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Fraud And Money Laundering Essay

3966 words - 16 pages

Fraud and Money Laundering

Money laundering is defined as: ‘The funnelling of cash or other funds generated from illegal activities through legitimate financial institutions and businesses to conceal the source of the funds.’ Anti-Money Laundering, 2nd ed., IFAC, 2004 Fraud is a general term for deliberate misrepresentation and may include money laundering. The problems of fraud and especially money laundering are increasing at an unprecedented rate. Governments worldwide are introducing new legislation and penalties for such white collar crimes. However, the huge amounts of money involved in these illegal activities ensure that criminals continue to exploit ways of increasing ...view middle of the document...

This occurs through unauthorised changes to the registered address of the company or to directorships. These crimes are not just a financial risk to the companies concerned, but a reputational risk which may damage the business for an appreciable amount of time. The Fraud Act 2006 came into force on 15 January 2007. This created a new offence of fraud, which can be committed in three ways: • by making a false representation (with intent to make a gain, cause loss or risk of loss to another) by failing to disclose information by abuse of position.

• •

It also became an offence to obtain services dishonestly, to possess equipment to commit frauds, and to make or supply articles for use in frauds. The Identity Cards Act 2006 created offences relating to the possession, control and intent to use false identity documents, including genuine documents that relate to another person.


Topic Gateway Series

Fraud and Money Laundering

The objective of 'phishing' is to obtain and use personal banking details. Potential victims receive an email purporting to be from a bank or building society, or these days commonly from eBay or PayPal. The email may state that there has been a breach of security or the person concerned needs to update their details. Alternatively, people may be told that they have made a purchase although they have not. They are then directed to a website that appears to be legitimate where they are asked to disclose their bank or personal details. If you receive any such message: • • do not reply to it do not pass any personal information by email or complete any forms asking for personal information delete the message.

Concerned individuals should contact the real company or organisation by post or telephone at a genuine address or number. Many companies that deal exclusively on the internet also have a help section which explains what you should do if you receive one of these emails. Examples of 'phishing' letters are also given. On 2 November 2005 the Times recorded that a fraudster who duped almost £200,000 from eBay customers using a 'phishing' scam had been jailed by Preston Crown Court. David Levi of Lytham, Lancashire, led a gang that amassed a fortune by stealing account details from users and assuming their identities. It is believed to have been the first successful prosecution for 'phishing'. Individuals should purchase appropriate computer software to protect them from this type of attack. Anti-spyware and personal firewalls are ideal, and anti-virus software will give a measure of protection against 'phishing'.

Cash back fraud
Cash back fraud may result when an individual offers something for sale on the internet, Exchange and Mart or even the small ads in a local paper. They may be contacted by a 'buyer' who wants to purchase the advertised item without wanting to see it.


Topic Gateway Series

Fraud and Money Laundering

The seller then receives a cheque for considerably...

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