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UAE regulator issues US$15.5m remittance scam warning

Eugene Costello - International Investment - 18-01-11
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United Arab Emirates (UAE) regulator the Dubai Financial Services Authority (DFSA) has issued a warning to residents that fraudsters are approaching people with a money-remittance scam – the second financial services scam involving the DFSA in as many weeks.

The fraudsters are claiming credibility with their approaches by purporting to be from the DFSA chairman among others, said the DFSA.

The scammers have also claimed to be calling from a UAE commercial bank and a number of UAE government entities, it added.

The scam is not a sophisticated one and appears to be a variation on the so-called 419 scam, popularly associated with Nigeria.

Fraudsters contact their intended victims to say that they are the beneficiary of an US$15.5m (£11.5m) money transfer.

The sting is that they say that, in order to process the payment, the “beneficiary” must first pay a processing and handling charge of US$54,250 (£40,200), as charged by “the Federal Government” [sic].

The lack of sophistication of the operation is seen in the fact that the would-be scammers misspell the name and signature of the DFSA chairman in their correspondence, the regulator said.

The scam also falsely attributes the letter headed “RE: APPROVAL AND ENDORSEMENT OF FUNDS FOR REMITTANCE TO [NAME OF CONSUMER]” to a UAE commercial bank, a government ministry and an online government system, the Khaleej Times reported.

The DFSA also pointed out that it would never seek funds on behalf of the UAE, saying that it “does not deal with any payments that may be requested from consumers by the ‘Federal Government’.”

Second scam involving the DFSA in as many weeks

Only last week, as reported in International Investment, the DFSA was forced to act when the UAE financial services community was targeted by fraudsters using a fake document purporting to be from the DFSA in a bid to dupe them into paying false fees.

In that instance, the DFSA warned that the scammers were using a false DFSA application form fraudulently to offer a “fund status recognition certificate” in return for paying an application fee.

With regard to the latest attempt in the UAE, the DFSA says that, to confirm the authenticity of any correspondence or documents that claims to be issued by the Dubai International Financial Centre (DIFC), DFSA or a DFSA-regulated firm, consumers should either call +971 4 362 2222 or send a complaint via the DFSA website.

It also points out that it has a dedicated webpage with advice on scams, which is copied below.

A brief history of scams

419 scams, also known as advance-fee scams, have been around a lot longer than was previously thought.

An early version was known as ‘the Spanish Prisoner scam’, and became popular in the 18th century.

Scam This involved approaching wealthy businessmen to seek assistance to smuggle a wealthy prisoner out of jail; in exchange with some money to bribe guards, the prisoner would show his gratitude once he had gained his liberty with largesse.

The scam has become popular once again in the digital era, and usually takes the form of unsolicited, or ‘spam’, emails.

Although many know it as ‘the Nigerian scam’, a study in 2006 found that 61% of such scams originated in the US, 16% in the UK and just 6% in Nigeria.

One reason suggested for the enduring stereotype in popular culture is that the Nigerian scams are often seen as comical in their poor English and florid language.

DFSA advice on avoiding scams

You can avoid being scammed by:

  • Checking the relevant regulatory agency’s website to see if the company you are dealing with is listed and regulated. You can even contact the regulator to verify whether the company is regulated
  • Doing general searches (e.g. on Google) to see what information can be found about the company you are dealing with
  • Only dealing with people you trust. Dealing with individuals you have never met carries a higher risk
  • Getting independent advice before entering into a transaction, or getting a second opinion from a trusted friend
  • Using common sense.

Be wary of the tell-tale signs of a scam such as persons who:

  • Communicate only via email and telephone with a reluctance or a refusal to meet in person;
  • Are reluctant or refuse to provide information on who regulates their activity; and/or
  • Use generic email address such as Hotmail and Yahoo; and
  • Keeping paperwork safe. When entering into any new relationship ensure that you maintain good records of all paperwork you receive and keep records of all your meetings and conversations. This may not prevent you from being scammed but will assist in the event that you need to take any action.

Remember:

  • If you receive an offer of an amazing deal out of the blue, don’t believe it! If it seems too good to be true then it is probably a scam
  • If you receive an opportunity to invest in a financial product which looks real
  • offers bigger and faster profits than real investments
  • offers less risk and less effort than real investments
  • offers something special that genuine investments don’t offer; and urges you to act more urgently than the real thing

DO NOT INVEST!



Tags: remittance scam, Dubai Financial Services Authority, DFSA, UAE

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