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Organised Fraud – Where does the money go?

Anyone familiar with organised frauds, especially those involving elements of social engineering and phishing, will be aware of the typical pattern of transfers. Funds are unwittingly paid away into one account held by fraudsters and are then promptly transferred to multiple accounts across the world. But, who holds these accounts?

We have been involved with the successful recovery of funds across the world, including in the UK, Singapore, Hong Kong, Germany, and the United States. In our experience, it is the middlemen who are generally identified and convicted. These individuals help commit the fraud and launder the funds but may not be the ultimate beneficiaries.

We have come across several criminal investigations that have focussed on prosecuting these fraudsters both in the UK and abroad. Our experience is that there is an increased chance of the authorities investigating where there is an element of public interest or where public funds have been misappropriated.

Worldwide prosecutions provide some insight into where and how funds are dispersed.

  • In Israel, authorities arrested four suspected leaders of a large-scale business email compromise ring that managed to siphon off more than EUR 18 million from companies in France and Belgium. The arrest followed a two-year joint investigation by Europol, the French National Gendarmerie – Section de Recherches of Bordeaux, and Israeli authorities.
  • Two individuals in Nigeria were targeting victims worldwide. The individuals behind the fraud were arrested in South Africa and extradited to the US to stand trial.
  • A Serbian-Hungarian dual citizen was convicted after opening multiple Hungarian bank accounts using real identification documents.
  • In Massachusetts, one individual conspired with others to open numerous bank accounts in the name of sham companies, as part of a fraudulent scheme. Through the use of fraudulent invoices and spoofed email accounts, the implicated individual duped the victims into transferring hundreds of thousands of dollars to bank accounts under his control. The individual and his co-conspirators then transferred funds from the accounts to others located overseas.

However, convictions remain extremely rare. Those controlling accounts in foreign jurisdictions and who are the ultimate beneficiaries are difficult to identify and hold to account.

So, is pursuing individuals and recovery useless?

Seeking to hold those ultimately responsible for these frauds remains incredibly hard. However, the good news is that funds can be recovered.

Misappropriated funds are often successfully frozen in recipient accounts, especially where the fraud is quickly identified. Often the banks action the freezing of these accounts. Lawyers in the jurisdictions where these funds are held may then play a key role in securing the recovery and returning the funds to the victim.

Recently, and where victims have struggled to obtain banks’ cooperation, we have seen an increased use of Norwich Pharmacal Orders in the UK. These are used to oblige banks to provide information on account holders and the destination of funds. Victims have also used the information obtained from these orders to identify whether banks have acted appropriately throughout their dealings with fraudulent parties.

In short, it is not easy to identify who is behind these frauds but pursuing recovery is not useless. The key is acting fast and seeking to quickly freeze accounts in as many jurisdictions as possible.

Ruth Willmington, Crime lead

July 2022
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