The present FATF report on Illicit Financial Flows from Cyber-Enabled Fraud focuses on the escalating issue of CEF as a burgeoning transnational organized crime. CEF criminal syndicates exhibit intricate structures, with distinct sub-groups possessing specialized criminal expertise, notably in money laundering. These sub-groups may operate in a decentralized manner across different jurisdictions, posing challenges to investigating CEF activities. Additionally, CEF syndicates demonstrate connections to other criminal activities, including human trafficking, forced labor in CEF call centers, and proliferation financing associated with illicit cyber activities originating from the DPRK.
Money laundering groups and professional enablers play pivotal roles in the CEF-ML process. The ML network typically involves money mules, shell companies, or legitimate businesses. FIs, encompassing banks, payment and remittance providers, and VASPs, are integral to these networks. Criminals employ various ML techniques, such as cash transactions, TBML, and unlicensed services, to obfuscate the financial trail of their illicit gains.
Digitalization and technology have facilitated the expansion of CEF activities in terms of scale, scope, and speed. CEF criminals leverage tools and techniques to deceive victims, exploiting psychological states and emotions to maximize fund extraction. Technological advancements, including virtual services like remote online account opening, enable criminals to establish foreign accounts and conduct rapid cross-border financial transactions. Social media and messaging platforms are also utilized for recruiting money mules on a large scale, while vulnerabilities in new digital financial institutions, e-commerce, and social media platforms are swiftly exploited.
To address the challenges posed by CEF, jurisdictions are urged to enhance victim reporting, improve suspicious transaction reporting, and establish strong domestic coordination mechanisms. The report emphasizes the need for effective analysis of voluminous information flows to combat CEF comprehensively. Given the cross-cutting nature of CEF, robust domestic coordination mechanisms are essential to prevent and combat both CEF and related money laundering.
The report underscores the disparity between the locations of CEF predicate offenses and the money laundering process. Proceeds are often laundered expeditiously through a network of accounts spanning multiple jurisdictions and financial institutions. Multilateral collaboration among jurisdictions is deemed essential to intercept CEF proceeds laundered across borders. Existing and potential multilateral mechanisms, such as INTERPOL’s I-GRIP and the Egmont Group BEC Project, should be leveraged to facilitate rapid international cooperation and information exchange for more effective CEF combat.
Lastly, the report provides a compilation of risk indicators, anti-fraud requirements, and controls for public and private sector entities. These tools are presented as instrumental in detecting and preventing CEF and related money laundering activities.
This summay benefits Compliance-Management, Sanctions Update Systems, Compliance-Tools and Compliance Reporting.
