Figures released by the Federal Bureau of Investigation (FBI) in the US reveal that complaints about investment fraud and online scams have soared to record levels over the past year, according to Charlie Osborne in an article for ZDNet.
The FBI’s Internet Crime Complaint Center (IC3) recorded annual complaint levels surging by almost 70% between 2019 and 2020, reaching six million on 15 May 2021. It took 14 months to add the final million, in comparison to the seven years it had taken initially for the IC3 to register its first million complaints.
Osborne says that Covid-19 has led to many scams offering fake vaccine appointments or online delivery notifications. The article quotes the FBI, which says: "The increase in crimes reported in 2020 may have also been due in part to the pandemic driving more commerce and activities online. The latest numbers indicate 2021 may be another record year."
This rise in cyber crime echoes earlier reports by Interpol in January 2021 that highlighted how fraudsters were using dating apps to connect to victims and promote fake investment opportunities, such as "worthless stock, as well as cryptocurrency or other investment plans that promise guaranteed returns far beyond initial investments", says Osborne.
Additional research by the US Federal Trade Commission suggests that over US$80m has been lost due to cryptocurrency scams by consumers since October 2020.
ZDNet article
Compulsory training in the UK for FCA and HMRC staff
Recognising the increasing threat from cyber crime, the FCA has sent 4,430 of its employees on compulsory training, writes Tom Higgins in a Professional Adviser article.
Over the past two years, FCA employees have received cyber crime and information security training to help "combat the growing threat of financial crime, such as money laundering and fraud", writes Higgins. In addition, 217 employees took more advanced training.
Wayne Johnson, CEO of Encompass Corporation and an expert on regulation, is quoted in the article. He highlights how the changing landscape of UK financial services means the FCA must keep its staff up to speed with the latest threats.
"Investing in the latest cyber skills training is essential, especially for an organisation tasked with investigating financial crime, money laundering and upholding regulatory standards," says Johnson. "With a surge in newly launched fintechs, alongside expanding traditional banks, the FCA has a complex remit that requires the highest technical skills in order to investigate and enforce."
The focus on cyber crime training at the FCA shows how seriously the regulator is taking the issue, adds Johnson, and that it is determined to "hold organisations to account".
Johnson believes that financial services firms should be looking to invest in robust anti-money laundering and know your customer rules so that they don’t suffer severe penalties. "Getting compliance right from the outset is a must," he is quoted as saying.
Professional Adviser article
HM Revenue & Customs (HMRC), one of the most impersonated organisations in the UK for cyber scams, has also invested in cyber security training for its staff, announcing on 20 May 2021 that it has spent £262,251 on cyber security training over its two most recent financial years. Training course topics have included cloud security, ethical hacking, phishing attacks, but the most popular security training among staffers in the chief digital and information officer group was the ‘Art of Hacking’.
Taking action
Across Europe, authorities have been busy breaking up a number of investment fraud schemes, recovering money in the process, writes Zdravko Ljubas in an article for the Organized Crime and Corruption Reporting Project (OCCRP).
Europol, the law enforcement agency of the EU, has been working on the case since an initial complaint was made in Gerona, Spain, in March 2019. This led to other complaints that revealed a pyramid scheme.
It is thought that over €15m has been lost by hundreds of victims as a result of a UK-based Spanish national conning them into making "seemingly safe investments with high returns", says Ljubas. According to Europol, €6m has so far been recovered, writes Ljubas.
As part of the investigation, UK investigators uncovered more than £642,000 in UK bank accounts, as well as a portion of the funds that had been "deposited in online gaming firms, a luxurious car, jewellery, and IT equipment".
Europol is quoted in the article, saying that confiscation of funds from organised crime is a "strategic priority" for the EU.
The news comes after a separate cross-border European operation the previous week, where a large online investment fraud saw hundreds of victims losing an estimated €30m.
The German-led investigation was supported by both Europol and the European Union Agency for Criminal Justice Cooperation, as well as authorities in Bulgaria, Israel, Latvia, North Macedonia, Poland, Spain, and Sweden.
OCCRP article