Police halt investigations into offshore scams, National announces $500 million road transport policy and Kiri Allan and Michael Wood back on the tools in the latest headlines. Video / NZ Herald / Getty
A senior police boss says investigators have all but shelved attempts to solve international scam crimes due to complexities in identifying offshore offenders and their use of “money mules” to mask the trail of stolen cash.
Offshore scammers are estimated to be draining hundreds of millions of dollars from Kiwi victims every year, with cases surging in recent months.
Detective Inspector Chris Barry oversees Auckland City CIB investigations and the police district’s 19-man financial crime unit.
In a blunt admission, Barry said while scams were becoming more innovative and victims were suffering significant financial harm, it was nearly impossible for police to trace funds sent offshore or identify the criminal masterminds due to their remote locations and ability to hide identities online.
Rather than trying to solve these cases and bring international criminals to justice, police were instead focused on identifying local people who helped facilitate the crimes through the use of domestic bank accounts, and educating the public to raise awareness about scams.
“It only takes a moment of dropping your guard and falling victim to these quite skilled predators.”
Barry said expert police staff were dedicated to investigating financial crime. But it was up to banks to track stolen money overseas and to invest in security systems to detect suspect transactions and stop New Zealand money being siphoned offshore.
“I think getting money back is a lot more likely than identifying the offenders and having them prosecuted in their own countries.”
Anti-cybercrime consultant Bronwyn Groot warns New Zealand will be seen as a soft touch if authorities here don't go after offshore scammers.
Anti-scam consultant Bronwyn Groot warns that financial crime is “big business” and failing to go after the scammers could make New Zealand a soft target for professional crime networks.
“I don’t understand how they can so easily palm it off. I’m amazed how they just keep saying, ‘There’s nothing we can do, the funds have gone overseas, it’s jurisdictional’.
“They are stolen funds that should be spent in New Zealand, by New Zealanders, for New Zealand businesses. It’s crazy.”
And a victim who lost $400,000 this year in an HSBC-branded investment scam says he’s frustrated police have given up trying to solve cases like his because they’re too difficult.
The man said police were only targeting low-rent offenders who offered the best chance of successful prosecution instead of going after scam bosses who oversee large-scale financial fraud against New Zealanders.
“Police are just completely under-resourced at the moment. It seems they’re struggling with crime in general and this is just a big fish that’s too hard to fry.”
It has sparked calls for banks to do more to protect customers, including forcing them to refund payments when victims have been tricked into sending money to criminals.
Banks have defended their anti-scam measures, saying they invest heavily in security systems to keep customers safe as well as educating the public about the dangers of scams.
Detective Inspector Chris Barry oversees Auckland City CIB investigations and the 19-person financial crime unit. Photo / Jed Bradley
Barry told the Herald the likelihood of tracking down offshore cyber crooks was slim given they usually resided in inaccessible regions across Russia, Asia and Africa.
Asked what police were doing to solve international scam cases, Barry said: “That is hugely problematic and to be fair that isn’t at this stage something we are trying to focus on.
“The first challenge would be identifying who these people are. They do hide behind a cloak of anonymity. That’s the way they operate in an online environment.
“Needless to say the money will go through numerous accounts in an effort to make it impossible to track.
“I struggle to a degree to see how these investigations would be successful given the location and complexities of identifying and locating the offenders.”
Though scammers were continuing to pick off Kiwi victims, Barry said criticism of police was unfair given the complexities involved.
Asked whether police were collaborating with overseas law enforcement and intelligence agencies such as Interpol or the FBI, as they had done successfully to target the importation of illicit drugs, Barry said that in theory, it “sounds easy”.
“But some of these countries we’re talking about - the Russias, the Nigerias ... it would be very difficult if not impossible for us to send a team over there to try and track down people.
“Given how many offenders are out there, us trying to police other countries would be a massive drain on our resources.”
He added that police rarely had intelligence such as offshore scammers’ names or foreign recipient bank accounts to share with overseas law enforcement agencies.
“I can’t think of any instances where a bank has come back and said, ‘This is the account number where we think [the money] has ended up and these are the details of the offenders’. We’re not getting that far.
“Once the money has left New Zealand it’s really up to the banks and financial institutions to try and track it.”
However, Barry said police rigorously pursued domestic fraud cases and were having success targeting local mules whose accounts were used to move money abroad.
Auckland’s financial crime unit had nearly 300 current files, 34 of which were under active investigation.
Police were obtaining numerous court orders forcing banks to provide details of fraudulent money transfers and recipient bank accounts.
But these could take weeks and some banks were slow to respond, despite their legal obligations, Barry said.
“There’s potential for improvement in that regard in the timelines for some of those organisations.”
There was no “silver bullet” in combatting scams. Education was key, but Barry hoped banks could also tighten restrictions to prevent customers’ money being fraudulently obtained and improve the capability to track and recover stolen funds.
Groot said it was vital to take the fight to scammers to demonstrate New Zealand was not an easy target.
She believed it was possible to track cyber criminals overseas and recover victims’ money.
Groot is working with a client who lost more than $1m last year but claims police said there was nothing they could do as the funds had left the country.
Groot, however, obtained details of the money transfers and has reported the matter to the FBI. Homeland Security investigators have now identified the offshore mules and taken on the case.
She said she also helped an elderly couple recover nearly $1m in a share trading scam by engaging a Hong Kong lawyer and taking civil proceedings against Hong Kong businesses, culminating in a repayment order.
Local money mules were “low-hanging fruit”, Groot said, with many of them unwitting participants caught out in romance scams.
She believed New Zealand needed a more co-ordinated approach to tackle the rapid growth in financial fraud, including closer relationships with overseas agencies.
Too many victims were being told, “It’s all your fault”, and giving up hope.
“It’s easy money for the offenders. It’s an easy crime.”
Lane Nichols is a senior journalist and deputy head of news based in Auckland. Before joining the Herald in 2012, he spent a decade at Wellington’s Dominion Post and Nelson Mail.
