Staying Ahead of Money Transfer Scams – What You Need To Know

Although money transfer and foreign exchange services are an absolutely indispensable part of the national economy, the point must also be made that these services have their fair share of problems, most notably the large number of scams and other nefarious activities that have penetrated the industry. According to Financial Fraud Action UK, an advocacy group to identifying and uncovering fraudulent schemes related to money transfer and other finance-related activities in the UK, an estimated 23.6 million pounds sterling were lost in 2014 to savvy fraudsters who preyed upon both local residents and tourists alike.

As part of their research, the FFA UK has identified some of the most common schemes used by those hoping to perpetrate money transfer fraud. The FFA UK has placed particular attention on the “phone scam”, a scheme in which fraudsters call individuals and masquerade as officials from their designated banking institution. Essentially, the fraud works as follows: the scammers often “spoof” the number of the bank in question, making it appear as if the bank is actually calling when caller ID systems are used. At this point, the scammer will tell the individual that fraud has been detected on the account and that they must quickly move their funds into a “safe” account in order to ensure that they are fully protected. This account is, of course, merely a vehicle through which the scammers can then gain access to the available funds, often leaving the victim penniless.

Through their research, the FFA UK discovered that nearly 70% of UK residents had received fraudulent propositions from scammers pretending to represent banking institutions throughout the last year. With this in mind, it is even more important for UK citizens to remain perpetually vigilant and ensure that they do not fall prey to career scammers.

Banks throughout the UK are requesting that individuals who believe they have been in contact with money transferscammers contact their offices immediately in order to report the activity so that they can properly warn the rest of their customers. Only through continued vigilance will such criminal activity be effectively thwarted.

Don’t exchange currency at the airport – they have the worst exchange rates

After disembarking from a lengthy international flight, the chances are quite good that you’re ready to seize the day and jump headfirst into your vacation plans. That being said, industry experts agree that certain items on your pre-entertainment “to-do” list, such as exchanging currency, are best done after you have left the airport.

Recently, the British pound has made unprecedented gains against the Euro, reaching a record 1:1.35 conversion rate. For those traveling into EU countries for vacation, this is likely to produce a variety of joyful responses. That is, of course, unless you are exchanging your currency into the EU dollar at local airports, which have now been reported to be offering as low as 1:1.06, a rate that is too far below international standards to ignore. With exchange rates settling near 1:1.30 online and 1:1.26 at a large number of high street banks, it seems almost impossible to believe that airport exchange services have the audacity to venture as low as they seem to be headed. This would be a scandal, but tourists are, nevertheless, continuing to opt into these predatory banking practices which are dramatically reducing the value of their financial resources during travel.

When asked to discuss the current exchange rates, Simon Phillips, a member of No1 Currency, stated, “The rates offered by money exchanges at the airports are terrible, targeting travellers who have no option. The clear message is to plan ahead and order online.”

Fortunately, tourists have a number of options available to them after they have decided that they are ready to exchange their currency outside of this predatory airline environment. A number of websites are currently available which feature outstanding currency exchange rates for a wide array of currency pairs. For those who would prefer to avoid online exchanges, it is highly recommended that all available exchange options at local banks be explored before visiting an airline shop.

Although the value of today’s in-demand currencies is likely to shift over time, savvy travelers can continue to find the best possible exchange opportunities to maximize the value of their financial resources. As always, a bit of persistence will likely pay off in the long run. Those who are passionate about finding the best possible deals on their exchange rates can do so by spending the time needed to locate the best possible exchange services. With the summer holiday season just around the corner, this information really couldn’t come at a better time!

£650 million stolen from online banks using an illegal money transfer software

In what many experts are now considering to be the most serious and damaging cybercrime of all time, Russian hackers have allegedly stolen nearly £650 million from a series of international banks, including financial institutions in China, the United Kingdom, Japan and the EU at large. The crime was uncovered after it was discovered that cash machines in the Ukraine were releasing large sums of money at seemingly random intervals. In order to determine the source behind this strange behavior, Russian-based cybersecurity firm Kaspersky Lab was called in to investigate.

After their inquiries, these experts uncovered a staggering infrastructure which has been developed over the course of two years. According to Kaspersky Lab, the operation was multi-phase in nature, involving both the installation of malware on internal computer systems within various banking networks, as well as mimicry of banking personnel made possible by illegal surveillance which occurred after the hackers had managed to break into the security systems of the banks they were planning to steal from and use custom designed money transfer software to achieve their desired goals.

Experts believe that the duration of time needed following the installation of the malware until the actual theft was between two to four months per bank. According to Sergey Golovanov, a member of the Kaspersky Lab team tasked within investigating the case, “These bank heists were surprising because it made no difference to the criminals what software the banks were using…It was a very slick and professional cyber robbery.”

Are we entering a new era of cybercrime? The changes are good that security professionals will be required to dramatically improve and refine pre-existing systems throughout the banking world in order that a theft of such magnitude does not happen again. It is also important to note that such trespasses can also occur in virtually any other large industry as well. To effectively counter this increases threat, cybercrime professionals must remain vigilant and do their best to limit the number of opportunities that cyber criminals may be able to exploit for personal gain. In the worlds of Golovanov, “even if the money transfer software is unique, a bank cannot get complacent.”

It will be interesting to observe whether or not these criminals will be brought to justice, and, if so, what authorities can learn from the tactics these hackers used.

International Money Transfer Trends Revealed

Given the fact that the 21st century continues to become increasingly interconnected thanks to digital and internet-based technologies, it should come as no surprise that the rate of international money transfer has expanded in kind. The international money transfer industry has blossomed as both professional and personal use of these particular services has experienced healthy growth over the last decade.

That being said, very little attention has been devoted to developing a comprehensive survey of international transfer trends until now. Recently, researchers from Azimo, a popular money transfer service, compiled a series of data points and metrics related to the contemporary world of international money transfer for presentation at the upcoming World Money Transfer day. While some of the information presented will most likely be expected, readers may be surprised by particular snippets of data included in this survey.

Take, for example, the current trends amongst individuals between the ages of 18-34 when engaging the help of a money transfer organisation. Although this generation is commonly considered to be the most “plugged-in” in all of history, the majority of those polled stated that they would first approach a bank for their international money transfer needs before using an online service.

It was also discovered that 85% of those polled believed that anything higher than a 2.4% commission fee was “unfair”, sentiments that seem rather curious considering the fact that the vast majority of global corporations engaging in international money transfer currently charge between 8-10% commissions on all exchanges.

Perhaps a more expected observation could be the fact that the number of money transfer transactions requested through mobile devices in 2015 more than doubled over the previous year. This, of course, coincides directly with the rise in e-commerce and mobile web browsing that is fast replacing desktop computers and other bulkier devices.

Ultimately, curious individuals who are eager to learn more about the current state of international money transfer will likely find that this new report is truly comprehensive. Those who make it their business to stay abreast of international money transfer news would do well to peruse a copy at their earliest convenience.

Could it be the end of Bitcoin transactions in Europe?

The European Commission (EC) is set to bring the anonymous transactions in virtual currencies to an end to help tracking of terror groups’ funding. To foster this, the Commission published an action plan that will help reinforce the fight against terrorism financing yesterday. It outlined information on how criminals are looking for new ways quickly that provide lower detection risk of moving their money.

There is no evidence in the plan that points out to finance terrorism being financed by virtual currencies. However, the Commission is certain that there is a possibility and feels that it is in a position to contemplate regulation as one of the continuing efforts to bring terror attacks to an end.

The plan requires the platforms that deal with virtual currency exchange to operate under the capacity of the European Anti-money Laundering Directive so as to ensure that exchanges can reveal who accessed their services and when they were used. According to the action plan, the Commission will as well inspect whether it is viable to include wallet providers of virtual currency.

Bitcoinistas should not feel like they have been left out by the EC since the action plan requires a re-think of how and when to reveal pre-loaded credit cards’ users, without minimising their utility. This is because many of these users are poor who find these cards useful instruments in financial matters because they work as credit cards without necessarily requiring the card holders to be credit-worthy. Consequently, a central register of bank accounts, as well as account holders, is required to be set up in the entire European Union member states.

Meticulous consideration of all exchanges between states and EU members that are known to be great points for money-laundering has not been left out in the action plan as well. About many government responses to situations raised by technologies, this issue remains of value, but pointless at the same time since virtual currencies create a virtue of privacy.

Bitcoin in its advice says, “To defend your privacy, there is need to utilise a new Bitcoin address whenever you accept a new payment. Also, you can make use of several wallets for various functions. In doing this, you will isolate all your exchanges and associating them with each other will not be possible. Those who send you money cannot view your other Bitcoin addresses and what you use them for. ”

Many virtual currency transactions are beyond EU’s reach in such a way that operators will find ways of cashing in cryptocurrencies within Europe. Cryptocurrencies do not allow terrorists to access funds.

Is the Foreign exchange market shrinking?

It took the foreign exchange market decades of build up as well as globalization and deregulation measures to earn the title of the largest financial market there is. However, as much as the forex market cannot get relinquished easily, it appears as if its glory days may just be over.

The situation has been accredited to the shrinking in size of both the market volumes as well the number of employees who work in the currency departments of most major banks. Other factors contributing to the same fact include banks implementing stringent regulations, a downward trend in; the market boom, as well as global economy and growth.

According to statistics, in the last three years, the total number of market traders employed in Europe’s top ten currency exchange banks has dipped by 30 per cent. Based on figures provided by the New York Federal Reserve and the Bank of England, as of last month, the trading volumes have reduced to a three-year low.

According to Coalition; a financial data analytics firm, 332 people were employed by the top ten FX banks that operate in Europe. However, in 2012, 475 people were employed by the same institutions, meaning that in 2012 the number of individuals employed by the banks was 30% higher than in 2015.

According to a central banker, towards the end of the year in 2014, the global forex activity in the market was at a peak. During this period, the average daily volumes amounted to about $6 trillion a day. According to data provided by CLS Bank, the average daily volumes in January amounted to $4.8 trillion. This figure indicates a drop by 9% from the previous year and a far cry from the peak average of $6 trillion.

The downward trend has also been attributed to regulatory changes that took place after the global financial crisis which has resulted in a reduction in the ability and willingness of traders to take risks.

According to Howard Tai, a senior analyst at Aite Group, the regulations carried a psychological effect on the market players and thus traders are o longer as aggressive as they used to be.

Suppressed market volatility has also been blamed for the dwindling average market volumes. A fall in spot volumes and reduced demand for derivative products; for example, currency options, based on the fact that if there is no movement of money in the market, them the demand for hedge quite minimal.

According to the managing director of Chapdelain FX, Douglas Borthwick, there is little volatility due to zero interest rates combined with a global environment that appears to be very dovish. Thus, since the volatility is low then the total average volumes are also low.

Hackers stolen £651 million from banks

For years, financial institutions around the world have relied upon the Swift payment system for international transactions with partner organisations, individuals, businesses etc. In a way, Swift has proven itself to be a highly efficient, ultra-reliable tool by which the world’s financial infrastructure can operate. Recently, however, a group of as yet unidentified hackers have proven that even a system as secure and heavily defended as Swift can be manipulated in order to help perpetrate cybercrime and digital theft.

According to official reports by global security experts, a team of hackers recently targeted the Bangladesh central bank as part of a massive cyber theft attack involving international money transfer. As a result of the attack, nearly 55 million pounds Sterling were diverted into the hands of these culprits. Although experts now know that the money was transferred to the Philippines, little information has been made available regarding who may have been behind this perfectly executed heist.

This crime has underscore the need for fresh thinking when it comes to designing and properly implementing theft deterrent measures within the Swift network. As it currently stands, there are nearly 11,000 banks and financial institutions which utilise the Swift payment network on a regular basis. In a recent response to the theft, representatives from Swift have stated that the company has known of “…a number of recent cyber incidents in which malicious insiders or external attackers have managed to submit Swift messages from financial institutions’ back offices”.

It is perhaps, reassuring to know that the means by which these criminals were able to manipulate the Swift system was through external means, i.e. the banking infrastructure itself as opposed to the Swift transfer mechanisms. In this heist, for example, Swift merely operated as a means by which the funds were transferred as opposed to the method by which hackers gained access to the funds.

Methods aside, however, this incident serves as a stark reminder that money transfer remains a potentially dangerous and risky tools for businesses and individuals alike. Although the Swift system may not have been directly involved in the heist, it remains the primary vehicle by which one of the world’s larger thefts was successfully completed. More information regarding this shocking crime will likely be made available in the near future. Investigators are actively searching for further information regarding this crime and the identification of possible suspects.

Impact of Politics on Currency Exchange

Politics can be seen to have what is called the butterfly effect. The election of Donald Trump, the results of the elections in France, the Brexit vote last June, and now the general election results of this month, among others, all play a part in how the currency is valued globally. In the aftermath of this most recent UK election, the pound sterling has slipped again. It was already low, have slumped and never recovered last year after the Brexit vote.

After exit polls predicted that the Conservative party would suffer a major blow in Thursday’s vote, the UK currency fell around 2 per cent. Investors have been spooked by uncertainty after this election ended in a hung parliament. This comes just days before the negotiations of Brexit begin. It slid a further 0.7% and failed to recover after the final results of the election were confirmed.

The Tory party had failed to secure a majority and the results on the markets were not good. The pound has lost more than 14 per cent against the dollar since last June’s Brexit vote. Some speculation surrounding a strengthening of the pound if the election results lead to a softer Brexit but there are many who remain skeptical about this. UniCredit’s chief UK economist, Daniel Varnazza, wrote in a note to clients: ““A ‘hard’ Brexit is almost a given,” “With Theresa May weak, the hard-line Euro-sceptics in the Conservative party, who are more organised than the Remainers, will be able to take the Prime Minister hostage in their pursuit of a hard Brexit. There isn’t any realistic prospect of this chaos leading to a rethink of the Brexit decision for the country.”

The current political uncertainty is having a dramatic impact on the pound and business leaders should take heed and come together to figure out ways to ensure the pound can be made more stable. There are many questions surrounding Brexit now, and the talks are going to have an even more unsettling effect on the markets.

Volatility of the pound will continue while the government figures out who will lead the country. The Brexit talks and negotiations will have the same effect. Even though the economists factored in what they presumed to be the volatility of sterling during the Brexit talks, even they are uncertain of what will happen in the near future. This is not good for attracting investors to the UK.

“Theresa May’s electoral gamble has catastrophically failed,” said Tom Stevenson, an investment director at Fidelity International. The market reaction to this unwelcome outcome is likely to hit UK shares, bonds and the pound. Markets will likely remain on the back foot while the difficult job of putting together a workable government is undertaken.”

Political uncertainty, election results here in the UK and elsewhere, Brexit, and the effects of the global economy, all are part and parcel of an extremely volatile pound and does not bode well for the UK as business continues to try to attract investments, Investments that seem to be waiting for everything to calm down before repatriating assets into the UK.

Keeping an Eye on the Pound

The pound is still floating around, not performing well, ever since the triggering of Article 50. It may be a long time before stability is seen and investors feel comfortable investing more. Brexit is still playing heavily on the pound, as is politics around the world, and the uncertainty that these bring has kept the already low pound under pressure.

It seems the pressure on the pound comes from many directions and numerous other countries. Even North Korea, with its missile testing, is affecting how investors interact with the pound. Since the euro is in a stronger, more stable position than the pound, investments seem to be centred more on it than the riskier Sterling. The euro, though, is rallying through all of the uncertainty.

Britain’s construction sector is a good example of how investment slumps can do harm to a sector and the pound. Growth in the construction sector hit a one-year low this month. It was hurt by an investment slump in the commercial sector as Brexit uncertainty weighed in. Data from other dominant service sectors will be very important for attempting to predict where the pound will fall.

Prime Minister Theresa May failed to win a clear mandate at a snap election in June and only has a slim majority in parliament that rests on an agreement with a smaller party. She remains vulnerable if pro-European lawmakers in her Conservative party team up with other parties to vote down legislation or support amendments. Prime Minister Theresa May warned lawmakers over the weekend that Britain could be faced with a Brexit “cliff edge” if they failed to back her EU repeal bill, which is to be debated in parliament on Thursday.

It is being speculated that there is a likelihood of a general election as Brexit talks wrap up late next year. The possibility of another general election and the uncertainty of Brexit, along with other political happenings are all combining to pressure the pound and we’ll have to watch closely as it navigates the political turmoil.

Due Diligence Required to Avoid Money Laundering Companies

Money laundering is the term used when someone transforms the profits of crime or corruption into legitimate funds. It got its name from turning ‘dirty money’ into ‘clean money’ through various channels, including money exchange. There are certain day-to-day responsibilities a business must abide by in order to avoid being an unwilling participant in money laundering. There are customer due diligence measures, along with internal controls and monitoring systems that you must have in place.

The regulations surrounding the responsibilities of businesses in regards to money laundering are based on the size and scope of the business. The UK government website has all of the details laid out and it would be wise to read the material they have so that your business is in line and acting accordingly. This article gives a rough view of these regulations, but it is not exhaustive nor is it to be construed as a guideline.

One of the main areas that needs to be controlled is customer due diligence. You’ll need to apply this due diligence when: you establish a business relationship, you suspect money laundering or terrorist financing, you have doubts about identification information you obtained previously, or when an existing customer’s circumstances change. There are monetary markers or thresholds that you must be aware of, as well. Even if you only carry out the occasional transaction in your business, customer due diligence is still necessary.

Customer due diligence means taking steps to identify your customers and checking they are who they say they are. In practice this means obtaining a customer’s name, a photograph on an official document which confirms their identity, their residential address and their date of birth. Asking for a government issued document like a passport is a good start. You will also have to ask for documents that confirm they reside at the address they give you. This can be in the form of a utility bill or bank statement that has been sent to their address, in their name. If you have doubts about a customer’s identity, you shouldn’t deal with them until those doubts have been assuaged.

Enhance due diligence is necessary in cases where, for instance, the customer isn’t physically present or where the customer is another Money Service Business. When the customer is trying to do business with you online, they are not physically present. In our global world, this is not uncommon but enhanced due diligence is necessary to ensure you are not getting yourself involved in a money laundering scheme. To safeguard yourself and your business you must obtain further information to establish the customer’s identity. You should also apply extra measures to check documents supplied by a credit or financial institution. Finding out where funds have come from and what the purpose of the transaction is, is common sense and good practice.

If you find yourself dealing with another money service business, you need to seriously consider applying enhanced due diligence. This situation presents a higher risk of money laundering or terrorist financing because the money you receive will be a ‘bulk transfer’ representing a collection of underlying transactions placed with your customer. The extent of enhanced due diligence measures you apply should be based on the risk and circumstances of each case.

Internal controls and monitoring systems are a must for your business. Creating an anti-money laundering policy, including what controls and procedures are in place to prevent money laundering, provides a good framework. Keeping this document updated, and your employees trained on what they should be looking for, will help to secure your business from the risks of money laundering. Ensure that your business is compliant by visiting the UK government website and carrying out a risk assessment. You can keep your business safe by following these rules and regulations.

Category: KYC & Compliance