Letter from the Editor, May 2015

In this issue, Nick Blank and Frank Hong take a look at the fine art of investigating corrupt  behaviour in China and how to manage the subsequent dismissal process.

I will be speaking at the Construction Law: Contracts & Dispute Management conference in London this summer. The conference takes place from 29 June to 2 July and aims to provide practical guidance to help you minimise and manage construction-related disputes. Click here to register and use VIP code FKW82566AFL to obtain a 20% discount.

We are also delighted to be able to offer you a 10% discount on IIR’s Detecting & Preventing Fraud courses on 17 and 18 June 2015 in London. Click here to register and use VIP code FKW52924AFNWL to obtain your discount.

We are always interested in articles and book reviews written by AFN members and readers. If you would like to contribute to the AFN newsletter or the website, please contact us at info@antifraudnetwork.com.

Nick Burkill

Posted in From The Editor | Tagged , , , , , |

Refining the art of corruption investigations and subsequent dismissals in China

 

Nick Blank

FrankHong

 

 

 

 

 

 

PART 1: Allegations, evidence and expecting the unexpected

Real world examples

Mr Wang (not his real name) headed the purchasing department for his division in a Shanghai based multinational advertising company.  He was also a shareholder in a small technology company, a fact that he kept secret from his employer but which came to light following a whistleblowing letter sent to senior management.

The advertising company’s labour contract and employee handbook made it clear that employees aren’t permitted to have conflicting interests involving supplier companies.  Mr Wang’s employer was ready to take action if they found Mr Wang had been sending orders to his own company, but the internal investigation hadn’t actually uncovered any concrete evidence that Mr Wang’s company was directly a supplier to the advertiser.  In fact, the technology company’s main business was giving strategic advice to internet start-ups, which had little overlap with advertising, a point Mr Wang made when he was interviewed for the investigation.  He also noted that he was only a shareholder, and not technically working at the technology company, which meant he was not in violation of his contract.
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Posted in 2015-05, Newsletter | Tagged , , , , |

Letter from the Editor, April 2015

Nick BurkillIn this issue, Alan Day, Director of AKD Services, looks at the similarities between anti-fraud security and physical security, and suggests that we could learn from the physical security systems that we take for granted and apply them to our anti-fraud security processes.

We are delighted to be able to offer you a 10% discount on IIR’s Detecting & Preventing Fraud courses on 17 and 18 June 2015 in London. Click here to register and use VIP code FKW52924AFNWL to obtain your discount.

In addition to plenary and track sessions, interactive round table discussions and opportunities to network, the Summit also includes an exclusive session in which former FCPA prosecutor Billy Jacobson will interview Richard Bistrong, who he targeted for prosecution in a 2007 FCPA investigation.  Mr Bistrong will reflect on how he “rationalised” bribery on the front lines of international business, which ultimately led to 14 months imprisonment. The discussion will cover the process of “flipping” Mr Bistrong and convincing him to cooperate undercover.

Register using code AFN15 to obtain your 15% discount.

We are always interested in articles and book reviews written by AFN members and readers. If you would like to contribute to the AFN newsletter or the website, please contact us at info@antifraudnetwork.com.

Nick Burkill

Posted in From The Editor | Tagged |

Physical security and anti-fraud security. Strange bedfellows or a match made in heaven?

Alan DayGo on admit it, everyone’s done it.  On leaving your home you say to yourself, “Did I lock the door?”  You retrace your steps and ensure that the door to your home is secure.  Some would call this a “senior moment”, but actually we just want to make doubly sure our home is secure against any criminal who may try to break in and steal our personal possessions.

But the latest figures from the United Kingdom’s Office for National Statistics (ONS) suggest that, for the first time, you are now more likely to be defrauded than you are to be burgled.  So when was the last time you heard anyone say as they left the house, “Oh, did I remember to update my antivirus software?”
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Posted in Newsletter |

Developments in the British Virgin Islands that assist in the fight against fraud

Jack HusbandsA number of developments in the British Virgin Islands (BVI) have improved creditor access to the courts and their subsequent chances of recovering their funds.  These developments exemplify the evolution of the BVI as both a leading commercial centre and a centre for the resolution of disputes.

Black Swan jurisdiction

Since the decision of the UK House of Lords in 1977 in the case popularly known as The Siskina, it has commonly been accepted that an applicant could not commence a suit seeking only interlocutory (intermediate, temporary or provisional) relief, at least not against foreign defendants who could not be served process without the permission of the court. According to The Siskina, a claimant must always seek final judgment against the defendant.
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Posted in 2015-03, Newsletter | Tagged , , |

Letter from the Editor, March 2015

Nick BurkillIn this issue, Jack Husbands from British Virgin Islands (BVI) law firm, Walkers Global, takes a look at a number of developments in the BVI that have improved creditor access to the courts and their subsequent chances of recovering their funds.

We are delighted to be able to offer you a 15% discount on Momentum’s annual Anti-Corruption & Export Controls Summit (ACES Summit) on 21 and 22 April 2015 in McLean, Virginia, USA.  The Summit will be of value to leaders and practitioners within the international trade community who specialise in anti-corruption, export controls or sanctions management.

In addition to plenary and track sessions, interactive round table discussions and opportunities to network, the Summit also includes an exclusive session in which former FCPA prosecutor Billy Jacobson will interview Richard Bistrong, who he targeted for prosecution in a 2007 FCPA investigation.  Mr Bistrong will reflect on how he “rationalised” bribery on the front lines of international business, which ultimately led to 14 months imprisonment. The discussion will cover the process of “flipping” Mr Bistrong and convincing him to cooperate undercover.

Register using code AFN15 to obtain your 15% discount.

We are always interested in articles and book reviews written by AFN members and readers. If you would like to contribute to the AFN newsletter or the website, please contact us at info@antifraudnetwork.com.

Nick Burkill

Posted in From The Editor | Tagged , , , |

Letter from the Editor, February 2015

Nick BurkillIn this issue, Carlos Rivas examines developments in El Salvador mark a new era for the country. Changes to the Money Laundering and Assets Act, as demanded by the Millennium Challenge Corporation in return for a potential US$277 million in project funding, and the country taking on the presidency of the Caribbean Financial Action Task Force are positive steps towards redressing the country’s poor image.

We are delighted to be able to offer you a 15% discount on Momentum’s annual Anti-Corruption & Export Controls Summit (ACES Summit) on 21 and 22 April 2015 in McLean, Virginia, USA.  The Summit will be of value to leaders and practitioners within the international trade community who specialise in anti-corruption, export controls or sanctions management.

In addition to plenary and track sessions, interactive round table discussions and opportunities to network, the Summit also includes an exclusive session in which former FCPA prosecutor Billy Jacobson will interview Richard Bistrong, who he targeted for prosecution in a 2007 FCPA investigation.  Mr Bistrong will reflect on how he “rationalised” bribery on the front lines of international business, which ultimately led to 14 months imprisonment. The discussion will cover the process of “flipping” Mr Bistrong and convincing him to cooperate undercover.

Register using code AFN15 to obtain your 15% discount.

We are always interested in articles and book reviews written by AFN members and readers. If you would like to contribute to the AFN newsletter or the website, please contact us at info@antifraudnetwork.com.

Nick Burkill

Posted in 2015-02, From The Editor | Tagged , , , |

Positive Developments in El Salvador: Revised Anti-Money Laundering and Assets Act and Presidency of the CFATF

CarlosRivasEl Salvador suffers from a poor image when it comes to corruption and financial crime. The country scored only 39 out of 100 in Transparency International’s (TI) 2014 Global Corruption Index and only 3.8 out of 7 in TI’s 2013 Global Competitiveness Index. Recent changes should, however, make a difference to both the country’s international reputation and the well-being and standard of living of its citizens. Changes to the Money Laundering and Assets Act, as demanded by the Millennium Challenge Corporation (MCC) in return for a potential US$277 million in project funding, and the country taking on the presidency of the Caribbean Financial Action Task Force (CFATF) mark a new era for El Salvador
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Posted in 2015-02, Newsletter | Tagged , , , , , , |

Letter from the Editor, December 2014

Nick BurkillIn this issue, AFN Board member Greg Valenti explains the legal regime in Italy that governs fraud committed through debit and credit cards. The first part of the article addresses the relevant legal provisions; the second considers the stance taken by the Italian Supreme Court with regard to credit card fraud committed over the internet; the third part looks at the measures adopted by the Italian Government to prevent credit card fraud.

We are always interested in articles and book reviews written by AFN members and readers. If you would like to contribute to the AFN newsletter or the website, please contact us at info@antifraudnetwork.com.

Nick Burkill

Posted in From The Editor | Tagged , , , |

Credit card fraud: Italy is confirmed as one of the safest countries for card payments

Legal frameworkGreg Valenti

Under Italian criminal law, there are two main legal provisions that prohibit fraud committed through the use of debit or credit cards:

1. Article 55(9) of Legislative Decree no. 231 of November 21, 2007 (which implements EC Directive 2005/60 on the prevention of the use of the financial system for the purposes of money laundering resulting from criminal activities and financing terrorism, and EC Directive 2006/70, which contains the relevant enforcement measures) regulates the illegal use of credit or debit cards and distinguishes between three types of criminal conduct resulting from actions put in place by those who, in order to make a profit for themselves or for others

  • Improperly use credit or debit cards or any other similar document that allows them to collect cash, purchase goods or provide services.
  • Forge or alter a credit or debit card or any other similar document that allows them to collect cash, purchase goods or provide services.
  • Possess, sell or acquire from an illegal source such cards or documents and the payment orders produced with those cards or documents.

These crimes are punished with a term of imprisonment of between one and five years and a fine ranging from €310 to €1,550.

2. Article 640ter of the Italian Criminal Code, entitled Computer Fraud, which provides that

Whoever, by altering in any way the functioning of a computer system or intervening—without the right to do so—on data through any means, procures an undue profit for himself or for others, is punished with a term of imprisonment from six months to three years and a fine ranging from 51 euro to 1,032 euro.

Types of fraud

In order to understand the application of these provisions, it is necessary to look briefly at the different types of fraud that can be perpetrated by means of debit and credit cards.

Lost and stolen cards fraud involves the theft of a payment card or its improper use by someone other than the owner.  The theft of the card can occur in different ways, including trapping the card in an automatic teller machine (ATM) or the physical theft of the card.

Counterfeit cards fraud involves the physical alteration of the card in order to record, transfer, clone, alter or replace the data on the card.  This type of fraud includes practices such as “skimming”, a process whereby genuine data on a card’s magnetic strip is electronically copied onto another for the purposes of making counterfeit cards.

Mail-intercepted card fraud involves the interception and stealing of a card during the period between the issuer sending it and its legitimate owner receiving it, usually by mail.

Fraudulent use of the card number occurs through the use of the code on the card, which is unlawfully obtained via different methods, without any material intervention on the magnetic card.  One method is by “phishing”, which is an internet fraud that aims to steal valuable information such as card numbers, user IDs and passwords.  A fake web site is created to look similar to that of a legitimate organisation—typically a financial institution such as a bank or insurance company—and an e-mail or text message is sent requesting that the recipient access the fake web site and enter their personal details, including security access codes.  The page looks genuine but users entering information are inadvertently sending their information to the fraudster.

Assumed ID fraud occurs through the fraudulent use of the cardholder’s personal data to obtain other payment cards.  This practice includes “account takeover fraud”, which can occur when a criminal—having gathered a person’s relevant documents and information—calls the credit card company requesting a change of address to one controlled by the criminal.  The criminal impersonates the legitimate cardholder by submitting proof of identity to the credit card company and requests a replacement card to be sent to the new, fake address.

Specifically with regard to ID fraud, Legislative Decree no. 64 of April 11, 2011(which amended Legislative Decree no. 141 of 2010) introduced a “Public system of prevention, on the administrative level, of fraud in the field of consumer credit with specific reference to identity theft”.  This new legal framework provides a dual definition of identity theft, which is defined in Article 1 as

  • Total embodiment: the total concealment of one’s identity by means of the unlawful use of another person’s identity and income.  The embodiment may relate to the misuse of data relating to a living person, as is usually the case for fraud on payment cards, or to a deceased person.
  • Partial embodiment: the partial concealment of one’s identity by using data relating to oneself, combined with the misuse of data relating to another person.

The legal issue
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Posted in 2014 - 12, 2014 Newsletter, Newsletter | Tagged , , , , , |