The second edition of the ICC FraudNet Global Annual Report takes as its theme the ever-evolving nature of fraud and financial crime, its responses and solutions. Ravaged and restricted by the Covid-19 pandemic – even at the point of publication – the current global climate of uncertainty has generated cause for re-thinking the responses to financial crime as its methods evolve. The annual Global Report published by FraudNet comprises original thought leadership from its members and Strategic Partners. It represents a unique contribution to these increasingly global issues. Focusing on the network’s interrelated practice areas of fraud, financial crime investigations and asset recovery, the papers herein exhibit expert insight from cutting-edge developments in the members’ respective jurisdictions as well as important contemporary cases in which many members have been actively involved.
Building on the success of the first edition published in 2021, this 2022 Report comprises 28 original articles authored by 46 contributors, from some 22 jurisdictions across the network. Many of the group have been involved in some of the most high-profile and complex asset recovery cases, and their experience in this regard makes for fascinating, instructive reading. Articles come from contributors practising in the UK, USA, Ireland, Jersey, Guernsey, Malta, Luxembourg, Poland, Spain, Austria, Hungary, Lebanon, Argentina, Guatemala, Panama, the Cayman Islands, the British Virgin Islands, Senegal, South Africa, Malaysia, Singapore and Japan; as well as from academics engaged in fraud and financial crime research. This breadth of engagement demonstrates the network’s global reach.
In furtherance of FraudNet’s thought leadership and academic initiatives that I am privileged to lead, this journal highlights purposive and practically relevant insights from leading practitioners, which it is hoped shall be of significant use to the wider network, Strategic Partners, professional collaborators, existing and prospective clients, and those with a practical, academic or policy interest in these important issues. Mindful that we are still living in a pandemic, fraud and related financial misconducts have spiraled during Covid19. Whether a confidence trick perpetrated by fraudsters manipulating the pandemic floodgates to unlawfully claim state benefit; or those targeting the vulnerable to exploit a sense of fear by pressuring them to part with savings for sham investments; or sophisticated, cross-jurisdictional cyber-frauds or ransomware attacks on over-burdened public sector organisations – this environment of volatility and overstretched systems is fertile ground for fraud to thrive.
The Report is thematically divided into chapters for ease of reference, although it must be noted that many of the contributions herein overlap into other areas by nature of this inter-related subject. Some of the specific themes covered in the Report include criminal and civil asset recovery initiatives, insolvency-related misconduct, investigations – including forensic analysis, litigation financing and partnerships, cyber-fraud including the increase in technology threats, virtual assets and cryptocurrencies, transparency initiatives and beneficial ownership, forgery and counterfeiting, and offshore issues.
Just as the ease with which predicate criminality can be committed and facilitated in a transnational sense, so too is the ability to utilise a borderless global economy to hide the proceeds of crime and suspect wealth. The offshore world has, for example, since the last report come under increased scrutiny in the wake of the Pandora papers data-leak, and has faced fresh criticism as to the facilitative role that certain in their number may – knowingly or inadvertently – be playing. The leaks also shone an indefatigable light on ‘onshore’ centres. Further, since the 2021 Report, we have seen increasing fallout from the 2020 FinCEN files publication. While such dataleaks are becoming commonplace and seemingly supported by legislators committed to corporate transparency – if the public register provisions of the UK Sanctions and Anti-Money Laundering Act are anything to go by – the revelations contained in such publications are oftentimes relatively unsurprising to those in this field. However, their influence on policy and the ongoing debate is inescapable. The issue of beneficial ownership is, of course, not an issue confined to the offshore world – but rather. as we saw with the US Corporate Transparency Act of 2021, there is increasing momentum in this area across the world, with the Financial Action Task Force engaging in an international consultation on a renewed standard. These issues are considered in the Report from both offshore and onshore perspectives.
Some of the contributions herein outline the utility of ‘controlled transparency’ in terms of global investigations of cases that involve some corporate presence offshore, as well as the benefits of litigating offshore or seeking injunctive relief therein to be enforced elsewhere. Members from the Cayman Islands, British Virgin Islands and Channel Islands share their practical insights on recent developments in this regard. In doing so, they also contribute deeper context to the often misunderstood world of ‘offshore’.
Elsewhere in the Report, the fundamental issue of the interplay between criminal and civil regimes is discussed – particularly in relation to operational synergy and cooperation between both frameworks as a means of enhancing investigations and their results.
Virtual currency is another key theme that is considered in the Report. It is increasingly controversial given the disparity by which both governments and regulators view certain virtual assets, and the challenges in a legal sense as to whether or not such “property” can be considered fair game in asset-recovery. This is set against a backdrop of concerns about how fraud can be perpetrated in the context of virtual assets. As the Head of the UK Financial Conduct Authority recently observed at the 38th Cambridge Symposium on Economic Crime, “many social media influencers are routinely paid by scammers to help them pump and dump new tokens on the back of pure speculations”. The application of new techniques in the virtual asset space is considered in the Report, including overviews of developments in jurisdictions like Malaysia, Singapore and Poland.
Important procedural issues are amply discussed, including enforcement of foreign judgments and the application of disclosure orders in terms of strategy. The continued application of relief such as Norwich Pharmacal orders are discussed, for example by reference to the Irish courts, as well as enforceability of judgments in certain jurisdictions, such as Lebanon.
The Report also considers forgery and counterfeiting in English law, as well as the position of professional advisors dealing with such cases. Further, one contribution reveals and analyses the industrial scale of wine fraud and forging in Europe.
The Report outlines developments in investigations, and insolvency-related misconduct. Insights are also provided from litigation funders highlighting challenges with spurious tactics used against funders during proceedings. Cutting edge accounts are provided in regards of the use of innovative technology to assist discovery and court proceedings. The theme of suspicious wealth is also considered in the Report including reviews of recent legal developments such as the impact of unexplained wealth orders in certain jurisdictions – a civil tool to target illicit wealth.
The network really demonstrates in this Report not only the breadth of work that members are engaged in, but also provides valuable observations from particularly high-profile cases. Insights from a contentious and ultra-high-net-worth case are given, in particular in relation to complex asset structures for high-value assets, and challenging, yet fruitful, efforts to obtain restrictive orders across a variety of jurisdictions.
The Report comes at a time where FraudNet was able to host its first inperson meeting since Beirut in 2019. It was particularly pleasing to launch various thought-leadership initiatives during the pandemic, but even more rewarding that many of the insights and ideas contained in the first Global Report were able to be discussed in person in Barcelona in late 2021. We look forward to such future opportunity in, hopefully, a safer and less restricted world by the time the Spring meeting comes.
In order to advance integrity in our societies, disrupt economic crime, repatriate ill-gotten gains, and achieve meaningful legislative and regulatory developments in furtherance of this mission, it has never been more important for those at the coal face to contribute to the debate. It is only with a greater understanding of mutual challenges that shared responses can develop, and meaningful cooperation can take place. This is critical when so many cases are transnational in their scope and impact. FraudNet Members and Strategic Partners’ engagement with this Report and the useful insights provided herein, contribute to this important objective and provide a basis for deeper understanding these complex issues.
Sincere appreciation to all contributing authors and colleagues in this field for making this Report possible. I hope the reader finds the 2022 Report instructive and insightful.
Dr Dominic Thomas-James
Editor, ICC FraudNet Global Annual Report
