased use of small boats used to cross river borders and the English Channel; to hiding of irregular migrants in concealments in freight vehicles and cargo trains that still move across the borders. – Migrant smuggling attempts appear to have been reduced due to stricter border controls (Covid 19 impact), but smugglers are adapting their modi operandi and both migrant smuggling activities and human trafficking continues. – Unaccompanied minors are a highly vulnerable group and face various risks, including violence, abuse, and exploitation along migration routes towards and within the EU. Reception centres are frequently used to identify potential victims and/or to arrange further transportation of victims to the places of exploitation. – Europol has been witnessing an increase in reported migrant smuggling activities in secondary movements, mostly in the Western Balkans region and across  the English channel; these movements have mostly been facilitated by concealing migrants in closed compartments of vehicles. – Due to Covid 19 impact,  the closure of establishments offering legal sex work may increase the number of incidents of illicit sexual exploitation; travel restrictions complicate the seasonal work in the agriculture sector, possibly increasing the demand for trafficked third-country migrants in this area. – Sexual exploitation is the trafficking in human beings (THB) in the EU. The majority of the victims are EU nationals from eastern and central Europe, while non-EU victims are mainly from Nigeria where OCGs continue to considerably influence EU organised crime.

Facilitated illegal immigration On 23 October 2019, Essex Police in the United Kingdom detected 39 bodies inside a refrigerated trailer of a lorry, parked at an industrial estate east of London. Migrant smugglers constantly put irregular migrants’ lives at risk by transporting them in vehicles, such as overloaded cars, transporter vans and lorries in life-threatening conditions. The concealed smuggling of irregular migrants in vehicles is the most common practice for the facilitation of illegal immigration in the Western Balkans and neighbouring countries,  and across the English Channel.

Irregular migrants are frequently put into locked, dark and airtight cargo compartments in crowded, inhumane conditions, unsuitable for passenger transport. The types of compartments include cargo bays of lorries, trailers and transporter vans; hidden, purpose-built compartments in cars, vans or lorries; and boots and even engine compartments. The irregular migrants are usually transported for several hours without stopping to avoid apprehension. Migrant smugglers also frequently employ the general method of hiding irregular migrants in cargo compartments by misusing cargo trains for the transportation across the Western Balkans and neighbouring countries.

In the first quarter of 2020, smuggling in compartments remained the most widely used modus operandi in secondary movements from Greece, across the region towards northern EU countries, as well as across the EU and towards the UK.

In early 2020 we saw alleged attempts of Turkish authorities to facilitate large groups of migrants towards and across the Turkish-Greek land border, close to the Greek border crossing point Kastanies. Such attempts, either politically motivated or criminally organised, show the risks of mass migrant movements across external EU borders which would not allow for proper registration and control of the migrants. Moreover, this would increase the incentive for the irregular migrants to continue their movements within the EU with the help of criminal networks, while remaining ‘under the radar’ of the authorities.

Visa Fraud Over recent years, Germany and other EU destination countries increasingly detected the use of fraudulently obtained visas for entry into the Schengen area. The general modus operandi suggests the issuance of Schengen visas based on forged breeder documents. 

Trends for 2020

While the economic impact of the COVID-19 crisis in Europe is not yet clear but expected to be significant, the impact on economies in the developing world is likely to be even more profound. Prolonged economic instability and the sustained lack of opportunities in some African economies may trigger another wave of irregular migration towards the EU in the mid-term. Moreover, a weakening economy in the EU may increase the demand for cheap labour, accessible through labour exploitation in the context of debt bondage owed by irregular migrants to their smugglers.

We expect a continuous demand for organised migrant smuggling services in the Western Balkans and neighbouring countries, due to enhanced border control measures that are likely to be only slowly removed, combined with the persisting high numbers of stranded migrants in Greece and the Western Balkans. Along with the continued smuggling in compartments in freight vehicles and cargo trains, we expect smuggling networks to more intensely use small and dirt roads across the region’s borders and boats to cross river borders. The region will thus remain a hotspot for the facilitation of secondary illegal migratory movements from Greece towards other EU countries.

Depending on the duration of the constraints in air travel, a diversion of smuggling activities to land and sea travel routes is to be expected. This will most likely have implications on the Western and the Eastern Mediterranean routes. Some migrants might also alternatively opt for the long and risky crossing from Senegal, Mauritania or Western Sahara to the Canary Islands (Spain).

We expect further – if possibly more subtle – attempts to drive migrants from Turkey towards the borders with Greece, and to a lesser degree towards the Republic of Cyprus and the border with Bulgaria. Specifically, at land borders, we expect a recurring decrease if not neglect of Turkish border guarding activities directed at migratory movements towards the EU. Based on increasing detection numbers in recent years, we expect a further increase of visa fraud cases (use of forged and fraud breeder documents), once air travel towards EU countries returns to normal.

Trafficking in human beings

The agricultural sector is particularly vulnerable to labour exploitation, due to the large number of workers employed on a non-regular basis, through third parties or as illegal workers. – In September 2019, Bulgarian and French law enforcement authorities, supported by Europol and Eurojust, dismantled an OCG involved in trafficking human beings for labour exploitation and money laundering. The OCG operated behind a legal business and recruited Bulgarian nationals as seasonal workers for the French agricultural sector. The workers signed employment contracts in a foreign language while being told they would receive €60 a day. In reality, a large part of their wages was taken for meals, transportation and other ominous charges.

The activities of Nigerian networks exploiting their female compatriots, both adults and minors, in the prostitution market in Europe has been well documented for more than a decade and poses a great challenge to EU law enforcement. Nigerian networks achieved significant influence in EU organised crime by regular cooperation with local criminal groups. Besides THB, Nigerian networks are known to be active in other criminal businesses linked to THB, such as fraud, corruption, migrant smuggling, counterfeiting of documents and money laundering. They are also involved in trafficking and distribution of various types of drugs and currency counterfeiting.

A large share of THB cases regarding forced criminality concerned drug-related crimes such as forced work in cannabis cultivation, or organised property crime such as pickpocketing or shoplifting.

Trends for 2020

Sexual exploitation, specifically of women and girls from eastern EU countries, is likely to constitute the most important part of the EMSC’s future activities in this area. We expect an increasing development in labour exploitation, specifically in the agricultural sector. OCGs engaged in labour exploitation are expected to continue to generate huge profits from their involvement in labour intensive, low-skilled and low-paid work sectors. 

More info on: https://www.europol.europa.eu/publications-documents/emsc-4th-annual-activity-report-%E2%80%93-2019

Updated on 6/13/2020

During this unprecedented crisis of coronavirus outbreak, governments, international organizations and other authorities are intensifying their efforts to combat various criminal and fraudulent activity related to that.   You may have already seen reports of fraudulent activity around the sale of face masks and hand sanitiser.

The COVID-19 pandemic has generated various government responses, ranging from social assistance and tax relief initiatives, to enforced confinement measures and travel restrictions. While unintended, these measures may provide new opportunities for criminals and terrorists to generate and launder illicit proceeds.

Criminals have been quick to seize opportunities during the COVID-19 pandemic to generate significant amounts of profit. Certain types of criminal activity intensified during the pandemic, while others almost ceased to occur. Even during times of crisis, criminal business continues.

Scammers are sophisticated, opportunistic and will try to get personal details or money from victims in many ways. They tend to target people who are more vulnerable or susceptible to being scammed, particularly in the current climate with many more people being at home.

– INTERPOL warns of financial fraud linked to COVID-19; – EUROPOL issued multiple reports on the criminal situation in Europe during the Coronavirus pandemic; – Statement by the FATF President: COVID-19 and measures to combat illicit financing; COVID-19-related Money Laundering and Terrorist Financing Risks and Policy Responses issued by FATF; – OLAF launches enquiry into fake COVID-19 related products; – UK FCA on how to avoid coronavirus scams; – Austria FMA warns about a strong increase in fraudulent activities in the financial markets in conjunction with the Corona pandemic; –  USA Justice Department Files Its First Enforcement Action Against COVID-19 Fraud – California Attorney General Issues Consumer Alert on Fraudulent Charities Amid the COVID-19 Public Health Emergency

INTERPOL is encouraging the public to exercise caution when buying medical supplies online during the current health crisis, with criminals capitalizing on the situation to run a range of financial scams. With surgical masks and other medical supplies in high demand yet difficult to find in retail stores as a result of the COVID-19 pandemic, fake shops, websites, social media accounts and email addresses claiming to sell these items have sprung up online. But instead of receiving the promised masks and supplies, unsuspecting victims have seen their money disappear into the hands of the criminals involved.

EUROPOL issued  reports on “Pandemic profiteering – how criminals exploit the COVID-19 crisis” (03/2020) and report “Beyond the pandemic how COVID-19 will shape the serious and organised crime landscape in the EU” (04/30/2020);

The European Anti-Fraud Office (OLAF) has opened an enquiry concerning the imports of fake COVID-19 related products, which are ineffective or even detrimental to health. On 19 March 2020, OLAF opened a case in relation to the imports of fake products used in the fight against the COVID-19 infection, such as masks, medical devices, disinfectants, sanitisers and test kits. Since the very beginning of the pandemic, OLAF has been collecting intelligence and information on this illicit trafficking.

Federal Court in USA Issues Temporary Restraining Order Against Website Offering Fraudulent Coronavirus Vaccine.  As detailed in the civil complaint and accompanying court papers filed on Saturday, March 21, 2020, the operators of the website “coronavirusmedicalkit.com” are engaging in a wire fraud scheme seeking to profit from the confusion and widespread fear surrounding COVID-19.  Information published on the website claimed to offer consumers access to World Health Organization (WHO) vaccine kits in exchange for a shipping charge of $4.95, which consumers would pay by entering their credit card information on the website.  In fact, there are currently no legitimate COVID-19 vaccines and the WHO is not distributing any such vaccine.  In response to the department’s request, U.S. District Judge Robert Pitman issued a temporary restraining order requiring that the registrar of the fraudulent website immediately take action to block public access to it.

California Attorney General Xavier Becerra issued on March 26, 2020 consumer alert to warn Californians about fraudulent charities during the ongoing COVID-19 public health emergency. The virus has thus far infected 2,535 Californians and has resulted in a state-wide shelter in place order, issued by California Governor Gavin Newsom. Attorney General Becerra reminds all Californians to do their research before submitting donations to any charity, especially during a time of crisis

FATF encourages governments to work with financial institutions and other businesses to use the flexibility built into the FATF’s risk-based approach to address the challenges posed by COVID-19 whilst remaining alert to new and emerging illicit finance risks. The FATF encourages the fullest use of responsible digital customer onboarding and delivery of digital financial services in light of social distancing measures. At a time when critical relief is needed in-country and beyond, effective implementation of the FATF Standards fosters greater transparency in financial transactions, which gives donors greater confidence that their support is reaching their intended beneficiaries.

Criminals are taking advantage of the COVID-19 pandemic to carry out financial fraud and exploitation scams, including advertising and trafficking in counterfeit medicines, offering fraudulent investment opportunities, and engaging in phishing schemes that prey on virus-related fears. Malicious or fraudulent cybercrimes, fundraising for fake charities, and various medical scams targeting innocent victims are likely to increase, with criminals attempting to profit from the pandemic by exploiting people in urgent need of care and the goodwill of the general public and spreading misinformation about COVID-19. National authorities and international bodies are alerting citizens and businesses of these scams, which include impostor, investment and product scams, as well as insider trading in relation to COVID-19. Like criminals, terrorists may also exploit these opportunities to raise funds.

Using information provided to the members of the FATF Global Network, it was issued a paper which identifies challenges, good practices and policy responses to new money laundering and terrorist financing threats and vulnerabilities arising from the COVID-19 crisis.

Austria FMA’s Executive Directors, Helmut Ettl and Eduard Müller warn the public: “Remain critical, even in a time of crisis. Stick with usual control mechanisms and precautionary measures even in these particularly challenging times. In such times, the old adage applies more than ever that if something sounds too good to be true, then it generally isn’t true.”

Key factors with impact on crime during and after pandemic

ONLINE ACTIVITIES – More people are spending more time online throughout the day for work and leisure during the pandemic, which has greatly increased the attack vectors and surface to launch various types of cyber-attacks, fraud schemes and other activities targeting regular users. A lot of these goods are offered on online trade platforms, which have made it easier and cheaper for counterfeiters and other criminals to access a broad customer base. Creating virtual and obscuring real identities is easier online than in offline interactions, which greatly aids criminals using aliases and creating front companies online. Certain population segments (e.g., the elderly, low-income groups, and remote or indigenous communities) may be less familiar with using online banking platforms, and therefore more susceptible to fraud.

DEMAND FOR AND SCARCITY OF CERTAIN GOODS – Demand for and the scarcity of certain goods, especially healthcare products and equipment, is driving a significant portion of criminals’ activities in counterfeit and substandard goods, organised property crime and fraud. A potential economic recession may also stimulate social tolerance for these types of goods and their distribution.

PAYMENT METHODS – The pandemic is likely to have an impact on payment preferences beyond the duration of the pandemic. With a shift of economic activity – including shopping for everyday goods – to online platforms, cashless transactions are increasing in number, volume and frequency. Even offline transactions are shifting to cashless payment options, as cash is seen as a potential transfer medium for COVID-19. Cashless payment options are likely to continue to gain in popularity and plurality covering credit card payments, payment platforms, virtual currencies and other mediums.

CRIMINAL USE OF LEGAL BUSINESS STRUCTURES AND MONEY LAUNDERING – The ease of establishing legal business structures has been of great benefit to the economy. However, this has also been effectively exploited by organised crime. During the COVID-19 pandemic, criminals have quickly exploited established legal business structures to orchestrate supply and fraud schemes, the distribution of counterfeit goods and money laundering.

ECONOMIC DOWNTURN – A potential economic downturn will fundamentally shape the serious and organised crime landscape. Economic disparity across Europe is making organised crime more socially acceptable as OCGs will increasingly infiltrate economically weakened communities to portray themselves as providers of work and services. Rising unemployment, reductions in legitimate investment and further constraints on the resources of public authorities may combine to present greater opportunities for criminal groups, as individuals and organisations in the private and public sectors are rendered more vulnerable to compromise. Increased social tolerance for counterfeit goods and labour exploitation has the potential to result in unfair competition, higher levels of organised crime infiltration and, ultimately, illicit activity accounting for a larger share of GDP. At the same time, trends for domestic human trafficking and organised property crime within the EU may intensify as a result of economic disparity between Member States.

MISDIRECTION OF GOVERNMENT FUNDS – Exploiting stimulus measures: FATF and FSRB members report that a small proportion of economic support directed to businesses and individuals may present potential fraud risks, and consequent ML. In particular, criminals can falsely claim to provide access to stimulus funds to obtain personal financial information. FATF members report that criminals may use legal persons to make fraudulent claims on government stimulus funds by posing as legitimate businesses seeking assistance. Some FATF members reported taking steps to reduce risks, such as disbursing aid to people and businesses via existing government accounts for receiving social benefits.

Scams and other crimes trends linked to the virus include: – Cybercrime – criminals have used the COVID-19 crisis to carry out social engineering attacks themed around the pandemic to distribute various malware packages. Criminals swiftly took advantage of the virus proliferation and are abusing the demand people have for information and supplies. Information received from law enforcement partners strongly indicates increased online activity by those seeking child abuse material. This is consistent with postings in dedicated forums and boards by offenders welcoming opportunities to engage with children whom they expect to be more vulnerable due to isolation, less supervision and greater online exposure. The pandemic has an impact on Darkweb operations. Certain illicit goods will become more expensive, as source materials become unavailable. Vendors on the Darkweb offer special corona goods (scam material) at discounts. Criminals are exploiting concerns about COVID-19 to insert malware on personal computers or mobile devices. Amid a sharp rise in global remote working, cybercriminals are also exploiting weaknesses in businesses’ network security to gain access to customer contact and transaction information. This information is then used in targeted phishing emails whereby the criminals pose as the compromised business and request payment for legitimate goods and/or services but instead direct this payment into their illicit accounts. – Telephone fraud / Phishing / Impersonation of officials – In such cases, criminals contact individuals (in person, email or telephone) and impersonate government officials with the intent of obtaining personal banking information or physical cash. In some cases, criminals impersonate hospital officials who claim a relative is sick and require payment for treatment, or government officials requesting personal banking information for tax relief purposes. Cases involving government impersonation are likely to increase as governments around the world disburse grants and tax relief payments to their citizens, with criminals attempting to profit from these payments. Also, instances found when emails are claiming to be from national or global health authorities, with the aim of tricking victims to provide personal credentials or payment details, or to open an attachment containing malware. – Counterfeit goods – Counterfeiters have already been among the biggest profiteers of the COVID-19 pandemic. The sale of counterfeit healthcare and sanitary products as well as personal protective equipment and counterfeit pharmaceutical products has increased manifold since the outbreak of the crisis. There is a risk that counterfeiters will use shortages in the supply of some goods to increasingly provide counterfeit alternatives both on- and offline. Efforts to develop a vaccine against COVID-19 are ongoing around the world. Scammers are already offering versions of such a vaccine online. – Fundraising for fake charities: FATF members highlight an increase in fundraising scams. In such cases, criminals posing as international organisations or charities circulate emails requesting donations for COVID-19-related fundraising campaigns (purportedly for research, victims and/or products). Recipients of these emails are then directed to provide credit card information or make payments through the suspect’s secure digital wallet. – Child sexual exploitation online will remain a significant threat as long as children spend a majority of their time online during the lockdown, either during their spare time or while receiving education via longdistance learning arrangements. This threat requires continued close monitoring and prevention measures should be implemented to protect children online. – Fraudulent investment scams: The economic crisis resulting from COVID-19 has led to an increase in investment scams, such as promotions falsely claiming that products or services of publicly traded companies can prevent, detect or cure COVID-19. Reporting by FATF members highlighted that microcap stocks, typically issued by the smallest companies, may be particularly vulnerable to fraudulent investment schemes as they are low-priced stocks with often limited publicly-available information. This facilitates the spread of false information about the company.  – Migrant Smuggling: While the economic impact of the COVID-19 crisis in Europe is not yet clear, it is expected to be significant and the impact on economies in the developing world is likely to be even more profound. Prolonged economic instability and the sustained lack of opportunities in some African economies such as Libya may trigger another wave of irregular migration towards the EU in the mid-term. This development needs to be carefully monitored. – Trafficking in Human Beings: If the pandemic is followed by a recession, there may be an increased demand for labour and sexual exploitation and a potential increase in intra-EU trafficking of victims. Besides traditional fields of exploitation (prostitution, begging and theft, textile and agricultural sectors), sectors such as construction, tourism, catering, nursing and domestic services are increasingly affected by human trafficking. In addition to the prolonged harm suffered by victims of trafficking, the closure of businesses with lower profit margins due to an economic crisis will leave the market open to those with illegal or cheap labour at their disposal.

The most threatening and most profitable Organised Crimes Groups (OCG) remain highly flexible and will take advantage of opportunities to launder profits wherever possible. This may also include EU-based OCGs shifting their money-laundering operations to non-EU countries with weaker AML frameworks and lower resistance to attempts to introduce large amounts of capital from dubious sources during times of precarious economic stability, where they have not already done so.

 What perpetrators tactics to look out for: – Exploiting short-term financial concerns, scammers may ask you to hand over an upfront fee when applying for a loan or credit that you never get. This is known as loan fee fraud or advance fee fraud. – ‘Good cause’ scams. This is where investment is sought for good causes such as the production of sanitiser, manufacture of personal protection equipment (PPE) or new drugs to treat coronavirus – with scammers using the promise of high returns to entice consumers. – Using the uncertainty around stockmarkets, scammers may advise you to invest or transfer existing investments into high return (and high risk) investments. – Clone firms – firms must be authorised to sell, promote, or advise on the sale of insurance products. Some scammers will claim to represent authorised firms to appear genuine. In particular, be aware of life insurance firms that may be cloned. -Scammers may contact you claiming to be from a Claims Management Company (CMC), insurance company or your credit card provider. They may say they can help you recuperate losses by submitting a claim, for the cost of a holiday or event such as a wedding cancelled due to coronavirus. They will ask you to send them some money or your bank details. – Cold calls, emails, texts or WhatsApp messages stating that your bank is in trouble due to the coronavirus crisis, and pushing you to transfer your money to a new bank with alternative banking details.

Examples: -> The Czech Republic reported a cyberattack on Brno University Hospital which forced the hospital to shut down its entire IT network, postpone urgent surgical interventions and re-route new acute patients to a nearby hospital. -> An investigation supported by Europol focuses on the transfer of €6.6 million by a company to a company in Singapore in order to purchase alcohol gels and FFP3/2 masks. The goods were never received. -> Between 3-10 March 2020, over 34 000 counterfeit surgical masks were seized by law enforcement authorities worldwide as part of Operation PANGEA supported by Europol. -> A 39-year old man has been arrested in Singapore for his suspected involvement in money laundering offences linked to a business email scam-related to COVID-19. This person was usurping the identity of a legitimate company and advertised the fast delivery of FFP2 surgical masks and hand sanitisers. A French pharmaceutical company had been defrauded of €6.64 million by this individual. Once the pharmaceutical company transferred the funds to a bank in Singapore, the items were never delivered and the supplier became uncontactable. – A sophisticated fraud scheme using compromised emails, advance-payment fraud and money laundering has been uncovered by financial institutions and authorities across Germany, Ireland and the Netherlands, as part of a case coordinated by INTERPOL. – Counterfeit masks have been offered online in different EU Member States at prices ranging between 5€ and 10€, approximately three times the normal price. Fake face masks for children are also being ruthlessly smuggled.

In many cases, the fraudsters impersonate legitimate companies, using similar names, websites and email addresses in their attempt to trick unsuspecting members of the public, even reaching out proactively via emails and messages on social media platforms.

If you are looking to buy medical supplies online, or receive emails or links offering medical support, looking for opportunities or just want to donate – be alert to the Signs of a potential scam to protect yourself and your money:

Independently verify the company/ charity/ individual offering the items before making any purchases and check if you’re dealing with a genuine firm; Check the websites and email addresses offering information, products, or services related to COVID-19. Be aware of bogus websites – criminals will often use a web address which looks almost identical to the legitimate one, e.g. ‘abc.org’ instead of ‘abc.com’; Check online reviews of any company offering COVID-19 products or supplies. Avoid companies whose customers have complained about not receiving items.; Be wary if asked to make a payment to a bank account located in a different country than where the company is located; If you believe you have been the victim of fraud, alert your bank immediately so the payment can be stopped. Do not click on links or open attachments which you were not expecting to receive, or come from an unknown sender or unverified sources; Be wary of unsolicited emails offering medical equipment or requesting your personal information for medical checks – legitimate health authorities do not normally contact the general public in this manner. Reject offers that come out of the blue. Beware of adverts on social media channels and paid for/sponsored adverts online. Avoid being rushed or pressured into making a decision. Do not give out personal details (bank details, address, existing insurance/ pensions/ investment details); Ignore offers for a COVID-19 vaccine, cure, or treatment. Remember, if a vaccine becomes available, you won’t hear about it for the first time through an email, online ad, or unsolicited sales pitch; Research any charities or crowdfunding sites soliciting donations in connection with COVID-19 before giving any donation. Remember, an organization may not be legitimate even if it uses words like “CDC” or “government” in its name or has reputable looking seals or logos on its materials. Be wary of any business, charity, or individual requesting payments or donations in cash, by wire transfer, gift card, or through the mail. Don’t send money through any of these channels. Be cautious of “investment opportunities” tied to COVID-19, especially those based on claims that a small company’s products or services can help stop the virus. If you decide to invest, carefully research the investment beforehand.

Donation Tips:

Check Registration Status: In many states the operating charities are required to register and required to file annual financial reports. Confirm that the charity is registered and up-to-date with their financial reporting. Give to Organizations You Trust: Do your research before giving. Review the charity’s purpose and its financial records, and find out how it spends donations. How much is spent directly on the charitable cause? How much goes to overhead and employee compensation? Research charities in your community and support those charities that make a positive impact. Don’t Be Pressured By Telemarketers And Ask Questions Before Donating: If you receive a call from a telemarketer, ask for the name of the fundraising organization, whether it is registered, the name of the charity benefitting from the solicitation, how much of your donation will go to charity and how much to the telemarketer, and the direct telephone number of the charity. If the telemarketer tells you the donation is for your local animal shelter, hospital, school, police department, firefighter or other public safety agency, check directly with the benefitting organization to confirm that they authorized the solicitation and will actually benefit from your donation. Don’t fall for pressure tactics or threats. Remember you have the right to reject the donation appeal and if you feel pressured or threatened, just hang up. Be Cautious Of “Look-Alike” Websites: These fraudulent websites may have a slightly different web address (URL). Similar looking URLs are sometimes purchased to lure in would-be donors. These sites may ask for personal information or install harmful material onto your device. Watch Out For Similar-Sounding Names And Other Deceptive Tactics: Some organizations use names that closely resemble those of well-established charitable organizations to mislead donors. Be skeptical if someone thanks you for a pledge you never made. Check your records. Be Wary Of Social Network and Crowdfunding Websites: If you are planning to donate through a social network solicitation or through a crowdsourcing website, such as GoFundMe, find out what percentage is going to the charity, whether you will be charged a fee, or if a percentage of your donation will be paid to the platform website. Protect Your Identity: Never give your Social Security number or other personal information in response to a charitable solicitation. Never give out credit card information to an organization unfamiliar to you. Some organizations sell or rent their donor lists to other organizations, including organizations that are not charities. Look at the charity’s privacy policy and learn who the charity might share your information with before you provide it.

More on: https://www.interpol.int/News-and-Events/News/2020/INTERPOL-warns-of-financial-fraud-linked-to-COVID-19 https://www.europol.europa.eu/newsroom/news/how-criminals-profit-covid-19-pandemic https://www.europol.europa.eu/newsroom/news/corona-crimes-suspect-behind-%E2%82%AC6-million-face-masks-and-hand-sanitisers-scam-arrested-thanks-to-international-police-cooperation https://www.fatf-gafi.org/publications/fatfgeneral/documents/statement-covid-19.html https://www.fatf-gafi.org/publications/fatfgeneral/documents/covid-19-ml-tf.html https://eba.europa.eu/coronavirus https://www.fca.org.uk/news/news-stories/avoid-coronavirus-scams https://ec.europa.eu/anti-fraud/media-corner/news/20-03-2020/olaf-launches-enquiry-fake-covid-19-related-products_en https://www.justice.gov/opa/pr/justice-department-files-its-first-enforcement-action-against-covid-19-fraud https://oag.ca.gov/news/press-releases/attorney-general-xavier-becerra-issues-consumer-alert-fraudulent-charities-amid https://www.europol.europa.eu/publications-documents/pandemic-profiteering-how-criminals-exploit-covid-19-crisis https://www.interpol.int/en/News-and-Events/News/2020/Unmasked-International-COVID-19-fraud-exposed https://www.europol.europa.eu/newsroom/news/corona-crimes-multi-million-face-mask-scam-foiled-police-across-europe https://www.europol.europa.eu/publications-documents/beyond-pandemic-how-covid-19-will-shape-serious-and-organised-crime-landscape-in-eu

FMA warns about a strong increase in fraudulent activities in the financial markets in conjunction with the Corona pandemic

Money laundering is the illegal process of concealing the origins of money obtained illegally by passing it through a complex sequence of banking transfers or commercial transactions. The overall scheme of this process returns the “clean” money to the launderer in an obscure and indirect way. https://en.wikipedia.org/wiki/Money_laundering

Criminal activities such as illegal arms sales, smuggling, activities of organized crime, including drug trafficking and prostitution rings, as well as embezzlement, insider trading, bribery and computer fraud schemes can generate large profits and create the incentive to ‘legitimize’ the ill-gotten gains through money laundering.

AML / CFT resources

Useful links:

United Nations: Office on Drugs and Crime – http://www.unodc.org

AML-CFT Governance

AML / CFT  risk scenarios:

Banking – Product: Transfer of funds 1. Perpetrator deposits large amounts of cash to his bank account and makes smaller transfers to other account(s) in a timely manner, so escaping transaction limits. 2. The business, which does not have any legitimate activity, and therefore no legitimate source of funds, perform fictitious transactions in order to disguise criminal proceeds as legitimate earnings from trade in goods and services, especially intangible services such as marketing, IT services and consulting. 3. Companies set up fictitious loans with each other to justify transfers of funds of illegal origin. 4. Perpetrator launders money by making the instant payment to/from dormant account.

– Product: Trade finance 1. Trade finance products such as letter of credit, guarantees and factoring may be used for money laundering and terrorist financing. Banks act as intermediaries to assist buyers and sellers by financing and covering the trade cycle funding gap, the amount of money needed to fund the ongoing operations or future development of a business. Most common techniques of trade finance money laundering involve moving illicit goods, falsifying documents, misrepresenting financial transactions and under- or over-invoicing the value of goods.

– Product: Credit 1. Credit borrower repays outstanding loan payments with illicit funds. 2. Terrorists use credit cards to finance TF activities (acquire the necessary items for terrorism act).

– Product: Cash currency exchange 1. Perpetrators convert their illicit cash into another currency. 2. Perpetrators, in order to avoid their identification, split transactions and perform currency exchange in small amounts.

– Product: Cash deposits to current account 1. Perpetrators place cash from illegitimate or criminal sources into their current account. 2. Perpetrators use cash front businesses to inject cash revenues into financial system. 3. Terrorists, their supporters or facilitators place funds from legitimate or criminal sources into the financial system with a view to using it for terrorist purposes.

– Related to all products 1. Individuals establish fictitious low risk entities and later sell it to a perpetrator. 2. In situations when banks refuse to start business relationship with a non-resident individual, the non-resident individual sets up a company and opens a bank account as a legal person. Later such company acts as a “shell company” for money laundering purposes. 3. Perpetrators use genuine accounts of money mules to process illegal payments linked to terrorism, money laundering and other economic crimes.

Credit unions 1. Credit borrower repays outstanding credit payments with cash with illicit funds. 2. Credit union refinances loan for customer who uses fictitious agreement with third party loan lender. 3. Credit borrower uses the funds for different purpose than stated, for example to finance terrorists. 4. Perpetrators place cash from illegitimate or criminal sources into current account.

Crowdfunding platforms 1. Criminal collects funds from legitimate sources using crowdfunding platform to fund terrorism. 2. With a help of crowdfunding platform, a perpetrator collects illicit funds from criminal activities using anonymous products like virtual currency. 3. Terrorists use “money mules” to collect money through the crowdfunding platform.

Currency exchange offices 1. Perpetrators via third persons establish fictitious currency exchange office and infiltrate illicit funds from criminal activities. 2. Perpetrators convert their illicit cash into another currency. 3. Perpetrators split payments into smaller amounts thus avoiding identification.

Investment companies 1. Customers conducting securities trades on behalf of organized criminals, use illegitimate money to purchase securities and then integrate funds into financial institutions after selling those securities.

Consumer credits and Leasing 1. Perpetrator, instead of the borrower, repays the credit using illicit funds. 2. Loan borrower uses the funds for different purpose than stated, for example to finance terrorists. 3. Perpetrator accelerates an agreed repayment schedule, either by means of lump sum repayments, or by means of early termination using funds emanated from a criminal lifestyle.

Life insurance 1. A perpetrator using illicit funds pays life insurance premiums for himself / herself or employees, who are not currently employed, or for a third party.

Money remittance 1. Perpetrators conduct cash transfers of low value in order to finance terrorists. 2. Perpetrators break down large amounts of cash acquired by criminal activities, thus they remain below the thresholds for required customer identification. 3. Perpetrators via money remittance agents launder illicit funds. Agents use fictitious IDs and supporting documents to launder money.

Payment / E-money institutions 1. The business, which does not have any legitimate activity, and therefore no legitimate source of funds, performs fictitious transactions in order to disguise criminal proceeds as legitimate earnings from trade in goods and services, especially intangible services such as marketing, IT services and consulting. 2. Companies set up fictitious loans with each other to justify transfers of funds of illegal origin. 3. Perpetrator launders money by making the instant payment to/from dormant account. 4. Perpetrators use genuine accounts of money mules to process illegal payments linked to terrorism, money laundering and other economic crimes. 5. A perpetrator uses e-money account as transition account for fictitious goods and services and later transfers illicit origin funds to a bank account 6. A perpetrator, having several passports, uses the one, which is more favorable in terms of AML/CTF, and opens the e-money account.

Virtual currencies 1. Perpetrators use virtual currencies systems to transfer funds with illegal origin or purchase goods anonymously (cash funding or third party funding through virtual exchanges). 2. Terrorist groups receive anonymous funding or purchases as virtual currency (cash funding or third party funding through virtual exchanges in which the funding source is not properly identified). 3. Perpetrators use criminal money to set up a virtual currency company that deposits criminal money. 4. A perpetrator deposits or withdraws illegally obtained virtual currency in a cashpoint machine and/or use cryptocurrency card for payments.

Accountants, auditors and tax advisors 1. Perpetrators in collaboration with accountants, auditors or tax advisors help establish and manage money-laundering schemes. 2. Accountants as collaborators do false accounting in favor of perpetrators to launder money. 3. Perpetrators in collaboration with accountants or tax advisors purchase real estate using funds with illegal origin. 4. Perpetrators in collaboration with accountants, auditors or tax advisors provide assurance and/or assistance with tax compliance, which may be unfairly performed in the interest of the perpetrator.

Advocates 1. Advocates help perpetrators to set up a fictitious legal entity and create complex corporate ownership structures involving many legal entities associated with high ML/TF risk jurisdictions. 2. Perpetrators in collaboration with advocates establish and manage money-laundering schemes. 3. A perpetrator with a help of advocate uses advocate’s deposit account to receive and transfer funds for the money laundering purpose.

Notaries 1. A perpetrator uses notary’s deposit account to receive and transfer funds for the money laundering purpose. 2. Counterparties settle some part of transaction in cash before going to notary and at a notary they formalize deal for a smaller amount for which transaction is made. 3. A perpetrator at notary formalize the purchase price higher than the market value. 4. When performing operations at notary, an individual client is being controlled by other individual person or group of persons for criminal purposes.

Non-profit organizations – Religious organizations 1. Perpetrators donate to religious organizations, which may fund terrorists. 2. A perpetrator establishes religious organization for money laundering and/or terrorist financing purposes.

Charities 1. Perpetrators donate to charities, which are not accountable for usage of funds. 2. A perpetrator establishes charity for money laundering and/or terrorist financing purposes. 3. Charity or its directing officials knowingly or unknowingly maintains an affiliation with a terrorist entity which may result in the charity being abused for multiple purposes, including general logistical support to the terrorist entity. 4. Charity supports terrorist groups with legitimate resources at the point of delivery. 5. A perpetrator, as an actor inside the charity or external actor (such as foreign partner or third-party fundraiser), using the diversion of funds method, supports terrorist entities at some point through the charity’s operational or financial processes. 6. Charity supports recruitment of terrorist entities. 7. Terrorist entities falsely represent themselves as the agents of charity in order to deceive donors into providing support.

Gambling sector – Product: Casinos 1. A perpetrator or his / her collaborator purchases casino chips using illicit cash and at the end of a game converts it back to cash or receives transfer to his / her account. 2. A perpetrator buys casino chips using illicit cash from other customers and receives a win statement. 3. Organized crime groups open a casino themselves or infiltrate to launder money.

– Product: Gaming machines 1. Organized crime groups establish fictitious gaming machines business. 2. A perpetrator plays using illicit cash and receives a win statement or withdraws cash by inputting illicit funds to a slot machine.

– Product: Betting 1. A perpetrator creates fixed matches schemes. 2. A perpetrator launders money by betting for the guaranteed win (very probable outcome) in order to revolve illicit money through betting and claim it as a win (conversion). 3. An organized crime group starts betting business to launder money by setting fictitious bets. 4. A perpetrator purchases winning tickets from other players using illicit funds with intent to launder money.

– Product: Lotteries 1. A perpetrator purchases a lottery ticket from the winner using illicit funds. 2. An organized crime group starts lottery business to launder money.

– Product: Online gambling 1. A facilitator (“money mule”) gives his / her account to perpetrator to engage in online gambling activity in order to launder money. Crime organizations may purchase online casino accounts containing funds already uploaded by non-criminal players at a higher price than the real ones. 2. An organized crime group starts online gambling business to launder money. 3. A perpetrator uses gambling sites to deposit illicit funds and to request the payout of winnings or remaining balance without engaging in gambling activity. 4. Crime organizations may use several “smurfs” to gamble online directly against each other using illicit funds. One of the “smurfs” receives all the funds as a winner, and withdraws the funds as the legitimate gambling earnings. 5. Crime organizations invent and bet online on fictitious (non-existing) matches or events to ensure winnings.

Trade in precious stones and precious metals 1. A perpetrator purchases precious stones or precious metals using illegal cash. 2. Terrorists or their collaborators sell the precious stones or precious metals obtained through robberies to finance terrorist activities.

Trade in movable cultural goods and antiques 1. A perpetrator purchases movable cultural goods and antiques using illegal cash. 2. Terrorists or their collaborators sell the antiques and other cultural goods obtained through robberies, to finance terrorist activities.

Trade in goods in cash 1. Perpetrator converts laundered criminal proceeds into assets such as vehicles, yachts and other valuable assets. 2. Perpetrators open cash-based business or collaborate with the cash based business owners to infiltrate illegal cash into the financial system based on fictitious economic activities. 3. Terrorist groups might run cash-intensive business to launder money and / or sell high-value goods such as antiques and jewelries and use these funds to finance terrorist activities.

Trade in real estate 1. A perpetrator purchases real estate using illegally obtained cash.

More resources on: https://nationalcrimeagency.gov.uk/who-we-are/publications https://www.austrac.gov.au/aml-ctf-governance