UAEFIU Warns of High-Risk Money Laundering Schemes

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The United Arab Emirates Financial Intelligence Unit (UAEFIU) has issued a warning about a surge in high-risk money laundering schemes, particularly involving funds transfer fraud and shell entities.

Funds Transfer Fraud: A Common Mode of Frauds

Funds transfer fraud is the most common transaction mode used in fraudulent activities, often involving significant amounts of money. In these cases, perpetrators typically use shell companies or legal entities to receive and dissipate the fraudulent funds quickly, making it challenging for authorities to track and recover the stolen money.

Rise of Shell Entities: A Growing Concern

The UAEFIU has also observed a rise in the use of shell entities, particularly in foreign countries, with proceeds being routed to UAE accounts held by legal entities. These schemes often involve complex networks of shell companies operating across multiple jurisdictions, interacting through purportedly legitimate transactions such as service fees, own-account transfers, or debt payoffs.

Common Fraud Types

The UAEFIU has identified several common fraud types, including:

• Impersonation fraud
• Business email compromise (BEC)
• Scam fraud
• Online scams involving virtual currencies
• Phishing/vishing attacks

These schemes often involve sophisticated techniques to deceive victims, including the exploitation of publicly available information, hacking, and spoofing.

Investment Scams: A Growing Concern

In particular, the agency has warned about the increasing prevalence of investment scams, which typically involve fraudulent offers of high-return investments with little or no risk. Perpetrators may use legal persons to receive funds from prospective investors and then route them through multiple bank accounts, making it difficult for authorities to trace the money trail.

Recommendation

Financial institutions and individuals should be cautious when dealing with transactions involving:

• Shell entities
• Legal persons
• Unusual payment patterns

They should also be aware of the latest fraud tactics and report any suspicious activities to the UAEFIU promptly.