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Court Dismisses Appeal in New Zealand’s First Criminal Prosecution Under AML/CFT Act

Richard Marley
July 18, 2022
3 minutes read
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Court of Appeal dismisses an appeal on 1st July against New Zealand’s first criminal prosecution under Anti-Money Laundering and Combatting Financial Terrorism Act

New Zealand’s Court of Appeal overlooked the call charged against the judgements in the first criminal prosecutions under the Anti-Money Laundering and Countering Financial Terrorism (AML/CFT) on 1st July 2022.

An estimated figure of $1.35 billion came out from the proceedings in crime which is laundered annually in New Zealand and includes drug trafficking, scams, and other offences. According to the legal laws proposed by the AML/CFT principles, businesses are required to mitigate and manage the risks involved in money laundering and terrorist financing.

The DIA (Department of International Affairs) of Te Tari Taiwhenua charged the sole director of Jiaxin Finance, Qiang Fu and his mother Fuqin Che. Jiaxin failed to provide the required records and reports of suspicious transactions performed by Xiao Hua Gong, also known as Edward Gong (Canadian Businessman), the tally was over $53 million.

On conviction, the Auckland high court sentenced Jiaxin to pay $2.55 million. Mr Fu was charged with fines of $180,000 and Ms Che with $202,000. Both individuals appealed their convictions in court on 1 July, but the appeal was dismissed by New Zealand’s Court of Appeal.

The director of DIA, Mike Stone said that the rejection of the appeal filed by Jiaxin Finance is a significant stance for the DIA and also for the AML/CFT system’s efforts in preventing money laundering and Financing of Terrorism in Aotearoa New Zealand.

DIA is one of the three supervisors that are complied with the AML/CFT Acts to prevent the illicit activities of money laundering and terrorist financing. The other two bodies are the Reserve Bank of New Zealand and the Financial Markets Authority.

According to the director of DIA, “Our department supervises over 5000 financial institutions and other non-financial businesses and professions for compliance with measures to detect and deter money laundering and terrorism”, says Mike Stone.

“For the most part, businesses want to comply with the AML/CFT Act and have programmes in place to do so.

Unfortunately, there are businesses that fail to comply with their obligations, including the reporting of suspicious transactions. This tarnishes New Zealand’s reputation of being a safe and legitimate place to do business.

The recent court judgment shows that the legislation is applicable to all who are obliged to comply and strongly supports the work of DIA and other supervisors under the AML/CFT Act to protect New Zealand’s global reputation and our communities from harm.”

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Kenya Accuses Two Leading African FinTech Firms of Operating Without Licenses
Two of Africa’s top FinTech companies have been accused by the Kenyan central bank of allegedly conducting unlawful business in the country.

Flutterwave and Chipper Cash, two FinTech businesses that support digital currencies, are said to have been operating illegally, even though the former has denied accusations of assisting money laundering worth more than $50 million.

At the conclusion of a recent meeting of the monetary policy committee, Patrick Njuguna, governor of the Central Bank of Kenya (CBK), addressed the media and disclosed that the two didn’t have the necessary licences.

“Flutterwave is not licensed to operate remittance provider or for that matter as a Payment Service Provider in Kenya. They are not licenced to operate and therefore they shouldn’t be operating. And Chipper we could also say the same,” the governor revealed, as reported by local outlets.

Chipper Cash was established in 2018 and utilises a mobile app to concentrate on cross-border payments. Users can also purchase and trade virtual currency using it. It raised $250 million at a $2 billion value in November of last year during its Series C fundraising round, which was led by FTX, the exchange run by the controversial Sam Bankman-Fried.

Flutterwave, the most valuable startup raised $250 million in February of this year at a $3 billion valuation. Additionally, it entered the world of digital assets by collaborating with Binance to provide a fiat-to-crypto gateway. Flutterwave, in contrast to its rival, was being investigated in Kenya for allegedly enabling the laundering of at least $52 million and was already facing regulatory issues.

While Chipper Cash hasn’t responded to the claims of the Central Bank of Kenya that it has been operating illegally, on the other hand, Flutterwave has shifted the claims to the central bank.

As per the report published by Business Daily Kenya, Flutterwave claims that it applied for the Central bank’s license back in 2019. It stated: “In 2019, as our operations grew, Flutterwave submitted its application for a payment service provider licence. We have been in constant engagement with the Central Bank of Kenya to ensure that we provide all the requirements and we look forward to receiving our licence.”

Suggested Read: Kenya Flags Betting Jackpots as Possible Avenues for Money Laundering

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E-Learning Platforms and Prevailing Crimes - How Shufti Pro Can Help
The global pandemic is prompting a phenomenal increase in online service. From doing groceries to job interviews and more, many daily activities have moved from in-person to online – that includes education. Started by religious institutions, the educational systems, as well as way of teaching, have transformed. Thanks to technological advancements, distance and e-learning services are becoming a new norm.

Over recent years, the education industry has faced numerous challenges as a result of digitization. Cyberattacks including data breaches, identity theft, phishing and blackmailing are a few most occurring issues that the sector is struggling to deal with.

Fortunately, these risks can only be mitigated to a large extent, with robust identity verification systems, which are capable of identifying the true identities of students before getting them on board.

The Rise of E-Learning and Crime [2022 Overview]

The online or distance learning sector has significantly grown over the past years, as modern IT infrastructures and instant internet connectivity is aiding the education industry to provide people with new opportunities to gain new skills. Since the coronavirus pandemic, e-education has become more common as millions of people across the globe have accepted the new learning model. The work from home and social distancing norms forced schools, universities and other education centres to provide remote services which surged the use of digital learning. According to Research and Market predictions, the e-education industry is all set to reach $350 billion by 2025. However, the number might be updated after assessing the growth of COVID-19 impacts on the sector.

There are hundreds of online learning portals or websites such as Uudemy, Lynda, Skillshare, and Coursera that are widespread over the digital world facilitating billions of people. Furthermore, top-notch universities are also democratising learning by making courses accessible through online portals. For example, Stanford and Harvard’s university gives access to students to get hands-on educational material as well as courses under different categories.

As new technologies are emerging and rendering heaps of benefits and innovative opportunities, the risk of crimes has also increased. Students, as well as cybercriminals, are manipulating the education centres for their own personal gains. Cybercriminals’ activities such as identity theft, data breaches, malicious attacks, blackmailing, synthetic identities and document fraud are among the commonly occurring crimes pouring adverse impacts over this industry. Due to this, the e-learning sector is being challenged by cyber criminals and is finding it hard to provide secure services while retaining customers along with their reputation.
Popular Cybersecurity Risks Education Sector is Prone To

There are numerous reasons cybercriminals target e-learning platforms. However, out of them, these two are perhaps the most significant, first online education service providers typically gather and store sensitive personally identifiable information of millions of students. This makes a jackpot-like situation for fraudsters, who are capable of getting their hands on the personal details of victims in just one malicious or data breach attempt. Second, the data placed in educational databases are highly valuable on the dark web. The information includes mailing addresses, social security numbers, ID numbers, driver’s licence numbers, and even medicare information. In fact, nearly 11% of all data breaches that occurred in 2017 involved exposure of faculty and student health records. According to the research, adult’s sensitive information sells for around $10 to $25 dollars on the dark web, while students’ data is worth nearly $300.

As a result of gathering data, it’s no wonder that employees or students associated with the education sector are targeted. Through phishing attacks or hacking the databases, criminals can use the victims’ credentials to manipulate students as well as damage the institutions’ reputations.

Social engineering attacks such as malware and phishing scams are on rise in the education industry. According to the key findings, in 2019, nearly 41% of the data breaches were caused by these attacks. CBC news published that MacEwan University lost $11.8 million after an employee fell prey to a phishing attack.

Ransomware attacks are another type of technique that fraudsters use to get their hands on databases. This involves infecting data files and systems through malicious viruses. By opening, installing or clicking on a file, the bogus software infects the system resulting in losing admin control.

Spoof attacks are also becoming common in education centres. In this scheme, the cybercriminals pretend to be a legal entity to gain authorised access to online learning platforms and then infect the data directories with malware viruses. This fraudulent activity happens in multiple ways, but some of them include email and caller ID spoofing.

Password Hijacking is another most preferred means of gaining unauthorised access to educational centres’ databases. This usually occurs when the passwords are easy to guess like “1234” or “ABC”. A report states that nearly 73% of people have set the same passwords across many accounts, making it a lot easier for criminals to hijack accounts.

How Shufti Pro Can Help

Depending on the current inconsistent situation, where the education sectors are trying hard to fight sophisticated crimes, there are numerous services available at Shufti Pro that can help them in a variety of ways. Ranging from consent verification, document validation, and facial biometric recognition to two-factor authentication that offers the highest level of confidence as those utilised by the banks or other financial service providers. Powered by thousands of AI algorithms, Shufti Pro’s state-of-the-art identity verification services can help the education industry to overcome the risk of cyberattacks, unauthorised access, and identity theft. Ensuring legit student onboarding with 98.67% accuracy.

In addition to this, online education platforms are also finding it hard to authenticate students as well as faculties identity documents before getting them onboard. AI-powered document verification services, capable of verifying 3000+ types of identity documents written in 150+ languages, can aid digital platforms in validating documents in less than a second along with determining the sign of tempering if present.

Want to know more about identity verification for the education centres?
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Court Dismisses Appeal in New Zealand’s First Criminal Prosecution Under AML/CFT Act

The Rise of E-Learning and Crime [2022 Overview]

Popular Cybersecurity Risks Education Sector is Prone To

How Shufti Pro Can Help

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