(NOT) UNDERSTANDING FINANCIAL CRIME RISKS IN E-COMMERCE

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/

https://www.rusi.org/sites/default/files/20191312_e_commerce_risks_moiseienko_final.pdf

 

Author: raytodd2017

Chartered Legal Executive and former senior manager with Isle of Man Customs and Excise, where I was (amongst other things) Sanctions Officer (for UN/EU sanctions), Export Licensing Officer and Manager of the Legal-Library & Collectorate Support Section

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