Scamming masterminds are not the tattooed thugs in movies. They are sophisticated cunning business people who choose to make big bucks illegally.
They are part of organised crime syndicates that have infiltrated Myanmar, Cambodia, Taiwan and the Philippines to set up offices, said Chua Choon Hong of Moody’s, which provides data, intelligence and analytical tools for business leaders.
These criminals set up the call centres and social media networks in modern offices with banks of computers. They kidnap people, enslaving them to do work like programming.
Chua leads a team of data scientists who, with the aid of AI and data analytics, scour the mountains of data such as databases from corporate registries, to identify the telltale signs of these scam bandits.
These insights and intelligence gathered are gold for business and financial leaders including law enforcement agencies to identify potential scams and shut them down.
“I want to nip in the bud the illegal operations before they start scamming victims,” said Chua, during an interview at the Money 20/20 event in Bangkok last week. He heads up Moody’s financial crime practice group and solutions specialists for Asia-Pacific region and the Middle East.
So what telltale signs would raise suspicion? Shell companies are one. These are business entities with little to no active business operations, assets or employees. Sometimes, businesses are renamed and have their business activity changed completely.
Another sign is a person with dual nationalities, wielding passports from multiple countries to evade scrutiny. Some may be nominee directors of many companies, as many as 500. These 500 companies may even be listed on the same official address.
The most unusual – and seemingly most obvious – sign is a director who is older than the biblical figure Methuselah, at more a century old.
These fishy details should set off the alarm bells. Some information is, mundane like date of birth (DOB), said Chua.
Lawyers, banking executives and others involved in the due diligence process would usually pay a cursory glance at DOB, but look closer and one might notice that the director was born 100 years ago, he added.
“Clearly, something is wrong here, a red flag. It sounds like a case of stolen identity.”
It is also suspicious for a person listed as a nominee director in 500 companies, which would be a serious case of corporate juggling. Similarly, one office is often the registered address for 500 companies.
Dual nationality is among the latest red flag indicator that has emerged from recent money laundering cases, such as the high-profile S$3 billion dollar one before the courts in Singapore.
The suspects have dual nationalities such as China and Cyprus, China and Cambodia and even triple nationalities for China, Cambodia and Vanuatu.
Chameleon companies that shed one name and business activity for another are another hint of something unusual. One example is a shipping company that moults into a spa overnight.
“The previous company was left on a shelf, left to age,” said Chua. “The scammers buy the ‘old’ company, rename it and change the business activity.”
“When they apply for bank loans, they pull wool over the banks’ eyes, leading them to think that the company has been around for a long time,” he added.
Setting up the scam nests
Chua also revealed that scam masterminds are systematic in setting up their operations. They often choose countries such as Myanmar, Philippines, Cambodia and Vietnam, which have been listed by the global watchdog Financial Action Task Force for having not having strong measures to counter money laundering and terrorist financing.
These illegal organisations’ first step is to set up modern operations, which include call centres, social media networks, app development and data collection. Then chillingly, they entrap people from Asia-Pacific, promising victims programming and office jobs.
They end up being slaves to fuel the scam engines, spinning social media messages to con other victims, while the women are enslaved not for prostitution but to act as the pretty faces to front the scams, said Chua.
“I suspect they also have specialists like psychologists who understand the human psyche and know how to hook their victims,” he said.
Then the “butchering” starts, he added. “They buy personal details and mobile phone numbers from the dark Web; they even have business units carrying out different scams.”
The ill-gotten money is next flowed into the financial system in other countries, laundering it, for example, by buying properties in Singapore and Australia. When exposed, the criminals move the operations elsewhere to begin anew.
The scammers’ cash pile is staggering. Fraudsters made away with US$1 trillion in 2023. One in four people in the world have lost money to fraudsters. In Singapore, victims lost the most money on average, at about US$4,031 per victim.
The Singapore police, in a separate report, say that phishing scams were the most common ruse in the country. Victims lost about S$16.5 million in 2022.
Always alert to enforcement action, the criminal masterminds are also changing their tricks and expanding their scope. Recent efforts have shown a trend where shell companies, with no operations or warehouses, have begun to import of unusual products.
Said Chua: “A spa company has the nominee director importing 200 washing machines. We discovered the machines can be stripped of parts like ball bearings and microprocessors which can be used in weapons manufacturing. This is to evade the sanctions against Russia in the on-going Ukraine war.”
In another case in Europe, a company imported breast pumps into a country which had a declining birth rate. Alarm bells rang because the pumps can be stripped for its parts which can later be used for arms manufacturing.
In cases like this, it is hard to consumers or even legitimate businesses to detect the scams and avoid being made use of for nefarious ends. Organisations such as Chua’s go some way to combat the global menace.
“Consumer education to alert them to scams is good,” he noted. “But my aim is to prevent the scam operation from starting.”
