FINANCIAL fraud can be defined as an act intended to deceive a person or a group of persons through the use of financial transactions for their own or the company’s gain.
Fraud is a crime that is punishable under the law. Fraudsters engage with the public in several different ways. This may be done either through face to face meetings, phone calls, Short Messaging Services (SMS), e-mail, WhatsApp or most commonly nowadays through social media.
There is always a huge financial incentive to be gained through quick profits, cash, travel packages and gadgets, and these are usually used to lure victims in.
Brunei Darussalam is not immune to this phenomenon where in the past, fraudsters have managed to persuade some who genuinely believe they are assisting victims of such tragedies, only to be fooled by never-ending fees to be paid in order to get the funds to be released. These scams may take various forms, such as inheritance scams, work scams and love scams.
Some fraudsters assume the role of victims or representatives for recently deceased high ranking officials leaving property usually in cash of which are to be distributed amongst them at an agreed percentage.
The modus operandi for these 419 scams, or commonly known as Nigerian Scams, have been in operation for a while despite the widespread media reports sharing stories of victims of such scams. The media have warned the general public of such scams but they are still unable to dissuade the general public from parting with their hard earned cash for the promise of big gains.
One of the popular schemes employed by fraudsters is through the use of social media such as Facebook. By creating fake profiles, the fraudsters have managed to exploit other users by pretending to develop an intimate and personal relationship with their victims.
The victims are led to believe and develop a strong bond with the fraudsters and would then take advantage of them by asking for funds to assist them in some kind of turmoil for example urgently requiring medical treatment. The rest works on the same template as the scams described earlier.
The use of Short Messaging Services (SMS) has also been utilised where fraudsters would send out an SMS blast to would-be victims informing them of prizes they have won in competitions organised by some beverage companies. Victims that fall prey to this scam would respond to the SMS, to which the fraudsters would reply by proving their legitimacy and state that the prizes or rewards are the genuine article.
Supposedly true documents endorsed through some high ranking government or banking officials are part of the package used to legitimise its worth, but has been artificially concocted through the clever and effective use of appropriate software to ensure its authenticity.
Get Rich Quick Schemes or GRQ are also part of financial fraud where the public is made to believe that with such investments, returns with unusually high returns over a very short period of time with minimum effort would be offered to them upon participation of such schemes.
MLM marketing is a business activity that involves the marketing and selling of goods or services through a network of distributors who receive remuneration either through profits of sale and commission through the achievement of targets either individually or in a group.
At the same time, there are others who operate as MLM but in fact are nothing more than a pyramid scheme in disguise. The focus of such schemes would be to obtain deposits through the recruitment of members without a valid product or even less so an ambiguous form of product such as tokens, e-books or commodity to market or to sell.
The promise of easy money with little or no effort followed by testimonies of those who have achieved success are often displayed in social media to add to the legitimacy of this business. However, it is not known by the public that these payments would dry up when it has run out of new participants to fund this group and investors are usually left high and dry.
One such trend that is gaining popularity nowadays involves the use of complex mathematical calculations in the form of crypto-currency such as bitcoins, utokens, altcoins. Whilst not being recognised as legal tender, crypto-currency was initially intended for gamers to enhance their virtual playing experience by being able to increase the powers or defence systems of their characters.
The use of electronic or virtual tokens which can be exchanged for cash has been a trend that is gaining popularity in this region. There are high hopes that the tokens bought will increase in value. The problem here is that these currencies are limited in quantity and are further broken into smaller units to meet demand.
This will lead to an appreciation in its value and there will be no guarantee that these crypto-currency can be exchangeable for cash due to its high value appreciation, as each small unit will require certain amount of real currency to support its value.
More worryingly, the anonymity element of crypto-currencies makes it the perfect tool to launder ill-gotten gains derived through unlawful means such as gambling, prostitution, corruption or human smuggling.
Thus, to allow such activities such as money laundering and terrorist financing to crystallise here in Brunei Darussalam may potentially tarnish the country’s image as an Islamic nation that carries the philosophy of Malay Islamic Monarchy (MIB). There is no guarantee that the funds received through the means above is clean and this may further affect the nation’s reputation.
In a nutshell, any form of investment offered to the public should only be offered by licensed and registered institutions sanctioned by the Autoriti Monetari Brunei Darussalam (AMBD). Financial institutions are licensed to safeguard depositors/policyholders/investors by imposing regulatory requirement such as capital guarantees, shareholders listing, proper monitoring of financial health of the institution. These mechanisms are all created to ensure that the general public’s safety and interests are well-safeguarded.
With unlicensed operators, there are no safeguards to preserve the general public’s interests and there are high risks involved, mainly due to the highly confusing nature of investments, the lack of documentation and it is not backed by any financial guarantees.
Most of the operators of such scams including Forex trading are in fact not recognised by AMBD. Licensed operators, on the other hand, are usually qualified, experienced and adequately trained. Their work is usually vetted by their institutions before they are allowed to offer any financial type investments to the public. Investment vehicles are usually explained in a proper manner with proper documentation backed by their organisations.