Unmasking Corporate Owners in Canada

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Lincoln Caylor
Litigator focusing on high-stakes, cross-border financial crime disputes
Bennett Jones LLP

Most large-scale fraud, corruption, taxation and other economic crimes have a common characteristic: complex webs of corporations and trusts used to perpetuate schemes and to launder funds. While the “corporate veil” establishes the separate legal identity of corporations for legitimate reasons, it can also aid in the concealment of money and the identities behind it.

By permitting corporate ownership to remain secret, governments facilitate money laundering. Secret corporate ownership occurs when a corporation hides the identities of their true beneficial owners. The Panama Papers serve as the most recent example of the need for transparency of this beneficial ownership. However, it is not a new concern.

In addition to places like Panama, Canada is also an attractive jurisdiction for those looking to keep corporate ownership secret because of its lack of ownership disclosure requirements. But the issue in approaching a solution is not a lack of awareness – Canada is well known to be a hub for these white-collar crimes, facing criticism from nations who have created successful transparency schemes such as the U.K. and the British Virgin Islands (BVI). Bringing the country into compliance with international norms and increasing beneficial ownership transparency has been a recent budget agenda item of the Canadian government, but several factors are continuously highlighted as standing in the way of formal commitment. For example, only 10% of Canadian companies are federally registered, making it difficult to create a national strategy to close loopholes without the cooperation of the provinces.

Despite barriers to prompt resolution of this issue, elements of a successful government approach to monitoring corporate ownership are clear:

  • Strong leadership from the Financial Action Task Force, the G-20 and the U.K.;
  • Coordination with the provinces and foreign governments;
  • A public registry of beneficial corporate owners;
  • Mechanisms to ensure a balance between privacy and social interests; and
  • Successful models to strive toward, such as those in the U.K. and BVI.

Canada is currently a safe harbor for laundered money, but it doesn’t have it to be. This infographic and the steps it lays out give Canadians the steps needed to make progress in the transparency of corporate ownership.

Are you interested in learning more about the latest fraud-related topics and trends that impact Canada? Attend the upcoming 2017 ACFE Fraud Conference Canada in Toronto, October 29-November 1. Register at FraudConference.com/Canada by September 29 and save CAD 100!

Identifying and Preventing Tech Support Scams

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Ron Cresswell, J.D., CFE
ACFE Research Specialist

While reading a blog on your laptop, a pop-up message suddenly obscures your computer screen. The message, which appears to be from Microsoft, says that your computer is infected with a virus and instructs you to call a toll-free number immediately. You call the number and speak to a woman who falsely identifies herself as “Sarah with Microsoft Tech Support.” Sarah wants you to download a program that will give her remote access to your computer so that she can diagnose the problem. If you comply, Sarah will claim to find a dangerous virus, or another serious security issue, which she will offer to fix for a fee.

This is called a tech support scam, and, according to the FBI, these scams are on the rise.

Tech Support Scams
In tech support scams, fraudsters impersonate major high-tech companies (usually Microsoft, Apple, Dell or Google) and convince victims to grant remote access to their computers. In most cases, victims are instructed to download and run common remote access software, such as TeamViewer, GoToMyPC or LogMeIn.

The goal of most tech support scams is to convince the victim to pay for unnecessary computer services to repair nonexistent viruses or other problems. However, in other variations on the scam, the fraudsters:

  • Steal the victim’s usernames, passwords and other personal information
  • Install spyware or malware on the victim’s computer
  • Refuse to relinquish control of the computer until the victim pays a ransom
  • Try to sell the victim software that is useless or free
  • Try to enroll the victim in a worthless computer maintenance or warranty program
  • Direct the victim to a website that asks for credit card numbers and other personal information
  • Harass the victim with phone calls seeking additional fees

Prevention
To prevent being victimized by tech support scams, consumers and businesses should take the following precautions:

  • Do not give unknown, unverified persons remote access to computers or install software at their direction.
  • Resist the urge to act quickly. In tech support scams, fraudsters create a sense of urgency and fear to compel the victim to act immediately.
  • Disregard pop-up messages that instruct the user to call a telephone number for tech support. Legitimate companies do not communicate with customers this way. 
  • Hang up on unexpected, urgent calls from outsiders who claim to be tech support, even if the caller ID says Microsoft, Dell, Apple or Google. Those companies do not make unsolicited tech support calls.
  • If there is a question about whether a communication is legitimate, look up the company’s telephone number and call to verify. Do not use the number on the questionable communication (e.g., pop-up message, caller ID).
  • Ensure that computer networks are protected by strong and regularly updated antivirus software and a firewall.

While tech support scams are common, they are usually easy to spot. Generally, they involve an unknown person asking for remote access to your computer. Once identified, such scams can be defeated by following the guidelines listed above.

3 Psychological Tools That Will Help You Elicit Confessions

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Sarah Hofmann
ACFE Public Information Officer

On a Thursday evening your doorbell rings. You open the door to find a 9 year-old child on your threshold who says, “Hi. I’m selling candy bars for my school. Do you want to buy one?” Would you buy one? Or would you politely decline? What if the child instead said to you, “Hello. Do you think children should be reading more?” If you respond affirmatively, they follow up with, “Do you mind buying a candy bar to support our library?” Chances are that you are much more likely to buy that candy bar after agreeing with the child that children should read because you now feel compelled to back up your previous affirmative statement. That scenario is more than a clever sales pitch for a child — it is a perfect example of the social contract compelling you to act.

In his session, “Social-Psychological Behaviors: An Underused Tool for Fraud Investigators,” Bret Hood, CFE, will share that story and more at the upcoming 2017 ACFE Law Enforcement and Government Summit in Washington, D.C., October 30. The child in question was his daughter and after slumping candy fundraising numbers, he taught her to use a two-prong question method to increase the likelihood of people buying the bars. He says that fraud examiners can use a number of psychological tactics like two-prong questioning to interview and elicit confessions from suspected fraudsters. A few other tools Hood will discuss are:

Social Contract. If you force someone into a situation where they use cognitive dissonance to lie to themselves, they are more easily exposed. He says that if you lie to a stranger, you won’t have as much trouble changing your story later, or denying what you said previously. However, if you lie to someone you know, or if you write down the lie, you’re more likely to stick to that story, no matter how outlandish it might be. 

Reciprocity. Humans are naturally inclined to reciprocate what they perceive to be kind gestures from others. Hood suggests some seemingly minor tricks to use in an in-person interview with a suspect — like offering them a can of soda or a more comfortable chair. The same concept can even be applied to interviews over the phone. Starting a thought with an implication of camaraderie or collusion — like saying, “I normally don’t share this with people, but…” — can make the target of the interview feel that they must give you a piece of information equally special.

Priming. Simply softening an interrogation about embezzling to a line of questions about “misplaced” money can elicit more honest responses from suspects, or even unwitting pawns. When people feel like they are safe and understood, they’re more likely to share information. Priming your words to make them feel understood is an easy way to achieve that truth.

There are many ways that anti-fraud professionals can build a case against fraudsters, but much of the work that requests for documents, subpoenas and audits do can also be accomplished by tapping into the most basic aspects of the human psyche. 

You can hear Hood speak about this topic, and hear about the latest fraud techniques unique to law enforcement and government professionals in Washington, D.C. next month. Visit ACFE.com/fraudsummit and register by September 29 to save an extra $95!