A HIGH PRICE WAS PAID BY A SMALL GROUP OF INVESTORS WHO PUT THEIR TRUST IN AN UNVERIFIED BUSINESS PARTNER

  • LACK OF DUE DILIGENCE COSTS INVESTOR GROUP MILLIONS Investment Due Diligence

 

THE INVESTMENT INDUSTRY

Fraud is of the utmost concern for all financial organisations. These include banks & financial institutions, real estate lenders, business credit and finance companies, commercial investment corporations, asset-based lenders, debt financing firms, acquisition capital firms and others. Having safeguarding processes in place is required both from a legal and compliance standpoint, and from the position of being a trusted, secure financial institution. The financial sector includes new Anti-Money Laundering (AML) rules and legislation, and these regulations are strict and increasingly enforced. As such, remaining in compliance through implementing proper prevention controls is a must. Failing to do so can mean a loss of business, trust and reputation: banking giant Citibank was recently fined $70 million in the U.S. for failing to address shortcomings in its anti-money laundering policies. (Reuters, 2018) Professional services organisation also face risk of accounting fraud – with embezzlement being one of the biggest threats. At CRI Group, our forensic accountants are trained to follow the money. And when it comes to AML services, CRI Group is uniquely positioned to help organisations stay ahead of the curve with anti-money laundering measures and the processes required to remain fully in compliance with applicable laws and regulations. This provides financial institutions, their business partners and their clients the confidence of knowing that the organisation, and its reputation, is protected from the negative consequences of money laundering. Learn more about our solutions for your business.

 

INTRODUCTION

A small group of investors in the U.S. interested in engaging in extensive economic and humanitarian projects overseas recently learned the high cost involved when proper due diligence is not performed. The investor group placed its trust in a very persuasive individual, an Australian man who presented credentials that purported to tie him closely to the royal family in Dubai as well as major banking centers in the U.A.E. This individual made several in-person visits with the investors in the U.S., during which he detailed a plan to help them monetize their assets in order to facilitate necessary lines of credit at a bank in Dubai. With an impressive resume and the impeccable air of a serious business mover, the investors decided to engage in a Joint Venture Agreement with the man and the project was underway.

 

LARGE CASH DEPOSITS

Unfortunately (as it would turn out) for the investors, their new partner had convinced them that the first stage of building the needed lines of credit involved making large cash deposits to the bank – through him as an intermediary, of course.

Handing over first hundreds of thousands of U.S. dollars, followed by two deposits totaling nearly $6 million, the investors now waited for their credit lines to open. One delay turned to another – with every phone call, their “partner” had an excuse for why there had been no action resulting from the exchange of cash. In the end, it all turned out to be a fraud. This individual had deposited the huge amount of money for himself, and done nothing as agreed upon with the investors. After having called the FBI and law enforcement in Dubai, the investors reached nothing but a dead end. By the time they called CRI Group for help, there was no trace of the money or the at-large fraudster.

 

WHAT THE INVESTIGATION REVEALED

CRI Group’s due diligence investigation revealed what the investors should have known before ever doing business with this individual. Among the revelations:

For the investors, it was a difficult and incredibly costly lesson in due diligence. Any of the above facts about the criminal fraudster could have been discovered by CRI Group’s experts before the investors had sent millions of dollars they will probably never get back.

 

Who is CRI Group?

Based in London, CRI Group works with companies across the Americas, Europe, Africa, Middle East and Asia-Pacific as a one-stop international Risk Management, Employee Background Screening, Business IntelligenceDue Diligence, Compliance Solutions and other professional Investigative Research solutions provider. We have the largest proprietary network of background-screening analysts and investigators across the Middle East and Asia. Our global presence ensures that no matter how international your operations are we have the network needed to provide you with all you need, wherever you happen to be. CRI Group also holds BS 102000:2013 and BS 7858:2012 Certifications, is an HRO certified provider and partner with Oracle.

In 2016, CRI Group launched Anti-Bribery Anti-Corruption (ABAC®) Center of Excellence – an independent certification body established for ISO 37001:2016 Anti-Bribery Management Systems, ISO 19600:2014 Compliance Management Systems and ISO 31000:2018 Risk Management, providing training and certification. ABAC® operates through its global network of certified ethics and compliance professionals, qualified auditors and other certified professionals. As a result, CRI Group’s global team of certified fraud examiners work as a discreet white-labelled supplier to some of the world’s largest organisations. Contact ABAC® for more on ISO Certification and training.