FIB monitoring self-liquidating loan scam

ICC’s Financial Investigation Bureau (FIB) is closely monitoring a sophisticated global advance fee fraud scam that targets companies facing financial difficulties.

ICC’s Financial Investigation Bureau (FIB) is closely monitoring a sophisticated global advance fee fraud scam that targets companies facing financial difficulties.

To date, at least five companies are known to have lost significant sums of money to this operation, and it is estimated that at least another three victims will face a similar fate.

FIB Assistant Director Jon Merrett provided details of the fraud: “We believe two teams of fraudsters are conducting the same or a very similar operation in the US, Europe and Australia. The fraud perpetrators appear to be pursuing companies in poor financial health, using a combination of media reports and intelligence gathered from third parties such as lawyers and accountants.”

Carefully selected victims are contacted and offered a way out of their difficulties, but in an interesting twist, they are not actively pursued. The assumption being that once a convenient exit strategy has been offered, only the most desperate will expend the time and effort needed to conclude the deal.

The offer itself is a form of advance fee fraud, deceptively termed a ‘self liquidating loan’. When it is clear that the victim has exhausted all avenues for resolving their financial problems, they are offered this ‘loan’. The financing is represented as offering deferred payment terms of up to 10 years, subject to an advance fee payment, representing 4% of the overall value of the loan. The fraud operators present the 4% advance fee as payment for an insurance certificate covering the loan.

In order to qualify for the loan, victims are required to register a new company in the Middle East. Once the company is registered and the advance fee handed over, victims receive a counterfeit cheque for the full amount borrowed. Upon discovery that the cheque and entire loan arrangement are false, victims find themselves unable to contact the ‘loan providers’. In some cases, the companies targeted had been seeking several million dollars in loans.

Mr Merrett added: “This scam has been assembled over a number of months, with the fraudsters carefully researching their intended victims. The scam operators appear to know, almost exactly, the amount of money to offer in order to relieve the financial difficulty of victims. Those stung by this operation have found themselves losing hundreds of thousands of euros and holding worthless insurance certificates.”

He concluded: “The FIB recommends that any loan offer appearing to have similarities to the fraud depicted above, should be treated with suspicion and avoided.”

FIB is part of the ICC's Commercial Crime Services (CCS). Full details of FIB membership benefits are available by calling +44(0) 20 8591 3000 or by email at fib@icc-ccs.org.uk