by Commercial Crime Services, a division of the ICC
London, 29 March 2005
"Low value" commodity frauds by-pass checks by banks
The re-emergence of a financial fraud specializing in low value
commodities has the ICC International Maritime Bureau (IMB) warning
banks to be on their guard.
IMB Assistant Director Michael Howlett stated: "This particular
internet scam typically pursues amounts of money small enough to fall
just below the threshold that triggers routine checks. Because the
amounts are smaller, banks do not perform the necessary checks and are
unlikely to spot these frauds."
While fraud involving small amounts may not seem like a large problem,
totals can add up quickly. The case of convicted fraudster Glenn
McCorquodale is a telling example. As reported in a 2003 edition of
the ICC newsletter Commercial Crime International, McCorquodale was
able to amass several million dollars by perpetrating numerous low
value fraud operations with non-existent agricultural or metal
shipments. McCorquodale ultimately received a four and a half year
jail term. The frauds he conducted are very similar to those many
banks may be currently facing.
IMB investigators were recently called upon to investigate a metal
shipment after a bank encountered documents that did not appear
authentic. The amount of money involved would ordinarily see the
consignee paid without question, but something about the documentation
led the bank to question their validity.
Examining the bill of lading, IMB quickly established that the vessel
named on the bill did not exist. They also found that while the noted
container numbers were genuine, their prefixes belonged to containers
owned by another company. The company name and address used had been
employed in a series of earlier frauds. Lastly, the commodity said to
be shipped metal from the UK at slightly below market value had also
been used in a number of recent frauds.
Mr Howlett commented: "The fraudsters operating these kinds of frauds
are counting on banks not to make the necessary checks. In this
specific case, the fraudster was only seeking 193,000 pounds assuming
the bank would not investigate important elements of the
documentation. With IMB assistance, the bank was able to identify and
prevent this fraud."
The IMB is concerned that banks may be facing a series
of such commodity frauds and the organization is urging financial
institutions to exercise caution if they are asked to confirm financial
documentation for non-customers. Banks concerned about documentation
related to commodities fraud or those that have recently encountered
similar suspicious activity are advised to contact the IMB for
assistance.
In particular, internet users who deal in commodities know well what
fraud is about, and how it has affected them through auction services
for example.
For further information or interviews please contact
IMB Tel: +44 208 591 3000, Email: imb@icc-ccs.org
IMB (imb@icc-ccs.org)