INVESTMENT FRAUD

What is investment fraud?

Investment fraud involves illegal sale or purported sale of financial instruments, convincing them to invest in schemes or products that are worthless or do not exist.
Investment fraudsters deceive potential investors into making purchases based on
inaccurate information by falsifying audits and other company statements. Investment fraud may involve stocks, bonds, notes, commodities, currency or even real estate. Before making any investment, DAFM recommends that you check to make sure that both the investment and the salesperson is registered and licensed by us or any financial authority.

Types of Investment Fraud

The most common frauds tend to fall into the following general schemes:

-Pyramid Schemes
A pyramid scheme is a fraudulent system of making money based on recruiting an ever-increasing number of “investors.” The initial promoters recruit investors, who in turn recruit more investors, and so on. The fraudsters behind these schemes typically go to great lengths to make their programs appear to be legitimate multi-level marketing schemes.

-Ponzi Schemes:
A Ponzi scheme is an investment fraud that pays existing investors with funds collected from new investors. In Ponzi schemes, the fraudsters do not invest the money. Instead, they use it to pay those who invested earlier and may keep some for themselves. The scheme is named after Charles Ponzi, a 1920s-era con criminal who persuaded thousands to invest in a complex scheme involving postage stamps.

-Pump and Dump:
A pump and dump scheme is a type of securities fraud that involves the artificial inflation of the price of a security through false, misleading, or exaggerated statements regarding the security’s price. The fraudster can profit from the price inflation by quickly selling the securities at a high price, while the new owner of the shares will likely lose a substantial part of their capital because the security’s price will quickly fall.

-Advance Fee Fraud:
An advance fee scheme occurs when the victim pays money to someone in anticipation of receiving something of greater value—such as a loan, contract, investment, or gift and then receives little or nothing in return. This type of
fraud plays on an investor’s hope that he or she will be able to reverse a previous investment mistake involving the purchase of a low-priced stock.

The role of anti-money laundering teams

Security controls continue to advance in order to keep financial businesses stress and fraud free. The anti-money laundering teams generally considered their roles to be to identify and escalate suspicion relating to the perpetrators of investment fraud.
The problem is global and we have already helped a couple of hundreds of international businesses to readjust to the new normal. Our responsibilities include:
-Investigating and assessing the financial risks posed by a company’s operations, as well as monitoring and regulating higher-risk activities
-Communicate with regulators and auditors regularly to explain their risk monitoring, control, and prioritization techniques
-Regularly examine data and solutions to verify all AML regulations are met