On 29 January, an Occasional Paper from RUSI in the UK which shows that e-commerce continues to be exploited by criminal actors, and says that regulators and governments can do more to prevent this. It identifies that E-commerce businesses can be exploited for criminal purposes in 4 major ways:
- Committing fraud against the customer by failing to deliver goods or services;
- Buying goods or services using stolen bank card data;
- Creating e-commerce businesses as a front for illicit transactions (for example, to accept bank card payments for drugs); and
- Abusing online marketplaces to move criminally obtained funds (for example, through the sale of computer-generated books sold via Amazon).
It also says that the latter two present particular money laundering and terrorist-financing (financial crime) threats because they involve consensual transactions that are intended to remain undetected. However, the paper argues, these purposes remain poorly understood, including so-called “transaction laundering” using bogus or disguised online payments. The paper says that there has been no examination of the effectiveness of online marketplaces’ defences against financial crime, and makes a number of recommendations – including that the FCA should consider a thematic review of risks related to transaction laundering and financial institutions’ ability to detect it, with a view to identifying best practices; and that the UK’s next national risk assessment of money laundering and terrorist financing addresses the risks of phantom transactions and mispricing involving online marketplaces/