Prosecutors Raise Questions About KYC/AML Against Cryptocurrency Mixers

Richard Marley
May 18, 2021
2 minutes read
152

According to the prosecutors and financial regulators, cryptocurrency mixers are reportedly being used by enterprises to launder illicit funds, despite the common beliefs that the mixers are a legit service to secure financial privacy in the crypto industry.

Recently, a crypto service company was charged with criminal proceedings regarding the cryptocurrency mixer. This has pushed the prosecutors and the financial watchdogs to raise questions regarding the requirement of Know Your Customers and Anti-Money Laundering regulations for crypto transmitters.

Cryptocurrency mixers or most commonly known as tumblers have been a part of the crypto sector for a long time. They are known to support the anonymity factor and privacy which makes cryptocurrency more appealing. Through bitcoin mixers, a bitcoin holder can send the currency to a service that mixes the bitcoins with other bitcoins in such a way that the transactional history and the source of the currency become blurred. Through this method, the source of the original funds become hard to identify. Bitcoin mixer transactions are visible on the blockchain but become harder to track down. Some users claim that mixers are a legit way of ensuring privacy in the sector but criminal activity linked to it has made the financial regulators think otherwise and has led them to place stringent scrutiny.

FinCEN (Financial Crime Enforcement Network) is the US regulatory authority that defines anyone involved in transmitting digital currency and is not a part of the transaction as a money transmitter for the regulatory purpose. Through this definition, FinCEN considers cryptocurrency mixers as money transmitters hence making the financial watchdogs implement Know Your Customer, Anti-Money Laundering regulations, and Counterterrorism Financing under the Bank Secrecy Act requirements that have been long enforced on the other financial sectors.

Failure to register with the FinCEN means the mixer is involved in the unlicensed money service business and can lead to financial penalties including prison time and heft fines.

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Silly Season Scams to Rise as AFP Forewarns Fake Delivery Texts
The Australian Federal Police (AFP) has warned of fake delivery texts. Scammers use legitimate-looking texts to deceive people into providing the personal information that they use to fulfil their illicit intentions.

The scammers do texts that seem legitimate to lure people into providing their personal information, which is then either used to defraud victims out of thousands of dollars or sold on the black market for profit. The messages urge the receiver to click on a hyperlink to track, redirect, or pick up a package while claiming to be a shipping status update. Sometimes they request postal address confirmation from the addressee.

How Much Have Australians Lost to Scams?

As per the Australian Competition and Consumer Commission, scammers cost Australians over $2 billion in 2021. The amount is predicted to increase to over $4 billion by the end of the year. Customers reported over 57,000 instances of dubious calls and messages, making phishing the most prevalent type of scam.

Chris Goldsmid, Commander of AFP’s cybercrime operations, said that as the holidays approached, fraudsters specifically targeted people who were anxious and distracted, such as those awaiting multiple deliveries. “Scam activity, in particular, is profit-driven,” he said. “Whatever the criminals can do to monetise the information they steal from the public, they’ll do that.”

Goldsmid advised customers to verify the legitimacy of messages and watch out for warning signs, such as grammatical mistakes, suspicious URLs, and requests for personal details, before clicking on a link.

Most delivery services, like Australia Post and Amazon, never call or email consumers to ask for personal details, money, or the installation of software. Amazon claimed to have spent over $900 million hiring 12,000 extra employees globally to combat cybercrime and online fraud, adding that it had “zero tolerance for fraud”.

Suggested Read: Black Friday Shoppers Alert: Digital Scam Victims Lose an Average of £1,000 Each

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Talent Acquisition Fraud - Hiring Legitimate Candidates with Identity Verification
Along with the rise in virtual and remote work, the number of cases of recruitment fraud is increasing at an unprecedented pace, urging authorities to take decisive action against criminals. Especially the pandemic resulted in huge mass layoffs giving setbacks to many sectors, ultimately creating massive inflation across the globe.

Now that the pandemic’s effects are diminishing, 97 million new job roles are to be expected by the next year, which will expedite fraudulent practices in the talent acquisition sector. Companies should be on their guard and implement a joint action plan to counter rising recruitment scams to secure their onboarding process.

How do Online Recruiting Scams Work?

The scammers fraudulently use an established company’s name, logo and even the details of real employees working in human resource departments to post jobs on recruiting websites or other social media platforms.

Keeping their credentials almost identical to the official company’s details, they send emails to job-seekers or post fake jobs. As soon as interested candidates apply, they conduct interviews to get sensitive information about candidates through telephonic or on-site interviews.

Through fake interviews and telephonic/email conversations, criminals ask for sensitive personal information, particularly social security, ID number and bank account details that job seekers often provide, paving the way for identity fraud.

In some cases, the scammers even seek money from the candidates in the name of background checks or certifications which directly cost them financial losses. In the US alone, users lost $86 million due to fake job opportunities posted on the internet.

Spotting the Signs of Recruitment Fraud

Recruitment fraud is the most unfortunate part of modern job hunting, where criminals prey upon candidates’ eagerness to find work for their living by creating scam job opportunities.

Here are a few signs that can help job seekers spot fraudulent elements during the recruitment process:

Legitimate hiring managers and employers never ask applicants to make any financial transaction in their personal or company account. Always say No to any person who is asking you to send money for any recruitment purpose.

Although the majority of companies ask the candidates to provide their personal information, this step usually comes when the recruitment process is near to complete. Any person asking for sensitive information like bank account details, social security number, date of birth or identity details could be a scammer who must be turned down.

The majority of companies recruit their employees using their official email accounts; rather than contacting the person through common numbers or email addresses. Any job letter/offer from any such account could be a fake one.

Legitimate recruiters always follow a comprehensive plan to get all the relevant information about the candidate. Any person offering you a job without following a standard hiring process raises suspicions.
High Profile Criminal Cases of Recruitment Fraud

After the Russian invasion of Ukraine, petrol prices ballooned worldwide, increasing inflation and the number of desperate job seekers. Through fake job postings, criminals exploit such individuals and get involved in recruitment fraud.

Several cases of talent acquisition fraud have been witnessed in the recent past encouraging global law enforcement authorities to take firm action against them. Let’s have a look at some of the high-profile cases:

1. Europol Arrested a Gang Involved in €20 Million Employment Fraud

In 2021, law enforcement authorities of the European Union dismantled a gang which was involved in an employment scam. The criminals were offering fake jobs in the construction sector to labourers while demanding an initial fee to pay.

It has been estimated that they illegally stole €20 million from the people in a few years, urging authorities to take strict action against them after the victims filed multiple complaints. The case is still in court, where their penalties are yet to be decided.

2. Hampton Gang Member Convicted for Pandemic Employment Fraud

Law enforcement authorities in the US have arrested a criminal for his involvement in a pandemic-related employment fraud. The Police have also stated that the criminal has a whole gang behind him, and they are trying to bring them under the law as well.

As per the investigation, the criminal was taking money from people to get jobs for them by submitting fake documents to various companies. The court has sentenced him to 27 months in jail and vowed to take down the whole gang working behind him.

Talent Acquisition Fraud and the Role of Law Enforcement Authorities

Due to the rising cases of recruitment scams across the globe resulting in financial losses of millions of dollars, law enforcement authorities of various jurisdictions are taking stringent action against criminals.

1. FBI Issued Instructions to Avoid Employment Scam

Federal Bureau of Investigation (FBI) has warned people to beware of cyber criminals using fake job listings to target applicants’ Personally Identifiable Information (PII).

FBI has instructed the common people to only apply for jobs through the official channels of companies and not pay attention to any emails, phone calls or messages received through unofficial accounts.

Employment fraud has been termed as a potential crime by the FBI, costing US citizens $59 million in 2020. The authorities have also instructed citizens not to provide any sensitive personal details like bank accounts, social security or identification number to any job recruiter through emails or phone calls.

2. UK Government – Raising Awareness of Employment Scams

The UK government has also taken drastic steps to guide their citizens about employment scams and how to avoid them. It has been strongly recommended that people apply for jobs only through the official portals or companies’ websites.

In their detailed guidance, the government has also guided job seekers to verify any email, phone call or message through certain checks, including verifying all details from the company’s websites.

It has also been instructed to the people not to proceed with any job application asking for money or any other personal details from you and not even open any spam link attached to the email.

How Shufti Pro can Help

With transforming technologies, the overall market is growing to produce more job opportunities for interested candidates. As per the surveys, this number is expected to grow in the coming years, increasing recruitment fraud risks.

Through talent acquisition scams, criminals not only defraud job seekers but also damage the reputation of established companies. So it is in their higher interest to find and implement a credible solution that efficiently mitigates the risks of stolen identity or credentials.

Shufti Pro’s identity verification services present an ideal option to counter this problem through its advanced identification features, including document authentication, facial recognition and address verification.

Want to learn more about identity verification services for eliminating recruitment fraud?

Connect with a KYC Expert

Prosecutors Raise Questions About KYC/AML Against Cryptocurrency Mixers

How Much Have Australians Lost to Scams?

How do Online Recruiting Scams Work?

Spotting the Signs of Recruitment Fraud

High Profile Criminal Cases of Recruitment Fraud

1. Europol Arrested a Gang Involved in €20 Million Employment Fraud

2. Hampton Gang Member Convicted for Pandemic Employment Fraud

Talent Acquisition Fraud and the Role of Law Enforcement Authorities

1. FBI Issued Instructions to Avoid Employment Scam

2. UK Government – Raising Awareness of Employment Scams

How Shufti Pro can Help

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