June 11, 2011

Online scams have reached unbelievable levels in Russia and the Ukraine. Corrupt government officials and local law enforcement has done little to prevent or stop this growing form of crime. Some of the stories from the scams cases are difficult to believe. If these crimes were a novel, they would surpass the stories imagined by Frederick Forsyth, Ian Fleming and Graham Greene combined. Their creativity is one of the leading traits that keeps these scammers and criminals in business. The FBI recently reported that internet fraud has cost the Fortune 500 companies hundreds and hundreds of millions of dollars per year. Among the crime, a leading cartel has emerged from Chinese cities near the Russian border.

The FBI warns that businesses and bank wire transfers to Chinese cities of Raohe, Fuyuan, Jixi City, Xunke, Tongjiang and Dongning into accounts in banks such as the Agricultural Bank of China, the Industrial and Commercial Bank of China, or the Bank of China are at high risk. In most cases, law enforcement and Russia private investigators still do not know if the funds remain in China or are transferred elsewhere. And we are talking about big money. In some cases, $900,000 to even $20 million have been wired in each transfer. Targets vary from major insurance companies to real estate to schools and even churches. Wealthy individuals are also targeted. Criminals can speak the industry lingo, present a golden opportunity, and finally close the deal with your “investment”.

Experts are alarmed at the level of sophistication being used in the international fraud cases from Russia and China, and there is little effort being made by local law enforcement to prevent it. Fraudsters are focusing on business accounts and are leaving individual accounts in the past, because businesses move larger amounts of money, balances and have more transactions per month than an individual does, and if scamming the victim directly isn’t possible, the door is open to hackers to target the victim.

Businesses in the U.S., U.K., Canada and Australia who have fallen victim to these scams have been devastated. Hackers can cause damage beyond repair in some cases, especially if it impacts the perception of trust by clients. For example, once a company is knowingly the victim of a hacker, consumers begin to recognize that company as a risky company to do business with, and doing business with that company might mean that your information is not secure. The result is a major decline in new customers, and a costly battle to recover from the damage. Due diligence is key to avoid the mess.

Russia private detective agencies emphasize that accounts must be properly secured, and safeguards put in place to avoid hackers. For websites, the McAfee secure seal is just one of many steps a company can take to show customers it is serious about avoiding hacker risks. While some businesses view such steps as costly, it’s important for business owners and corporate managers to know the alternative, not verifying, can be far more costly. To be safe, consult a professional for due diligence!

All the best,

S. Birch
© 2011 S. Birch
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