Global Fraud Footprint

Romance fraud, cryptocurrency risks and money laundering in Asia Pacific

The Asia Pacific region has become a hotbed for cyber romance scams. Hong Kong cybercrime alone has risen 565% since 2012. The region’s global financial centers also face increasing concerns about cryptocurrency and blockchain money laundering fueled by North Korean cybercrime.

He said he was an engineer from Britain who wanted to establish a relationship with a wealthy, 66-year-old Hong Kong businesswoman. What he really wanted to do was rip her off. And he did — to the tune of $23 million in four years. He claimed on the online platform Lovestruck that he had financial problems and repeatedly asked the woman for money. She transferred cash to bank accounts in Hong Kong, mainland China, Malaysia, Japan, Taiwan, Britain and Germany — in more than 200 transactions. This lonely-heart case set the record for Hong Kong’s largest romance scam. (See “Online romance scam record for Hong Kong as Wan Chai businesswoman loses US$23 million to ‘British engineer,’ ” by Clifford Lo, South China Morning Post.)

According to the Hong Kong Computer Emergency Response Team, cybercrime cost Hong Kong companies and residents more than $250 million in the first nine months of 2018 (a 565% increase from 2012) with businesses sustaining more than 9,000 attacks (a 55% increase from 2017). The true amount of attacks is likely much higher, which justifies Hong Kong’s presence in a LexisNexis Risk Solutions list of the top five cyberattack destinations. (See “With financial losses of HK$2.2 billion and more than 9,000 cyberattacks so far this year, Hong Kong finds itself a top target of hackers,” by Simone McCarthy, South China Morning Post, Dec. 8, 2018.)

Hong Kong police recorded 8,372 cases of deception in 2018, up 18 percent from 2017. Among the notable increases were cases of social media deception (2,064 cases and a 94 percent increase), online business fraud (2,717 cases and a 36 percent increase), email scams (894 cases and a 29 percent increase). Almost 600 of the social media deception cases consisted of romance scams that cost victims more than $57 million. (See “Overall law and order situation remained stable in 2018,” The Government of the Hong Kong Special Administrative Region, Jan. 29, 2019.)

During a recent interview with Fraud Magazine, Parag Deodhar, CFE, Asia Pacific director for information security at a multinational corporation, described the romance fraud phenomenon. “Romance fraud is one of the major scams prevalent in Hong Kong and Singapore,” Deodhar says. “Scammers target wealthy single women. Similarly, con artists — posing as part-time sex workers — target men.”

Though romance scams are common in Hong Kong and Singapore, they aren’t unique to the region, according to Barry Tong, CFE, advisory partner at Grant Thornton Hong Kong and president of the ACFE Hong Kong chapter.

“These kinds of scams are often cross-border frauds because many of the fraudsters are targeting victims from outside of Hong Kong,” says Tong.

In October 2018, authorities in Hong Kong, Malaysia and Singapore launched a joint operation targeting a romance scam ring that led to the arrests of 52 suspects who allegedly conned more than 140 victims out of $14 million. (See “Hong Kong, Malaysian and Singaporean police bust US$14 million online romance scam ring,” by Clifford Lo, South China Morning Post, Oct. 26, 2018.)

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