Welcome to the first edition of our newsletter. On a biweekly basis, we deliver thought-provoking content to help you make sense of the world — through a financial crime perspective. To connect with our team, hit reply to this email. Happy Reading!
For good reason, focus these days has been on the alarming events concerning the COVID-19 pandemic. Globally, the number of coronavirus cases has surpassed 2 million this week. Simultaneously, the number of COVID-19-related fraud cases has been on the rise too. According to Time magazine, the United Kingdom’s National Fraud Intelligence Bureau has reported losses amounting to more than USD 1.1 million as a result of coronavirus-related scams.
Fraudsters thrive in environments filled with fear and uncertainty, much like the world we are living in at the moment. The crimes are no different from the ones you have heard before — phishing scams, mobile malware, malicious websites — all tailored to the current pandemic.
Earlier this week, Interpol released a statement on an elaborate fraudulent scheme the German health authorities had found themselves embroiled in amounting to almost EUR 1.5 million. Using legitimate-looking websites and a chain of emails to mask the identities of the ultimate recipients of the scam, fraudsters played to sudden border closures within the European Union and the demand for medical supplies as the virus spread. Similar crimes have sparked around the world, as consumers dashed to find alternative means of obtaining hand sanitizers, alcohol disinfectants and the like.
One thing the virus has definitely exposed is vulnerabilities in traditional transaction monitoring that rely on face-to-face interaction. Financial regulating bodies, such as the Financial Crimes Enforcement Network and the Financial Action Task Force, have unanimously released statements over the past month to their communities on their approach to the crisis and warning the public of potential scams during this time. However, in the age of social distancing, this has also created opportunities for regulators to innovate rapidly and think ahead of ways we can create robust models for risk screening and sharing of financial crime related matters across borders in real time.
It’s been years since Canada earned its reputation as the newest tax haven, thanks to ‘snow washing’, a way of exploiting the nation’s clean reputation to generate a false sense of legitimacy and using secrecy laws similar to those in countries like Panama and the British Virgin Islands. In British Columbia, the stunning most-Western province of Canada, journalists have exposed how crime and money laundering have manifested in casino schemes, luxury cars and exorbitantly priced real estate, notably in Vancouver. This has spurred comprehensive investigations and reports that tie into long standing gang activity and regulatory failures, aggravating the public’s need for accountability.
Many are left wondering how Canada could harbour such insidious and malicious activity.
Last May, the premier of British Columbia John Horgan announced The British Columbia Money Laundering Commission. It is led by British Columbia Supreme Court Justice Austin Cullen, hence the name.
It is the first money laundering public inquiry in Canada and has a tight timeline of two years. An interim and final report are scheduled to be delivered November 2020 and May 2021, respectively. The next provincial election is scheduled for October 2021, giving a political context for its relatively fast deadline.
Public inquiries are generally expensive and prone to extensions — for now, Budget 2020, the province’s three-year-fiscal plan has announced a commitment of $11 million. While some critics believe that the extensive reports by experts are enough, others point to the success of previous commissions, like Quebec’s Charbonneau Commission as an encouraging example. This noteworthy commission, which tackled corruption in Quebec's construction industry resulted in arrests, new regulatory body changes, political resignations and protections for whistleblowers. The Charbonneau Commission was a 4 year undertaking that cost nearly $45 million.
Either way, with one poll finding that 90 percent of British Columbians consider money laundering a problem in their province (higher than the average Canadian) it’s clear there is a growing awareness and intolerance. Experts have already noted the dismal track record of the justice system — since 2012, only 10 people have been convicted of money laundering in British Columbia. Canada is also said to miss 99.9% of money laundering due to weak rules and penalties, a shocking realization that beckons a wake up call.
What brought British Columbia to this point though? In following issues we explore the independent reviews that prompted the Cullen Commission’s creation, while tracking the hearing’s developments.
