The ICC Financial Investigation Bureau (FIB) has urged ongoing caution over gold transactions, after the previously-reported trend in fraudulent deals continued.

The ICC Financial Investigation Bureau (FIB) has urged ongoing caution over gold transactions, after the previously-reported trend in fraudulent deals continued.

In Autumn 2010 the Bureau reported a rash of fraudulent gold shipments that were all variations on the traditional advance fee fraud, but using the promise of discounted gold to lure in unsuspecting victims. Just as the demand for gold has not abated, nor has the number of fraudulent transactions reported to the Bureau.

In one recent case, FIB heard from a Saudi commodities trader that received an offer from a London-based scrap metal exporter of gold bullion via its Spanish agent. The sales contract document referred to a Turkish oil company as a partner. FIB analysis quickly ascertained that neither of the companies named is registered in the United Kingdom or Turkey. Indeed, the postcode provided for the UK entity was for a different location than that described in the rest of the address. Furthermore, neither of the email addresses provided were from a corporate domain. The description of the goods offered also featured a number of red-flag terms, not least the significant discount offered.

FIB Manager Karen O’Neill commented: “Throughout its history, FIB has noted that with every spike in demand for a certain commodity there has been a concurrent increase in suspect transactions involving it. A recurring theme that we have also picked up on is the willingness of traders to defer their suspicions when confronted with an especially tempting deal.”

In another case, an individual in Thailand offered 5000 MT of gold bars. Part of the initial negotiations with this individual involved a number of spurious documents that are well-known to the Bureau and should alert any experienced trader that the transaction is potentially suspicious. It is possible that the fraudster partly uses these documents to ascertain whether or not they are likely to be able to exploit their potential customer. This case also featured a second set of documents that named a number of ‘seller’s agents/representatives’, all of whom were set to receive a small percentage commission.

Many of the cases seen by the Bureau only vaguely reference the origins of the gold, rather concentrating on the discounted price. A few cases tell elaborate stories involving the origins of the gold, most likely in an attempt to convince the buyer that the gold is real. Ghana is a popular ‘origin’ for many recent attempted gold frauds, though increasingly other African countries are also being used.

Ms. O’Neill continued: “As long as there is money to be made from trading commodities, there will be those attempting to gain illegitimate funds through these fraudulent transactions. In most cases that we have seen, though, the loss of funds could have been avoided had the damaged parties sought to independently verify the components of the transaction with third-parties. By doing so, these deals could have been exposed as a sham, thus saving time and expense that could have been used on legitimate transactions.”

For more information on FIB services, please e-mail fib@icc-ccs.org or telephone: + 44 20 7423 6960.