Suspicious transactions / Advance Fee Fraud
What is money laundering?
It is a process whereby criminals attempt to hide and disguise the true origin and ownership of the proceeds of their criminal activities, thereby avoiding prosecution, conviction and confiscation of the criminal funds. Illegal or dirty money is put through a cycle of transactions or washed, so that it comes out at the end as legal or clean money.
What is a suspicious transaction or unusual transaction?
It is any transaction where there is a reasonable ground to suspect that the accountable institution has received or is about to receive the proceeds of unlawful activities or activities related to an offence to the financing of terrorist and/or related activities.
The Financial Intelligence Centre Act (FICA) also places a duty on the accountable institution to report any transaction with no apparent business or lawful purpose, or a transaction conducted purely for purposes of avoiding having to report the information in terms of FICA. A suspicious or unusual transaction will naturally be a transaction concluded with the purpose of money laundering or tax evasion.
The duty to report all suspicious and unusual transactions arises, not only when a person knows that a suspicious transaction is taking place, but also in circumstances where there is reasonable suspicion that such a transaction is taking place.
What is a Cash Threshold Transaction (CTR)?
It is any amount of up to R24 999 per cash transaction. The accountable and reporting institutions are required to report any transactions in excess of such amount or smaller amounts equating to R25 000 (if they appear to be part of one transaction) within a period of two business days after such transaction has taken place.
What is a 419 scam?
The 419 scam gets its name from Section 419 of the Criminal Code of the Federation of Nigeria and Lagos. It is also known as Advance Fee Fraud scheme.
Who are the perpetrators of the 419 scam?
The fraudulent scam letter is believed to be used by international crime syndicates who mostly target computer users and owners of mobile phones. The perpetrators are mostly West African syndicates who misrepresent themselves as influential members of organisations or governments, a charity or business group or even Lottery/Sweepstakes organisations.
What is the modus operandi of the 419 scam?
Unsolicited letters are sent to persons and/or companies worldwide inviting the receiver to partake in a deal which will make them very wealthy, usually foreign currency (normally millions) that have been obtained as a result of some occurrence, e.g. inheritance, over-budgeted contract payment, loan, lottery winnings, without much effort on their part. The letter would stress that confidentiality must be maintained at all times.
Who are the victims of the 419 scam?
The victims are usually unsuspecting ordinary citizens, irrespective of their colour, creed, or educational background who are deceived to hand over large sums of cash in the belief that they will in return receive large sums of money.
How do you become a victim of the 419 scam?
If a person receives an e-mail, facsimile letter or a message on their mobile phone and responds thereto, the scam begins to take its own course. The perpetrator will maintain communication and proceed to the next level of the scam.
Once a positive response to the letter of solicitation is received, the receiver of the scam letter is asked for their banking details, passport and identification number and various other personal details. Communication between the victim and perpetrator continues until the final details of how and when money will be exchanged are agreed upon. It is at this stage that the victim receives very authentic looking documents, signed by influential persons and bearing the logo of a financial institution, including the South African Reserve Bank, or a Government Department, confirming that money is awaiting transfer to a nominated bank account.
However, prior to the release of the funds, the victim is required to advance money to obtain clearance documents, e.g. Drug and Anti-Money Laundering Certificates, Tax Clearance Certificates. After the victim pays the required fees, the perpetrators ask for more fees.
The victim is now faced with the prospect of either losing the original fee paid or pays more money, hoping for the big payoff. In this way, tens or hundreds of thousands of Dollars/Rands may be swindled from a victim. The payoff, of course, never comes, because there never was any payoff to begin with.
On many occasions the victim is asked to meet with the perpetrators to witness the signing of the final release form. If the victim is unable to be present at the signing, the perpetrators will appoint a “Lawyer” or “Barrister” to act on the victim’s behalf. Again more funds are asked for to cover the “legal fees” that are incurred relative to the preparation of the clearance documents.
Since funds deposited to a local bank account can be monitored by law enforcement authorities, the perpetrators request that these fees be paid by way of Money Gram, Western Union and/or Authorised Dealers in foreign exchange with limited authority (ADLAs) and are not usually recoverable.
Once the perpetrators have achieved their objective (to scam the victim for as much money as possible) communication lines are abandoned and the victim has no recourse to the lost funds.
How to avoid becoming a victim? What must you do when you receive a 419 scam letter?
Never respond or act upon the message. Remember if it sounds too good to be true, then it probably is.
What must you do when you become a victim of the 419 scam?
Report the matter to the Police and send the documents, including details of payments made, to the South African Reserve Bank via e-mail at the following address: SARBFNSDEPT@resbank.co.za.
Typical questions asked to the South African Reserve Bank staff by victims of the 419 scam
(i) Can I speak to Daniel Mminele; I spoke to him this morning?
(ii) I spoke to Thomas Dlomo at the South African Reserve Bank this morning, can I speak to him again?
(iii) Can I speak to someone in the International Remittance Department or Foreign Remittance Department?
(iv) You are holding onto my lotto winnings, when are you going to release my funds?
(v) I have paid for a Money Laundering Certificate; do I still have to pay for a Clearance Certificate?
(vi) Ms Marcus phoned me this morning, can I speak to her please?
(vii) My money has been transferred from Barclays Bank in the UK, have you received my funds?
(viii) Why do I have to pay fees? Why can’t you deduct the fees from my prize?
(ix) I need to pay an activation fee in order to draw money from my ATM card. I received a SMS that I have won the lotto and was told to contact the South African Reserve Bank to claim it.
(x) I have inherited money from abroad; I need to pay a transfer fee to receive my funds.
(xi) I have won a contract abroad; I need to pay registration fees.