Law Enforcement

FinTech and Law Enforcement partnerships

Expert Working Group Topic 2: Law Enforcement partnerships

We’ve just wrapped up our second Expert Working Group, following last year’s EWG on FinTech Approaches to Sanctions Regimes. This time, we gathered 16 experts from FinTechs along with law enforcement leaders to chat about our partnerships with law enforcement.

This working group made it clear that finding the right contact or information can be tricky. Please do not hesitate to reach out to the FFE secretariat at ffe_admin@fintrail.co.uk if you need help making contact on an important law enforcement matter—this goes for law enforcement, FIUs and FinTechs. We’re happy to help you find the information you need, quickly.

A sneak peek into just a few of the insights that came from our discussions, which covered FinTech best practices for receiving and responding to requests, SAR feedback, asset freezing, stay-open requests and more: 

  • Public/private partnerships and industry groups are tough nuts to crack—58% feel they’ve struggled to get traction with groups that share high-value law enforcement information

  • We hear from law enforcement a lot. Half of us receive several requests per week.

  • MLROs rarely act as the central point of contact. If you’re an MLRO, and you’re still taking all the phone calls, delegate away—today is your day!

Check out the full report for more, and reach out to us at ffe_admin@fintrail.co.uk to share any insights of your own. And, of course, stay tuned for further Expert Working Groups!

How Social Media is used to Further Financial Crime - Part 2

Similarly to most 18-year-olds, “Carlos” is glued to his phone, constantly refreshing his social media feeds and scrolling through friends’ pictures. In contrast with many other teenagers though, Carlos’ uploaded photographs illustrate a level of opulence and a life of excess. Carlos and his friends are pictured holding wads of cash, draped in designer clothes, Rolex watches on their wrists, and driving around London in a Mercedes. This seems quite implausible for an individual who left school after GCSEs and is now a junior employee at a central London restaurant (1).

 

Is the use of social media helping to fuel this problem? The HM Inspectorate of Probation’s report, ‘The Work of Youth Offending Teams to Protect the Public’, have described social media platforms as the “catalyst for some of the most serious and violent crime offences” (2). This is of no surprise as there has been a generational shift, with youngsters now living in a progressive online world which some adults just cannot get to grips with.

 

In Part 1 of this series, FINTRAIL used four basic money-mule associated search terms to pre-identify social media accounts of interest and those assessed to be associated with potential mule activity. These search terms were “Legit money UK”, “Easy Money UK”, “Flip Money” and “Instant Cash UK”. This investigation now seeks to focus on the initial phase of money mule recruitment and how by disrupting this critical stage it can disrupt the rest of the money mule value chain. However, it is important to first understand the money mule life cycle  which looks like this:

A simple diagram breaking down money muling into four steps; step 1 how to entice on social media, step 2 where they get a DM and get money deposited, step 3 the mule transfers money across their accounts, step 4 the mule gets caught and faces the c…

Honing in on Step 1 i.e. contact over Social Media, FINTRAIL have identified a number of key indicators of which combined together likely indicate an attempt to lure someone into Money Muling; these fall into two categories, visuals and language.

The likelihood of money muling being carried out on the internet depicted as visuals, e.g the images of cash etc to lure and the language used e.g. quick cash etc.

Visuals: There are a combination of images used that show instant gratification; key features include cash, cars, watches and evidence that large sums have been transferred into bank accounts. Further to this, many of the pages had adverts in their “stories” asking people to DM them if they want to make money quickly and requested people with very specific bank accounts to get in touch.

Language: By doing a simple drag and drop of Facebook, Instagram and Twitter pages into a tag cloud generator, FINTRAIL identified the types of language used across all platforms; the more popular the word, the larger it appears. The language used on the accounts really highlighted three key areas; fraudsters would request a specific bank account whether Barclays, Lloyds etc, then offer free fast easy money and explain that this was only a DM or whatsapp message away.

High chance of money muling: The combination of these images linked with these words are likely to indicate and point to something unsavoury and potentially illicit. This combination of factors can be used by social platforms to limit the likelihood of false positives when monitoring behaviour on their platforms and if kept up to date with evolving typological information, would create a far more effective disruption to wholesale financial crime scams than the over reliance on the regulated financial sector, by which point the damage is already done and the act of money laundering has already occurred.

So What Next? 

For FINTRAIL our money-mule journey on the social media platforms ended with the phrases “DM me for more info” or “whatsapp me”. However, in reality we know that this is only the beginning. We know that from here, behind the scenes, bank details are exchanged and money transfers are being made. This is where law enforcement has a critical role to play, coordinated with social media platforms, so that more can be done upstream to reduce the impact and have far more effect, reducing harm across the value chain of money mule activity.

 

Instagram as well as Facebook, use a new AI system Deep Text to essentially deal with and counteract major issues such as cyber bullying as well as malicious posts and comments. If the Instagram algorithm detects or finds provoking content, it’s discarded immediately. This demonstrates that technology already exists that can have an enormous impact on how social media platforms are abused (3).

A robust disruption of Step 1 of the money-mule cycle that is facilitated by social platforms will have a significant downstream impact where the end result would likely amount to a positive reduction in;

  • harm and exploitation of vulnerable people

  • costs to law enforcement effort (investigating money-mule cases)

  • the burden on the UK and global Suspicious Reporting Regimes

  • the burden placed on those operating in the regulated financial service sector


Very clearly, this needs to be an industry wide coordinated effort with law enforcement at the forefront and social media platforms on board. During the fifth Europol Money Mule Action (EMMA 5) week, 3883 money mules were identified alongside 386 money mule recruiters; 228 of these were arrested. As a major catalyst of money muling recruitment, social media platforms should share the burden and play their part in the deterrence of money muling by utilising technology they already have.

Get in Touch
If you are interested in speaking to the FINTRAIL team about the topics discussed here or any other anti-financial crime topics, please feel free to get in touch with one of our team or at contact@fintrail.co.uk

(1) How teenage money mules funnel millions from online fraud

(2) Monitor social media of young offenders to prevent crime says watchdog

(3)  Instagram leverages AI and big data

Keep Calm and Keep Planning: Pandemic Planning for FinCrime

No business sector has been left unaffected by the outbreak of the coronavirus. The financial sector, including FinTechs, is no exception. In times like this, working together as a community is more important than ever.

This document collates examples of how COVID-19 has impacted the FinCrime operations of FinTech FinCrime Exchange (FFE) members and how the teams have responded as they pivot to almost exclusively remote operations, as well as presenting some best practice guidance for a business continuity plan (BCP) and remote anti-financial crime (AFC) compliance.

It looks at how international bodies, financial regulators and law enforcement agencies across the globe have responded so far to the ongoing coronavirus situation, highlighting specific areas FinTechs should focus their attention on. 

The document also discusses differences between traditional business continuity planning and pandemic planning which may present unique challenges to Fintechs management teams. Finally, in its annex, the document collates information on COVID-19 related scams divided into four categories: imposter, product scams, investment scams, and insider trading. 

This guidance is based on research conducted by FINTRAIL across the FFE community. This includes a survey sent to all global members, review of 31 responses, 15 follow-up interviews, and additional research and analysis conducted by FINTRAIL. The survey and interviews were conducted during the week commencing 16 March 2020.

A black line drawing of the FinTech FinCrime logo and accompanying text title
 

With thanks to members of the FinTech FinCrime Exchange for sharing best practices.