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Money laundering – can you do it unknowingly?

Money laundering – can you do it unknowingly?

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Ever since digital currencies became much more than just a technological novelty, the society relates to its usability and application in the context of money laundering. This issue especially arises in the statements of the delegates, financial market regulators, but also of those, who are not in favour of innovations implemented by bankers. 

In theory, cryptocurrencies allow, among others, to cover up the source of funds. This is advantageous to mobility, international availability and also to mixing crypto tokens with the use of dedicated services. However, cashing owned cryptocurrencies is inevitable at the end of the process chain, where the cryptocurrency market permits assets exchange. 

For this reason, an offensive towards cryptoassets sector continues nowadays. Is it justified? It turns out that the scale of laundering money using fiat money  is much greater and there are many ways to commit this offence apart from using cryptocurrencies.

Money laundering – how is it regulated by Polish law?

Money laundering – can you do it unknowingly? 15th May 2021 an amendment to part of the provisions modyfying the Act of 1 March 2018 on counteracting money laundering and terrorist financing came into force. Additional obligations related to the used safety measures were imposed on institutions exposed to money laundering, as well as the obligation to identify the real beneficiaries, namely natural persons who, owing to their powers, exercise direct or indirect control over an economic entity.

In 2020 in Poland, 3805 acts related to money laundering were traced. Prosecutors received 378 notifications of suspicion of crime. Last year, the number of notifications has increased by about 37,3%. Contributing to money laundering carries a sentence of 6 months up to 8 years in jail. The judgement does not only concern those, who are directly involved in money laundering, but also the ones indirectly or unknowingly related to this activity.

How are the criminals framing others for money laundering?

Real estate for a child

In episode 108 of Dział Zagraniczny podcast entitled ”Jak przestępcy piorą brudne pieniądze za pomocą kryptowalut” (”How are the criminals laundering money using cryptocurrencies”) during the discussion with Paweł Opitek, the persecutor, the simplest way to launder money was cited – accepting a bribe and the purchase of real estate for a child or another relative. This way the criminals are hiding tracks of illegally obtained money. It illustrates that money laundering takes place not only through introducing money into a legitimate source. This practice may also entangle immediate family members, but they might be unaware of the fact that it can fulfil the premises of criminal offence.

Money Mule

Another example of unaware money laundering was mentioned by Łukasz Chmielniak, an attorney,  on the blog bialekolnierzyki.com.pl. He believes that an employee may take a job in a company that is deliberately recruiting new staff by e-mail and uses them to launder money.  An employee becomes a ”money mule” transferring dirty money to, most often, foreign accounts.

In the article for Money.pl, Mateusz Ratajczak presented an example of complicity in money laundering. A woman accepted a job offer as a specialist for tourism. She was asked to create a bank account or provide her own (in case of a quick purchase or an urgent transfer). During the first two days she was planning trips. On the third day she was comissioned to cash 15 000 PLN she has received earlier and to transfer it to a contractor’s account as a ”mule”.  After completing the request all contact stopped. A few days later the woman called the sender of the transfer and learnt that the money was stolen from him. The incident was reported to the police. It turned out that her bank account was used to launder money. Eventually, the funds were transferred to cybercriminals who are now cashing it in other parts of the world.

Phishing attack

Another fraud is reported by the journal ”Polityka”, describing Polish banks maintaining ”mules” accounts which are used by criminals. One of the victims was a wealthy businessman from London who planned to purchase an island located in the Caribbean. The law firm that carried out this transaction supposedly informed the client of the change of the bank account number to which the money was to be transferred. In fact, cybercriminals impersonated the company and sent new transfer details. The law firm became a victim of a personalised phishing attack (spear phishing). Hackers obtained information necessary to gain access to the victim’s e-mail address through a fake website. E-mail access enabled cybercriminals to monitor calls made and look for opportunities to gain wealth. Under a favourable circumstance, they started to control the conversation and misled the said investor.  Eventually, the payment was deposited on the money mule account and then instantly transferred to China. The money was further distributed to different accounts to complicate its recovery by the victim and to make determination of the end beneficiaries impossible.

It is worth mentioning that one can become a money mule unwittingly. How? It is enough to provide personal details on a website that is impersonating an online store or a bank. We believe we are shopping in the well-known shop, whereas it turns out we entered our data on a site deceptively similar to our store’s. Other example? We throw out wrappings with a complete and readable consignment note containing our personal data. ID card details are valuable for criminals – disclosing them unknowingly to wrong people puts us at risk of being involved in money laundering.

Above examples show that money laundering is a practice that can be committed unknowingly. Marcin Ganclerz, cyber security expert at PKO Bank Polski, believes:

”If something is too good to be true, we are most likely dealing with a fraud. There are no expensive smartphones for half the cost, investments that guarantee fast, certain and high profit or job offers that do not require any efforts and ensure earning quite decent money for withdrawing money from cash maschines or bank transfers on the Internet. Every time we come across such advertisements, our warning light should switch on”.

How not to fall victim to money laundering?

  • Before responsing to a job offer – identify the employer. It is best to search for information on the company’s official website and to verify REGON number in the public register. Read opinions about the company on other sites. Most often the advertisement will lack correct contact information, thus you can compare it with legitimate details.
  • Do not open a bank account at the request of someone you just met and do not transfer any money on behalf of others.
  • Beware of job offers proposing easy profit. No employer would offer high salary for several money transfers.
  • Install an antivirus program and make sure it is periodically updated to avoid Internet threats, such as trojans or viruses that can steal your identity.
  • If you received an e-mail with an attachment or a link that looks suspicious, be aware that it can connect a user with false addresses created to steal identity or extorting money.
  • In order to avoid stealing your identity share your personal data in a very thoughtful way and make sure it does not fall into the wrong hands.

Kanga Exchange is acting against money laundering and terrorist financing

Kanga Exchange is running a campaign ”Nie Pie(p)rz”, with articles and videos aimed at educating in the field of anti-money laundering and counteracting other fraud published on a regular basis. It is worth mentioning, that Kanga has extensive procedures for user verification, including activities from an AML (Anti-Money Laundering) perspective.

After a meticulous examination of the subject of digital currencies and blockchain technology, it is worthwhile to consider whether the offensive towards cryptocurrencies within the context of money laundering makes sense? Or does it rather aim at diverting attention away from the actual problem, at the same time highlighting the lack of knowledge in this field and a fear of novelties emerging on the technology market? Whatever the reasons, we trust that improving our knowledge about money laundering will enable us to protect ourselves, family and friends against the loss of capital due to this practice.

We encourage you to familiarise yourself with ”Nie Pie(p)rz” campaign on YouTube.