Daily fraud update: 17th December

Mumbai police arrest man in connection with vast fraud claims

Police in the Indian city of Mumbai have arrested a man from Surat over claims that he created and attempted to profit from a range of fake companies.

Tejas Desai, who was the director of Vastram Creations, was also accused of avoiding Input Tax Credit.

Overall, he stands accused of making profits of 41 crore rupees – equivalent to £4.3m, or around $5.7m – as part of the alleged scam.

He is accused of having created a range of fake invoices in order to get the tax credit.

There is an alleged foreign exchange fraud dynamic to the situation too.

Desai is accused of using forex dealers as part of a web of tricks to conceal his real activities.

He is also accused of incorporating commission agents, custom house officers and more.

According to local press, he has admitted to the crimes – and also owned up to destroying evidence.

He will now face two weeks in custody as the investigation is prepared.

The case continues.

CipherTrace: billions of “traceless” crypto transactions

International crypto intelligence firm CipherTrace has hit the headlines again after a section of a recent report gained traction.

The report found that around $2bn worth of digital currency which goes through major US financial services firms ends up “traceless”.

The report, which was based on an analysis of how well “know your customer” and “anti money laundering” policies are put into place, found that some institutions do not have a proper framework in place in this regard.

According to CipherTrace, the main reason for this is that while the relevant technology does exist, it is not used on a regular enough basis.

As a result, it becomes difficult for even big firms to properly know their customers – and it is hard for them to detect and categorise transactions properly.

According to Dave Jevans, who serves as CEO of CipherTrace, this could leave organisations “exposed”.

“Financial institutions are exposed to cryptocurrency-related risks because they have no way to detect underlying threats”, he said.

He also highlighted the way in which international rules from the Financial Action Task Force could change the situation – especially in regard to “privacy coins”, which are crypto coins designed to keep transactions confidential in the face of regulatory changes.

“In anticipation of the new FATF AML regulations, many cryptocurrency exchanges have preemptively jettisoned their privacy coins; yet, 32 percent of exchanges, including those determined to have weak KYC, still have privacy coins listed”, the report was quoted as saying.

Ultimately, the report struck a pessimistic tone, and made the implication that scammers were simply moving to other modes of crypto fraud – or at least other ways of instituting “traceless” transactions – whenever their current mode was cracked down on.

“Ciphertrace had previously speculated that the shift from outright thefts to exit scams and other frauds perpetrated by insiders indicated that crypto exchanges had begun to adequately invest in hardening their IT infrastructures”, it said.

Chris Lee

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