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Asian Money Launderers Sent Region-wide Warning

June 21st 2012

money laundering

Law enforcement officials in China, Taiwan, Burma, Thailand, and the Philippines have launched a blitzkrieg targeting money launderers who have been swindling and blackmailing average citizens throughout Asia to the tune of millions of dollars.

The criminals, part of a transnational syndicate, began squeezing funds from companies and individuals in 2007. Phoning their intended victims and claiming to be speaking on behalf of the police, they informed them that their bank accounts were being abused by money launderers and terrorist organizations, then instructed them to transfer funds to “safe accounts“ that were in fact controlled and owned by the syndicate. According to Liu Ancheng, deputy director of China’s Criminal Investigation Bureau (CIB), they then withdrew the money via local ATMs in Taiwan and Thailand.

In late May, after a two-year investigation, law enforcement authorities arrested 482 people from Burma, China, Taiwan, and Thailand. Ultimately, they will be accused of defrauding victims of funds totaling CNY 73 million (USD 11.5 million) in at least 510 cases.

Originally, the group operated out of the Chinese mainland. But following a crackdown by China in 2010, operations were move to various locations throughout Asia, including Burma, Cambodia, Indonesia, Fiji, Malaysia, Sri Lanka, Taiwan, and Thailand. According to the CIB, the group attracted recruits by promising high salaries and tourist visas and supplying specialized fraud training.

According to the Philippines police, authorities got one of their big breaks in the case when they tracked and geospatially located the IP addresses of the gang, which made its calls using voice over IP. The criminals reportedly worked in cells that carried out the various aspects of the operation: phone calls; maintenance of the telecom network’s servers and equipment; and withdrawing, transferring, and eventually, laundering money.

To capture the group, China engaged in unprecedented law enforcement cooperation with Taiwan—staggering in and of itself, since Beijing still considers Taiwan to be sovereign Chinese territory—and six other countries. The CIB has publicly asked other law enforcement agencies for help in tracking those in Asia and Oceania outside its own jurisdiction who are involved in telecrime. At this juncture, international cooperation is “important to crack down on telephone fraud groups,” according to Yang Dong, deputy director of China’s criminal investigation department.

What can governments throughout Asia and Oceania do to stop telefraud and money laundering? While global organizations, such as INTERPOL, have an important role to play, it is time for forward-thinking Asian governments to create ASIAPOL as a smaller, more robust, regional association. Europe has EUROPOL, a law enforcement agency whose primary mission is to fight international crime and terrorism. ASIAPOL should fight human smuggling, counterfeiting, terrorism, drug trafficking, money laundering, organized crime, and the like.

Asian countries should also systemically roll out bilateral police cooperation agreements that would, among other measures, fight identity theft, phishing schemes, and fraud. As a corollary, law enforcement attaches assigned to select embassies around the region should be encouraged to help their host nations crack down on criminal activities sponsored by nationals from their home jurisdictions.

Following the money is another crucial tool in capturing criminals, but law enforcement agencies must aggregate and sort through financial intelligence in a smarter way. There are countless pieces of financial information filed internationally by a wide variety of sources, including banks, money service businesses, and individuals. Law enforcement and intelligence analysts must become proficient in the innovative intelligence and financial tools developed in the last decade, including geospatial and network analysis tools, to attack criminal networks and uncover the financial links among them.

Tools such as Palantir, Analyst’s Notebook, ArcGIS, and Google Earth make it easier to manage and sort through vast reams of data and facilitate tracking of financial flows and smuggling routes. Nevertheless, many government officials do not use them and are not even aware that they exist. Ignoring these innovations hampers their ability to capture and put behind bars members of international crime syndicates, triads, and other illicit actors.

Finally, governments should focus on tightening their laws regarding jail time and fines for those engaging in telecommunications fraud. China, for example, has taken telefraud seriously, and sentences for this type of crime now range from three to ten years. A sentence of life in prison is also considered if the amount involved is over CNY 500,000 and the fraud results in someone’s death. Keeping in mind the need to also balance human rights and basic liberties, other governments who wish to mitigate this emerging risk should consider following suit.

The criminals are getting better, faster, and smarter at their trade. This should force law enforcement officials to think beyond national borders and increase intelligence sharing capabilities. Lawmakers will also need to do their part by instituting appropriate penalties. All of this is critical for protecting and defending average citizens.

Avi Jorisch is an Adjunct Scholar at the Washington Institute for Near East Policy, Fellow at the Joint Special Operations University, and author of Iran’s Dirty Banking: How the Islamic Republic Skirts International Financial Sanctions. He wrote this article for Asia Times, from where it is adapted.


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