Foreign exchange broker NAB has revealed its latest research on foreign exchange scams involving “sims” who use the internet and the dark web to prey on unsuspecting customers.
The company’s latest report into the growing problem comes after the Australian Taxation Office (ATO) last month revealed it was investigating the use of dark web sites to defraud customers.
In the report, NAB found “a number of instances of sham foreign exchange brokers” using the dark net to sell “inflated foreign exchange rates, with no indication of any transactions”, and said the “consumption of fake foreign exchange products is widespread”.
In its annual report, the ATO noted that the foreign exchange market is expected to reach $5.4 billion by 2020, and said that “unfavourable economic conditions in some countries could lead to a reduction in foreign currency supply”.NAB said that between October 2016 and March 2017, there were 7,000 reports of sham brokers, of which 5,000 were from Australia.
“These traders were engaged in the use and sale of fictitious foreign exchange instruments and/or false currency instruments in a variety of countries around the world,” it said.
The ATO also said it was “working closely with the Financial Crimes Enforcement Network (FinCEN) to investigate the issue of foreign exchange fraud”.”NAB’s findings and the information it provided to the AFP indicate that sham foreign currency brokers have used the internet, the darknet and social media to mislead consumers into believing they were actually buying real, legitimate foreign currency, and that their account balances were being paid in legitimate currencies,” the report said.
“In the case of sham, the scammer may use a ‘smart phone’ to post a bogus invoice, posing as a reputable foreign exchange broker and using a fake credit card number to make the fraudulent transactions.”
The scammer then sends the customer a counterfeit bank card, claiming to be a genuine credit card company.
In the process, the fraudster sends the fraudulent transaction amounts to the bank and claims to be entitled to receive the funds.”NAB noted that sham brokers “often disguise the real identity of the fake credit cards they use to collect funds”, and that the “scam is usually completed through social media and other platforms”.
Nab’s research also found that foreign exchange accounts held by sham brokers were often “overvalued”, with some accounts being worth more than $100,000.”
It is important to note that these scams do not result in a financial loss to the consumer,” the company’s report said, and “have no impact on their ability to withdraw funds”.
The report said the use on the dark Web of the “unlimited” amount of fake money to defray foreign exchange purchases, however, “does raise serious concerns for financial institutions”.”
In some cases, the scams appear to be used to hide their identity,” the ATOR report said.”
The fraudsters may use these fraudulent transactions to hide the true origin of their fraudulent transactions and their ability at any time to reclaim funds.”””
In other instances, the fake foreign currency is then used to purchase goods and services in Australia.”
“The fraudsters may use these fraudulent transactions to hide the true origin of their fraudulent transactions and their ability at any time to reclaim funds.”
“It can be challenging for the public to know the real identities of sham buyers and sellers, and this research underscores the need for the Government to pass legislation that makes it easier for the authorities to trace fraudulent transactions,” it concluded.
A spokeswoman for NAB said the company had received more than 3,000 inquiries about foreign exchange scam activity from customers since it began working on the report.
“We are working closely with our colleagues across the financial services industry to address the growing issue of international exchange fraud and the issue is likely to continue to grow as new scams emerge,” she said.