A forensic ‘cyber fraud’ investigator shares insights on this crisis, and reveals what needs to be done to nip the trend.

Money laundering is a huge threat to economies and national security. Every year, approximately US$800bn to US$2tn (2–5% of global GDP) is being laundered globally.

Even with more rigid regulations being imposed, criminals in Asia continue to target victims with impunity. This is even projected to increase, according to ‘cyber fraud’ investigator, consultant and trainer Kanwaljeet Kaur.

What is the world doing wrong? Read on to find out what Kaur shared with DigiconAsia.net.

DigiconAsia: What are the latest anti-money laundering (AML) trends in 2022 to tackle rising cyber fraud?

Kanwaljeet Kaur (KK):  

Three AML trends to be watched for may include:

  1. Measures aimed at tackling crypto fraud: I have observed that, in the last two years of the ongoing global pandemic, investors tend to look for newer financial instruments more than ever before, and cryptocurrencies are preferred. The problem is that crypto is by nature decentralized and anonymous and lacking in a solid and universal regulation; therefore, it is highly prone to financial crime. So, to ensure AML compliance in cryptocurrency exchanges, new crypto-oriented AML laws will be required for each user around the globe.
  2. AI and AML will be used to boost compliance: Financial institutions will achieve better data optimization and AML compliance, and this trend is expected to continue.
  3. Mandating of data sharing among leading financial institutions: The Financial Action Task Force and many governmental agencies are pushing for intelligence information sharing between the private and public sectors to establish an integrated framework against money laundering and other financial crimes.

DigiconAsia: Where does Asia stand in comparison with AML measures in the Western and Eastern countries?

Kanwaljeet Kaur

KK: APAC is taking impressive steps when it comes to AML. However, the implementation is not very uniform. For example, countries such as Singapore and Hong Kong have more stringent regulations compared to those in Iran and North Korea. The money laundering risk rating for the European Union and Eastern European countries is generally lower than the global average.

Going against improved AML measures are incessant cyberattacks by Chinese threat actors, and although the respective countries in the region are taking preventative actions, we have a long way to go.

In my opinion, there should be dedicated cyber laws to deal with such issues.

DigiconAsia: What are the emerging methods of money laundering to counter AML measures, and how can individuals and enterprises help fight against this crime?

KK: In my AML/’Countering the Financing of Terrorism’ consulting experience, I have seen some modernized money laundering tactics:

  1. Social engineering online is currently what many fraudsters that using to gain access to other people’s bank accounts. For money laundering purposes, a criminal may transfer money directly to such a victim’s account and trick the person into sharing sensitive information such as passwords or into getting remote access to the victim’s computer.
  2. Synthetic identities are now easily created using a combination of real and fabricated information to open accounts for credit cards, online deposits and loans. These identities can be used to pull off money laundering schemes, as they are difficult to detect.
  3. Prepaid cards such as gift cards, debit cards and credit cards can be purchased in a completely anonymous manner. They can be purchased in cash as well. The value loaded in these cards can be redeemed online anywhere in the world without the identity of the person being disclosed. This feature makes it an attractive choice for money laundering now.

Since AML is not just the responsibility of regulators:

  • Individuals should keep monitoring their bank accounts closely: if you ever receive an anonymous fund transfer, report it to law enforcement agencies as it could be a sign of money laundering
  • Enterprises should modernize AML technologies for data analysis and trend analysis. Any transaction or customer that looks suspicious should be immediately reported to the regulators. Use a three-step approach to detect potential fraudsters: 
    • Check the background of investors involved 
    • Check why the entity or person is seeking to invest 
    • Perform detailed checks about assets that appear in any financial documents they submit for onboarding

DigiconAsia: What are some common mistakes that make money laundering easier for fraudsters?

KK: The hit show ‘Ozark’ is a quick example here how an seemingly innocent family man actually runs a big money laundering business. The sad truth is that any of a business’ customers or clients could be a money launderer, so constant vigilance is needed at all times, while keeping an eye on some of the common mistakes in vigilance:

  • accepting huge investments from an investor without proper due diligence due to the inviting amounts involved
  • not keeping up-to-date on the latest tactics of money laundering, and therefore being exposed such “zero day” methods of attack
  • absence of formal AML policies:it is a disaster in waiting

DigiconAsia thanks KK for sharing her views on the money laundering crisis.