As we endure these uncertain times, it is clear that not every threat that we face as citizens of the world is health-related. Many Americans have begun to feel the sting of ever-increasing financial pressures as jobless claims continue to mount – approximately 16.8 million unemployment claims have been filed since March 15th – and the threat of a receding economy with no end in sights weighs on individuals, families, and corporations alike. Responding to this unprecedented crisis, the federal government has expanded its efforts to ease the impact of the free-fall these entities are currently mired in by implementing new aid programs aimed at assisting companies and local governments in gaining access to pivotal funding, and seeing the Federal Reserve agree to pump hundreds of billions of dollars into stimulating the national economy. While the obvious economic effects associated with widespread job loss has been the major talking point across the financial sector of late, another significant threat will continue to loom large as COVID-19 runs its course; that thread being financial fraud.
Amidst the profound growth of web-based technologies and solutions available to consumers since the turn of the century, the growing reliance on remote banking and retail options have contributed significantly to the rise of cyber-fraud. Our current situation, one that has seen nationwide “stay home” orders, as well as changes in general accessibility and shortened hours of operation implemented at most financial institutions, has forced American citizens to adjust the management of their bills and finances exclusively via the digital realm. Financial criminals, of course not known for their moral compasses, have used the distraction caused by the pandemic to facilitate an uptick in the success rate of their fraudulent scams. While financial watchdogs have urged banks to enhance their online security accordingly, thus far cyber-criminals have jumped on this opportunity by pumping out an increased number of phishing email and phone scams, creation of banking and federal unemployment websites that appear legitimate but are meant to pilfer login pins and crucial personal information, fraudulent loan and credit card applications. Even “shipping fraud” – which refers to the criminal practice of redirecting purchased items to the address of an individual different than the customer who supplied their payment information to make the original purchase – has become a prevalent practice today. Unfortunately, early figures have demonstrated that these fraudulent trends are becoming a significant threat to millions upon millions of already-struggling Americans as the pandemic progresses. A recent survey carried out by consumer credit reporting agency TransUnion found that at least 22% of Americans have been targeted by digital fraud related to COVID-19, with the company’s Global Fraud & Identity Solutions department reporting a “347% increase in account takeover and 391% rise in shipping fraud attempts globally against its online retail customers.”5 Of course, there are many more individuals that have been targeted or scammed without their knowledge.
In their 2020 e-commerce report, TransUnion also noted other shockingly high increases in fraud over just a one year span, including a 118% growth in potential fraud from mobile devices, with fraudsters taking notice to the fact that an increasing number of online purchases are made from smartphones and taking steps to replicate consumer behavior in order to avoid detection from authorities.5 By factoring in the many millions of people now forced to make an increased number of purchases online, these percentages will likely skyrocket in the coming months.
With that being said, the United States government is taking this novel problem very seriously. This past week, the Federal Trade Commission (FTC) released guidelines to help protect citizens from falling victim to various Coronavirus-related scams. Some of the listed guidelines include not responding to emails or calls about checks from the government, hanging up on “robocalls”, and being diligent when it comes to donations. The FTC is already tackling telemarketing issues by having sent cease and desist letters to at least nine marketing companies using Coronavirus-themed calls.1 The FTC also announced that they are teaming up with the FDA on this issue to send out warning letters to companies advertising with unapproved or misbranded products related to COVID-19.1
While our health remains the primary focus at the moment, citizens must remain vigilant and alert when it comes to maintaining their financial security, especially during the COVID-19 saga, as criminals are counting on this distraction to help propel their individual interests.
Former Fox Execs Indicted in U.S. Corruption Probe
Last Monday, United States prosecutors announced the indictment of two former executives of multinational mass media corporation 21st Century Fox Inc. for their role in a ploy paying millions of dollars worth of bribes to Fédération Internationale de Football Association (FIFA) officials in exchange for exclusive broadcasting rights. The individuals in question, Carlos Martinez and Hernan Lopez, were high-ranking developers of Fox’s sports broadcasting initiatives in South America. The pair has been indicted in a federal court in Brooklyn, New York on counts of wire fraud and money laundering related to the bribery of officials at FIFA’s South American soccer confederation known as CONMEBOL. The legal representation for the two men have vehemently denied the claims thus far, citing the general lack of impropriety noted in the prosecution’s unsealed indictment. Later on Monday, charges against Gerard Romy, former executive of Argentinian sports marketing company Full Play Group SA, that included wire fraud, money laundering and racketeering related with ties to FIFA were also formally announced.
The respective allegations become the latest fallout from in a widespread U.S. investigation into corruption across the international soccer realm that commenced in 2015. Since the allegations of collusion between CONMEBAL, FIFA’s Caribbean, Central and North American confederation (known as CONCACAF), and several sports marketing/mixed media executives first aired, a black cloud has been cast over the sport and has culminated in the arrests of numerous FIFA officials and their associates for collectively taking bribes in excess of several hundred-million dollars. The investigation also led to the resignation and subsequent banning of the former head of FIFA, ex-President Joseph “Sepp” Blatter, in December of 2015. Prosecutors recently announced the discovery that FIFA officials also “took bribes in connection with choosing Qatar and Russia to host the 2018 and 2022 World Cups, respectively” 2 which is likely to extend the investigation further.
U.S. Counters Iranian Plea for Coronavirus Aid
Over the past week, Iranian President Hassan Rouhani has urged the International Monetary Fund (IMF) to approve the Islamic Republic’s application for a loan of $5 billion to help combat the coronavirus and its profound economic impact amidst ongoing U.S. sanctions. The IMF, a Washington, D.C.-based international organization promoting financial stability, cooperation, and overall growth among the 189 countries that comprise it, has seen a sharp increase in similar funding requests from government bodies across the globe in wake of this unprecedented health crisis. As such, the U.S. government has approved a significant increase in the IMF’s lending ability. However, the Trump Administration believes that Iran currently has billion-dollar accounts that could fight the pandemic that it has chosen to hold out. It is also the belief of the President that with additional financing from the IMF, “Tehran would then be able to divert those or other funds to help its economy, which has been weakened by U.S. sanctions, or finance militants in the Middle East, rather than on containing the pandemic.”4 With that being said, the United States has reportedly planned to block Iran’s request, increasing the pressure on Iran to submit to perhaps structuring a new nuclear deal that would be far more favorable to the United States interests than the Obama-era deal that was withdrawn from in May of 2018.
Rouhani has accused the United States of engaging in what she coined as “medical terrorism” for their handling of this matter, while questioning the overall humanitarian impact of the imposed U.S. sanctions on innocent, yet ailing citizens. The U.S. has countered that there have been numerous humanitarian financial channels opened that would allow the citizens of Iran to gain access to valuable funds and goods, though the constant threat of penalties for sanctions breaches/circumvention have limited the prospect of different entities choosing to explore these options.
HSBC Self-Reports AML Breaches in Australia
Multinational financial services firm HSBC Holding plc. recently reported itself to AUSTRAC, Australia’s financial regulator, for potential breaches of anti-money laundering regulations discovered as part of an internal probe. In their annual report released in December of 2019, HSBC announced their findings that included “one such matter relating to the under-reporting of a limited category of cross-border transactions involving non-bank financial institutions and other financial institutions”3 with which the bank had actively been working to resolve/remediate with AUSTRAC. HSBC now joins Commonwealth Bank of Australia and Westpac as the latest major financial institution to become entangled in anti-money laundering issues in the land down under in recent years.
While the official number of breaches found by HSBC has not yet been disclosed, early reports have indicated that this total is likely in the range of several thousands of transactions that were not properly reported to regulators – if they were even reported at all. Banks found to be non-compliant with AML legislation in Australia can face fines of up to $21m AUD (£10.3m) for each individual offense discovered.
- “FTC Warns Nine VoIP Service Providers and Other Companies against ‘Assisting and Facilitating’ Illegal Coronavirus-Related Telemarketing Calls.” Federal Trade Commission, 27 Mar. 2020.
- Pierson, Brendan. “Former Fox Executives Indicted in U.S. FIFA Corruption Probe.”Reuters, Thomson Reuters, 7 Apr. 2020.
- Ryan, Peter. “HSBC Flags Potential Anti-Money Laundering Law Breaches.” ABC News, 8 Apr. 2020.
- Talley, Ian, and Benoit Faucon. “U.S. to Block Iran’s Request to IMF for $5 Billion Loan to Fight Coronavirus.” The Wall Street Journal, Dow Jones & Company, 7 Apr. 2020.
- “TransUnion Research Quantifies How Social Distancing Is Changing Shopping Patterns.” TransUnion Newsroom, TransUnion, 24 Mar. 2020.