A “warning” has been issued to 10 B.C. residents suspected of being witting or unwitting so-called “money mules” for international cryptocurrency fraud schemes, according to the RCMP Integrated Market Enforcement Team (IMET) and the B.C. Securities Commission (BCSC).
The two organizations held a joint press conference Monday, at the E-Division (BC RCMP) headquarters in Surrey, with the stated intention to warn of international organized crime networks — including from Nigeria, China and Russia — soliciting British Columbians via text message to transfer cryptocurrencies.
On May 29, IMET and BCSC investigators claim they hand-delivered warning letters to 10 people suspected of transferring funds on behalf of criminals, according to Superintendent Adam MacIntosh, officer in charge of the Financial Integrity Program for the Pacific region.
The suspected criminals are recruiting British Columbians with the lure of job offers, friendship and romance and then offering a portion of the transferred cryptocurrency funds as an incentive, added Sammy Wu, the commission’s manager of investigations.
Upon opening a cryptocurrency account the person then becomes a middleman or so-called “money mule” for the criminal whose intent is to layer transactions to launder the proceeds of crime.
MacIntosh said it is suspected that some middlemen are knowingly laundering cryptocurrency while others are unaware of their actions and may be victims themselves.
MacIntosh said the scheme is far-reaching and it’s unclear how many people are involved in these acts; however, “it’s becoming more prolific.”
MacIntosh said the public needs to be aware of text messages soliciting these transactions and said if activity continues following warnings criminal charges could be assessed.
But when asked whether any person has been charged, MacIntosh revealed that the agencies are faced with difficulties, such as the international nature of the crime, tracking down suspects and proving a predicate offence, which is required for money laundering charges to stick.
MacIntosh suggested the problem is too big for law enforcement.
“They’re complex,” he said of the investigations.
“We are not going to arrest and charge our way out of this problem,” he said.
Asked what police and the commission are doing about the text messages he says the public is being “bombarded” with, MacIntosh said the RCMP is only a law enforcement agency and can only make recommendations to the Canadian Anti-Fraud Centre or others.
“That’s not something for us,” said MacIntosh.
Financial fraud expert David Baines, a retired Vancouver Sun columnist, said a press conference about issuing warnings “says everything you need to know about how toothless the RCMP are when it comes to financial crime.”
“Warning letters instead of charges? How considerate. Trumpeted in a news release? How pathetic,” said Baines.
As of 2019, fraud represented 12 per cent of the Crime Severity Index, which is used to measure crime across Canadian communities. Ten years earlier, in 2009, fraud represented just 6.5 per cent of the index, according to Statistics Canada.
And while fraud is up significantly in Canada, total court decisions for fraud cases have trended downward since 2009. Since then, there have been 12,500 court decisions, on average, with under 12,000 such decisions in 2018 and 2019.
Cryptocurrency exchanges must be registered with the commission to legally solicit and offer accounts to B.C. residents.
When asked, Wu said no registered exchanges have been utilized by the middlemen; rather, the commission is dealing with roughly 100 illegal/unregistered exchanges affecting B.C. residents.
Wu and MacIntosh initially cited “Nigeria, East Europe and Southeast Asia” as the origins of the schemes but when asked by media if Chinese organized crime was involved Wu affirmed that is also their understanding.
