x
Our website uses cookies. By continuing to use the site, you agree to our use of these cookies. To learn more about how we use the cookies and how you can manage them, please see our cookies policy.
How Financial Fraudsters Harness Technology to Perpetrate Their Frauds
Financial fraud and crypto currency fraud in particular, continues to rise. Fraudsters constantly adapt their methods to utilise advances in technology as they arise. The evolution of advanced digital infrastructure, a combination of both hardware and software technologies which financial fraudsters harness to enhance the speed, scale and sophistication of their attacks aimed to defraud their victims.
One type of fraud that has been adapted from cryptofraud is recovery fraud. This is where the fraudsters who have already targeted their victim and obtained their money, return to the victim purporting to be able to assist them to recover the stolen funds. Frequently they claim to be an organisation such as a claims management firm or part of a special division of the police that is aware of the scam and that they are able to retrieve the cryptocurrency that their target has lost. Often the victim is rushed into taking action as the fraudsters tell them that the only way to recover the stolen cryptocurrency is to act immediately before their money is sent to different wallets and can no longer be identified.
Clearly the fraudsters wish to avoid detection and obscure their identity and often operate from jurisdictions where they will not be likely to be prosecuted. They also move from one location to another on a regular basis.
Depending on the type of fraud they are perpetrating, they select their victims carefully, for example if the fraud involves investments they will target a novice investor and encourage small-value investments that deliver a return. After a short time the fraudsters then encourage their potential victim to register as self-certified elective professional clients which removes the access to the protections that the Financial Conduct Authority (FCA) provides in the event of fraud. Self-certification suggests that the person has the experience and knowledge to understand high-risk investments and can recognise risk and potentially avoid it. Fraudsters sell their victims the concept of the ideal investment, a low-risk, high-return investment, presenting the lure of an inconsistent, unrealistically lucrative returns. Often to individuals who would not in the normal course of events would not be considered suitable for such schemes are approached.
The classifications for self-certification individuals are as follows:
High Net Worth Individuals
- Those with an annual income of £100,000 or over.
- Owning net assets of over £250,000 that does not include pension entitlements or your primary residence.
- Must have been a member of a business angel network for at least six months.
- Must be a director of a company with an annual turnover of £1 million for at least two years.
- Must have worked professionally in private equity or SME finance in the previous two years.
- Must have made more than one investment in an unlisted company in the past two years.
- As a restricted investor you must certify that you will not invest annually over 10% of your net assets in non-listed securities such as shares or bonds.
High Net Worth Individual (HNWI)
- Annual Income: Over £100,000.
- Net Assets: Over £250,000, excluding your primary residence and pension entitlements.
Self-Certified Sophisticated Investor (Must meet at least one of the following):
- Member of a business angel network or syndicate for at least six months.
- Director of a company with an annual turnover of at least £1 million within the last two years.
- Worked in a professional capacity in private equity or SME finance in the last two years.
- Made more than one investment in an unlisted company in the last two years.
- Restricted Investor
- Must certify that you will not invest annually more than 10% of your net assets in non-listed securities (shares, bonds, etc.)
Individuals with the correct expertise, experience in the financial sector in a suitable position, can be elevated to the Elective Professional Client status provided they have initiated ten transactions per quarter over the previous four quarters and have a portfolio exceeding 500,000 euros.
Firms that deal with investments and other regulated financial activities must be authorised and regulated by the FCA and provide the following:
- A detailed three year place and financial prediction
- Meet the capital requirements
- Demonstrate that the firm is able to comply with the handbook rules
- Also, that criminal record checks have been carried in respect of the individual controllers.
If you have been targeted by financial fraudsters or those purporting to assist in recovering your stolen money, Giambrone and Partners lawyers can assist.
Joanna Bailey heads our banking and financial fraud litigation department, she frequently leads the litigation against financial institutions involved in cryptocurrency trading disputes, as well as Forex investment issues and regulatory investigations. Joanna has had some considerable success in retrieving our clients' funds lost in fraud.
She has developed a range of strategies both to find the assets of the individuals perpetrating the fraudulent schemes and to restore the funds to our clients. As well as recognising culpability in the organisations facilitating (but not associated with the fraud), by failing to undertake adequate due diligence.
Joanna led the first case in Europe where proceedings were served on Persons Unknown connected with two digital wallets over the blockchain by a non-fungible token or ‘NFT’ in a cryptocurrency fraud. Following this ground-breaking case Joanna was named as Lawyer of the Week in the Financial Times.
Joanna is highly experienced in high-value out-of-court settlement negotiations and has in-depth knowledge of the Civil Procedure Rules as well as English common law.
If you have been the victim of a cryptocurrency fraud or any other type of deception, the lawyers at Giambrone and Partners can assist in retrieving your stolen funds.
Please click here for more information.