Financial agent or escrow fraud

5 minute read

Financial agent or escrow fraud

Financial agent or escrow fraud

With the introduction of digital accounts and the associated digital identification of business and private customers, a well-known and deceitful scam is booming again – ripping off unsuspecting private individuals via so-called financial agents or escrow assistants.

How does the financial agent trick work?

Perhaps you have also received a lucrative sounding job offer lately. One that sounds too good to be true – high earnings, hardly any work.

Currently, fraudsters lure their victims with dubious job offers on job fairs, Internet job sites or by e-mail. Often, these criminals pose as employees of financial management companies or financial service providers and increasingly approach bank account holders with shady intentions.

These criminals are particularly interested in holders of digital accounts from direct or online banks.

Increasingly, the terms "financial manager," "fiduciary agent," or "financial transaction manager" also appear in corresponding ads, emails, and job portals. The goal is to recruit unsuspecting account holders to work as so-called financial agents or escrow assistens.

Via a bank account, the recruited "financial agents or escrow assistens" are supposed to accept payments from third parties and transfer them as quickly as possible by sending cash via financial transfer service providers (e.g. Western Union or MoneyGram) to a person or company located abroad.

Alternatively, vouchers are to be acquired by the financial agents from online merchants, such as Amazon or ITunes, and passed on. As payment, a high commission often awaits, which the financial agent retains from the transfer amount – 5-20% is usually offered.

Attention: The employment relationship is only simulated to possible financial agents. Interested persons are asked to apply via e-mail - usually without much effort or appropriate documents.

After just a few days, an employment contract is sent, thus giving the scam an “official” appearance. It is always confirmed that the account is only used for legal business. After the applicant has signed the "employment contract", money from alleged customers of the company are received on the private account of the “new employee”.

These sums of money are supposed to be further transferred by the "employee" to accounts abroad.

A quick scam that covers the tracks to the real criminals.

All of this can be prosecuted under criminal law. The recruited financial agent is liable for the damage incurred, not the bank where the account was opened for the fraudulent schemes.

Where does the money come from?

The money transferred to the financial agent's or escrow assistant’s account comes from people who have themselves been victims of fraud, for example, by buying goods on the Internet that were non-existent.

With this action, the account holder – the alleged financial agent – places himself at the service of the fraudsters, who want to transfer the illegally obtained money once again to further accomplices abroad, thus blurring transfer routes.

This in turn leads to the original transfer being revoked by the victims. Unfortunately, it is often too late, as they are waiting for the arrival of the ordered goods, for example. But, because the financial agent, for his part, has continued to transfer the money, is liable for the resulting loss.

The five most common fraud schemes:

  1. Phishing: Here, account access data is obtained by fraudsters; they then transfer money from the victim's account to the account of a previously recruited financial agent. The agent then transfers the money abroad. The consequences: considerable financial losses.

  2. Fraudulent Internet auctions: On auction platforms on the Internet, goods of all kinds are offered at an unusually low and therefore enticing price. The buyer is supposed to transfer the purchase price to the financial agent's account; however, the goods never arrive.

  3. Fake online stores: Financial agents specifically open a new account that appears to be a business account by providing false information in fake online stores. For this purpose, they go through a real identity check and present real identification documents – banks are powerless in this case, because these are accounts of private individuals. The financial agent acts as a straw man for the criminals.

  4. Commodity agent: People are recruited via the Internet or advertisements to make their account available for the transfer of funds. With the incoming money, they are supposed to buy high-value goods, mostly technology, e.g., Iphones, laptops, smart TVs, and send them to certain addresses for a commission. The incoming cash is money from criminal acts.

  5. Financial agent against will: The criminals sometimes simply transfer money to an account holder, who thus gets involved in the illegal activities without his knowledge. Where these account numbers come from is often unclear, but probably from previous phishing attacks. The “wrongly transferred” amounts are reclaimed by the fraudsters under an easily understandable pretext (e.g., money was mistakenly transferred to the account due to a typing error, but was intended for a friend abroad), whereby the account holder abused as a financial agent is allowed to keep part of the money for the inconvenience caused. However, the remittance is not supposed to go to the original account, but to be transferred to another account, often abroad.

Note: Again, it is the account holder who is liable for the transfer, not the bank.

The legal consequences

The German Federal Criminal Police Office and the State Criminal Police Offices urgently warn against seemingly reputable job offers and quick side income opportunities where unknown companies are looking for financial agents or trust assistants, because there are criminal, civil and administrative consequences, especially because of the suspicion of money laundering.

  1. Criminal prosecution: Instead of supposedly lucrative business, there is the threat of imprisonment for reckless money laundering (Section 261 (5) of the German Criminal Code) and claims for damages by the aggrieved parties. Furthermore, proceedings by the Federal Financial Supervisory Authority (BaFin) for operating unauthorized financial services businesses will follow.

Financial agents are in any case threatened with criminal proceedings for money laundering. By making an account available and transferring the criminal funds received, the financial agent helps to conceal the origin and transfer routes of the money. In doing so, the financial agent is guilty of at least reckless money laundering. The consequence: a prison sentence of up to two years or a fine.

  1. Administrative prosecution: Since financial agents receive a commission for their activities, they are conducting a commercial financial transfer business. This means that they are providing financial services for which a permit from the Federal Financial Supervisory Authority (BaFin) is required.

Of course, this is not present in the case of fraudulent activities. BaFin can therefore initiate administrative proceedings against financial agents for unauthorized operation of financial services. The consequence: imprisonment for up to three years or a fine.

  1. Civil prosecution: Victims of financial agents from whom the looted funds originated can take civil action against financial agents and demand full repayment.

What Solaris is doing to prevent fraud

The protection of our customers and the security of their deposits is a top priority for Solaris. The fight against financial crime and money laundering is the most important component of this. To ensure maximum security Solaris relies on a robust Anti-Financial-Crime (AFC) compliance architecture consisting of Governance, Know-Your-Customer and AFC Operations.

Especially in the area of transaction monitoring, Solaris trusts digital data-based solutions that help analyze cases in real time.

When it comes to fraud cases, Solaris naturally relies also on tips from those affected. If anyone believes they have been the victim of fraud by a financial agent or an escrow assistant, they should immediately contact Solaris directly.

There is no guarantee that the funds will be recovered, only if the fraudster is still holding the funds in the account, they can be recalled. The victim should always file a criminal complaint with the police if they suspect they have been the victim of fraud.

Do you want to report a suspicious activity or fraud?