The UAE is being targeted by international criminals using increasingly sophisticated methods to defraud companies and investors, one of the country’s financial regulators has warned.
The Dubai Financial Services Authority has issued nine alerts so far this year warning firms registered in the Dubai International Financial Centre about the scams, which use the internet to impersonate genuine investment companies and individuals, and says that the abuse is on the rise.
“This is a global problem that seems to be increasing in size, scale and complexity,” a DFSA spokesman said.
The attempted crimes often involve “advance fee scams” in which fraudsters construct false websites inviting funds from investors – or promising them loans, contracts or something of value in return for a deposit – who then receive nothing in return.
In some cases, the DFSA itself is targeted by the fraudsters. In a case earlier this month, the regulator issued an alert after it uncovered a scam in which criminals promised to issue DFSA-approved cash cards on payment of US$1,950. There have been two earlier alerts by the regulator about attempts to misrepresent itself by fraudsters.
In other cases, criminals attempt to pass themselves off as genuine financial organisations seeking investor funds in sophisticated websites that copy and reproduce real companies.
The UAE Central Bank is also believed to be monitoring the increasing abuse of advance fee scams. The authorities believe the presence of wealthy people in the Middle East looking for investment outlets makes the UAE especially vulnerable.
Ralph Stobwasser, the managing director of forensic business intelligence for the international accounting firm Deloitte in Dubai, said: “Some of the fraud schemes we have seen in recent years have become quite elaborate. Scammers are targeting businesses and entrepreneurs mostly under the pretext of making available some form of financing, but in reality seeking an advance fee through phoney insurance bonds or guarantees.
“Cases often go unreported, not only because victims may be too embarrassed but also because of the complexities of the multi-jurisdictional nature of such advance fee frauds. The fraud may be initiated in an African country using the identity of a GCC-based entity and targeting a victim in the United States,” he said.
An earlier alert related to criminals calling themselves Al Mashriq Commercial Investment Corporation and claiming to have DFSA approval for a scheme to offer loans in return for a $53,000 insurance bond.
“The DFSA strongly advises that you do not respond to any offers made by Al Mashriq,” the regulator said.
In other cases, criminals imitate the identity of a genuinely licensed DFSA firm by creating a fake website “without authority and for a malicious purpose”, the regulator said.
In another case, criminals misused official DIFC letterhead to offer a fraudulent document called an “official fund approval notification” supposedly signed by former and current DIFC executives.
Advance fee scams are sometimes known as “419s” by regulators and investigators after section 419 of the Nigerian penal score, which deals with fraud. Many of the scams originate in Nigeria and other West African countries.
In the most publicised scam, an Emirati businessman lost $48m in 2012 in a plot hatched in Togo that allegedly involved an official linked to a French oil company.
The DFSA said: “Advance fee scams are just one of many types of fraud that have become prevalent in recent times because they have proven to be an efficient and cost-effective way of defrauding the public. The ever-increasing penetration of internet usage at all levels of society has enhanced their efficiency greatly.”
The regulator added: “A person with access to a computer, a printer and the internet can promote an advanced fee scam. The risk for the promoters of such scams is that they will get caught. However, the promoters of these frauds are often able to mitigate that risk by using false identities, promoting their scams over the internet to hide their true physical location and promoting scams from jurisdictions with inadequate legal and regulatory frameworks.”