On March 23, 2010, a federal jury in the Western District of North Carolina, which encompasses Charlotte and Asheville, convicted a Nigerian citizen on conspiracy and wire fraud charges in connection with an “advance-fee” scheme that involved the use of money services businesses (MSBs) to transfer money.
In its press release, the U.S. Department of Justice described the scam as follows: The defendant and his co-conspirators sent spam e-mails to potential victims that falsely informed them that they had won a foreign lottery or had inherited a large sum of money. If an individual responded to the email, the defendant or his co-conspirators instructed the individual to wire funds to The Netherlands, Spain, or the United Kingdom through Western Union and other money transfer service companies in order to pay the necessary expenses and legal fees required to complete the transaction. According to the testimony during trial, at least 18 United States and international victims lost more than $9.5 million as a result of the scheme.
Putting aside the obvious question of why anyone would fall victim to this type of scheme, the important questions for MSBs and depository institutions concern whether you, too, are being used to “advance” this type of scheme:
- Do you have proper policies and internal controls in place to detect advance-fee scheme transactions?
- Have your associates been adequately trained on the red flags and on the proper responses to those red flags?
- Do your associates know your protocols for filing Suspicious Activity Reports (SARs) on advance-fee schemes and/or contacting law enforcement by telephone?