GCFFC APAC Chapter Publishes First Financial Scams Report

The GCFFC calls for the establishment of an international task force or body with a clear anti-fraud and scams mandate.

The Global Coalition to Fight Financial Crime (GCFFC) has released a new report assessing the fraud and scams landscape in APAC and offering suggested best practice approaches to address the threat.

The paper was released at the GCFFC’s first in-person meeting of its APAC Chapter, hosted by INTERPOL in Singapore on 30 May. The meeting included keynote remarks from Financial Action Task Force (FATF) President T Raja Kumar and INTERPOL Executive Director for Technology and Innovation Madan Oberoi.

The report assesses financial scams in Australia, Hong Kong, and Singapore to offer insights into combating these crimes. These jurisdictions were chosen because they report enough information to enable a good understanding of the threat, the GCFFC said.

Harm from scams

The report identifies more than 20 main types of scams, including hybrids and those involving additional criminal activities. It says scams result in financial losses ranging between USD 50 billion to USD 177 billion.

In addition, an estimated 500,000 modern slavery/human trafficking victims have been forced into criminality to support romance baiting and numerous suicides from scams such as sextortion.

The report says countries that are more affluent, digitally connected, and offer remote banking services are more attractive targets for scammers. It also highlights that limited citizen awareness and the rapid adoption of new technologies also play significant roles in increasing vulnerability.

Despite the growing threat, international standards and coordinated responses remain underdeveloped, the report says, calling for enhanced international cooperation and information sharing to combat the threat.

International task force

“Currently there is no international body established or mandated to lead the international fight against financial scams,” the report says.

The GCFFC suggests that this could be the FATF, but that it would require an extension and material change to its mandate, and its workload. The report says the FATF has “recently rejected” this route, but that it supports alternative international leadership in this space.

The report notes that the UK recently held the first international ministerial summit with G7 countries, Australia, South Korea and Singapore; saying this might be “the start of an opportunity” to work towards creating a “new international organisation with a clear anti-fraud and scams mandate”, i.e. a “Fraud/ Scam Action Task Force”.

Meanwhile, a four-year effort to agree on a Cybercrime Convention at the UN has failed so far. However, the GCFFC says the draft Convention must strive to go further and ultimately establish comprehensive international standards and a body to oversee and monitor country implementation.

Alternatively, an additional protocol could be added to the Palermo Organised Crime Convention to focus on fraud and scams, including those facilitated by cyber means, as predicates for money laundering.

“It is essential that increased international law enforcement cooperation is enabled,” the report says. “An international task force could be established off the back of the Convention.”

Response measures

Among several recommendations, the report calls for more education on scams for the public, stronger regulations to combat scams, better cooperation between public and private sectors, and enhanced cross-border information sharing to track and combat international scams more effectively.

It also calls for investments in cybersecurity and advanced technologies such as AI to detect and prevent scams, specialised training and increased resources for law enforcement agencies, and for anti-scam centres to be given priority.

Authorities also need powers to act against telco, technology and digital businesses that facilitate scams through the abuse of their products and services. This requires the development and enactment of new laws and regulations.

For victims, especially the vulnerable, more support should be provided to help them deal with the crime committed against them and the consequences from their experiences, including to help them recognise that full justice or full compensation may not be achieved in all cases.

Loss-sharing models

Addressing loss-sharing models that have recently been proposed in several jurisdictions, the report says “prevention must be the priority ahead of post loss liability”.

“Pre-fixing liability, without considering case by case actions may appear attractive to some, but may also generate unintended consequences, which should be considered and factored in before any decision is taken to proceed in this direction,” it says.

“For example, generous third party compensation models will encourage first party fraud, and dis-incentivise potential future victims in becoming scam aware, generating ever more
illicit proceeds for the scammers.”

“As a counter, third parties made responsible are likely to improve their own defences to prevent and mitigate scam losses but are just as likely to increase friction through restricting access to related products and services, and these may adversely affect vulnerable victims the most.”

The GCFFC says the costs, benefits and “fairness” should be considered and assessed before any new loss-sharing models are introduced.

The full report is published here.

To Top
Share via
Copy link
Powered by Social Snap