Anti-money laundering service, SmartSearch, has reviewed ten of the most lucrative fraud and money laundering cases in recent years. This briefing provides advice on what businesses and individuals can learn from them.

Money laundering and fraud costs UK businesses, citizens and the government more than £100bn a year, according to the National Crime Agency. The effects can have a devastating impact on ordinary people as well as businesses and the government.

The following cases show the huge sums of money that can be involved plus the massive fines that have been given to firms in breach of anti-money laundering rules.

1. ‘Mr Big’ on the run
In 2012, after serving a three-year prison sentence for money laundering for drug dealers, Maythem Al-Ansari, also known as ‘Mr Big’, was facing another jail term for multi-million-pound mortgage fraud.

After handing over his passport when being released on bail, a blunder allowed Mr Big to contact the Home Office to obtain a new passport, which he quickly used to flee to Syria. At the time, this left millions of pounds unaccounted for, but in 2016 Al-Ansari gave himself up at London Heathrow.

This mishap was purely down to lack of communication and coordination between various government bodies. To avoid any similar blunders in future, the government bodies must endeavour to work together more closely, to ensure confiscated identity documents cannot be reapplied for when a person is released on bail.

2. UK’s largest ever visa fraud
In September 2019, four people were sentenced at Southwark Crown Court for their involvement in the UK’s largest-ever immigration fraud case. The fraudsters posed as immigration advisors who devised a network of fake companies to deceive officials in the Home Office.

The culprits charged extortionate fees for pulling together hundreds of false immigration applications that would have cost the taxpayer millions of pounds, had the scheme run successfully. Raids on the defendants’ homes and businesses provided substantial evidence for the case to be prosecuted.

For those looking to migrate to the UK, it’s essential to go through the official channels to avoid any possibility of being defrauded.

3. Standard Chartered Bank fined £102.2m
The Financial Conduct Authority (FCA) issued its second largest fine to Standard Chartered Bank in April 2019, a nine-figure sum of £102,163,200 for anti-money laundering (AML) breaches.

Serious and prolonged shortcomings in Standard Chartered’s approach towards identifying and rectifying money laundering risks led to this fine. An example of these failings includes opening an account with three million UAE Dirham (£500,000) deposited from cash in a suitcase without verifying the funds.

Businesses, particularly those in the financial sector, must take an active approach in identifying potential money laundering risks and reporting suspicious transactions, to avoid breaching AML regulations. Investing the time to ensure all money laundering processes are water-tight will save businesses money in the long run as any resulting fines, if caught, would be far greater in size than the fraudulent funds.

4. The UK’s most prolific female fraudster
Maria Michaela, dubbed by police at the time as the UK’s most prolific female fraudster, conned banks out of £13m by submitting offers on houses over the market value and then defaulting on the mortgages.

By creating false identities, Michaela was able to repeat this scam multiple times, conning banks out of millions until she was eventually arrested in January 2012 after being tracked back to a mortgage broker she had been working at in Blackheath.

Offers coming in well over the asking price on properties may be a classic case of being too good to be true. Of course, many strong offers will be genuine, but mortgage brokers should critically analyse these to consider whether there may be something fraudulent going on.

5. Designer watches, gold bars, and 500 lottery tickets
Police had suspected Stephen Burton, from Tunbridge Wells, of purchasing expensive items and rare metals to cover up money earned through illegal activity.

When his home was eventually raided in February 2019, police uncovered possessions with a value totalling nearly £1m, including gold bars, Krugerrand coins, silver coins, designer watches, thousands of pounds and euros, 500 lottery tickets, and various false identity documents, including two passports with Burton’s name, but different birthplaces and dates of birth.

This is a prime example of detectives ‘following the money’, as purchasing expensive metals and items as an average citizen can often be a clear indication of fraudulent activity.

6. £15m smuggled from UK to Dubai in suitcases
In November 2019, ten suspected members of an organised crime gang were arrested under suspicion of smuggling £15.5m out of the UK to Dubai in suitcases. These suspects were also wanted in connection for conspiracy to illegally transport 17 people into the UK.

Luxury cars, drugs and cash were all seized from the suspects’ homes when they were raided by the National Crime Agency. This is another example of the authorities building a case on suspected illegal activity and acting upon their information. Unusual travel patterns and living far beyond one’s means is often a key indicator that illegal activity may be going on.

7. One of the UK’s largest benefit frauds
Ethel McGill, 68, of Cheshire, was jailed in July 2019 for one of the largest benefit frauds ever recorded in the UK. McGill claimed her dead father, Robert Dennison, was still alive and doing so allowed her to claim his war pension and benefits after his death in 2004. At one point, McGill even asked a friend to lay down underneath a blanket to pretend to be Mr Dennison.

McGill also faked disability and dementia for over two decades. Eventually, investigators from the Department for Work and Pensions acquired video recordings of her driving and moving around, despite claims she needed a wheelchair.

This is a sad case of benefit fraud but thankfully investigators eventually caught up with McGill’s charade. However, everyday people should keep an eye out for suspicious activity and report it to the authorities if something doesn’t appear genuine.

8. Bank of Scotland’s rogue employees in £245m scandal
Between 2003 and 2007, rogue employees at Bank of Scotland’s (HBOS) Reading branch worked with a group of consultants to defraud the bank and small businesses of roughly £245m, leaving hundreds of people in dire financial trouble.

HBOS was consequently fined £45.5m for failing to disclose information about the scandal. The scheme involved referring small businesses to a turnaround consultancy, which would load the businesses with obscene debts and fees.

Small businesses should be wary about being referred to outside consultancies and should always look to seek independent legal and financial advice when faced with this kind of situation.

9. Four suitcases stuffed with £1.5m in cash
Mohamed Imran Khan Sathar Khan, 36, was caught in 2019 by Border Force officials attempting to smuggle £1.5m in four suitcases onto a flight to Dubai. Each case weighed exactly 20kg, which raised eyebrows among border guards, before they found the money.

This is an exemplary case of the Border Force realising something may be amiss and investigating thoroughly to uncover a crime. Although not all attempts to smuggle cash out of the country will be as blatant as this, it’s important for authorities to remain vigilant and investigate suspicious patterns.

10. Commonwealth Bank agrees to pay £400m fine
Australia’s largest lender, Commonwealth Bank, agreed to pay a £400m fine (the largest ever civil fine in Australian corporate history) in 2018 for breaching anti-money laundering and counter-terror financing legislation.

The bank failed to report 53,000 suspicious transactions to the relevant authorities. According to Commonwealth Bank this was caused by a coding error, which meant their machines were not able to automatically report the transactions.

Organisations in the financial sector should carry out regular checks to ensure their software is in good working order, and actively seek expertise on complying with anti-money laundering and fraud legislation.

Comment
John Dobson, CEO at SmartSearch, comments:

“With the astronomical cost – well into the hundreds of billions of pounds – of money laundering and fraud to British citizens, businesses and the government each year, the scale of this criminal activity can almost be incomprehensible.

“However, reviewing cases like these provides a glimpse into how money laundering and fraud can manifest in real life, while the consequences faced by those responsible highlight their severity.

“We hope that this insight will help raise awareness of money laundering and fraud in this country, and help businesses understand what they can do to protect themselves and help others.”

This article originally appeared at https://www.mortgagefinancegazette.com/ and is reproduced with kind permission.