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Payment Processing & other Counterfeit Draft Scams / Work at home jobs: processing payments, collections, donations, investments, forwarding checks and money orders, forwarding packages, forwarding money received by Western Union, writing and signing checks, Secret shopper jobs, forwarding cash received in packages and envelopes

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Green Card Lottery Scam: Truth and Lies in simple words

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Fraud secrets con artists don't want you to know!

ALL funds wire transfer systems are used for money laundering

Wire transfer systems: Introduction   Fedwire   SWIFT   Other wire transfer systems

OTHER WIRE TRANSFER SYSTEMS:

CHIPS

CHAPS

BOJNet

Funds wiring service companies

About Western Union and MoneyGram transfer systems

Alternative money transfer systems - hawala, chit, chop, etc.

e-Currency - Non-bank digital currency systems, Digital Currency Exchangers (DCE), Digital Gold Currency (DGC)

CHIPS: Clearing House Interbank Payments System. An interbank payment system related to international trade, CHIPS is used for the transfer of international trade dollars.  CHIPS is used by both Fedwire and S.W.I.F.T.

CHAPS: Clearing House Automated Payments System.  Operated by the Bankers Clearing House of London, CHAPS is used for interbank messaging and wire transfer involving British Pounds.

BOJNet: Electronic wire transfer system overseen by the Bank of Japan.

FUNDS WIRING SERVICE COMPANIES: Although there are many wire transfer services, they must each use the basic services such as Fedwire, S.W.I.F.T, or BOJNet.  Examples of wire money transfer services are Western Union, Moneygram, Eurigro, Sterling Draft Service, and the various payment services available on the Internet.

ABOUT WESTERN UNION AND MONEYGRAM TRANSFER SYSTEMS:

Bank-to-bank

When you wire funds from your checking account to your cousin's checking account in Oshkosh, a paper trail is established.  If your cousin calls you on Tuesday to find out where the money is that you wired last Thursday, your bank can track the path of the money through the banking system to see in what account the money currently resides.  A record of transfer is generated each and every time the moves moves from one bank's ledger to the next. See Fedwire and SWIFT.

The funds transfer to the stated account and can only be accessed by the account holder.

Western Union and MoneyGram

That's not the case when you use Western Union, MoneyGram, or similar wire transfer systems. 

Western Union and MoneyGram transfer money entirely within their own system.

If you wire funds from your local Western Union or MoneyGram office in Oshkosh to your cousin in London, you will receive confirmation that your brother picked up the money in London and at which office (not necessarily the one you sent it to).  Should your cousin be in Dublin or Paris or Singapore at the time, he can pick up the money at a local office there, even though you addressed the funds to a London office. See Where the money can be picked up below

The office that doles out the funds from it's own supply is credited for the amount disbursed by the company.  In other words, you are withdrawing money from the system at a local level that has been credited to the system at another location.

Where the money can be picked up

Western Union operates out of central city and/or country hubs (Los Angeles hub, London hub, Sri Lanka hub, Ghana hub, Nigeria hub...) and funds can be picked up at any office within the hub area.  The money can be picked up by ANYONE who presents identification, and ID's can easily be faked.  We call it "sending money into the void."

MoneyGram's system is worldwide. Once you place your funds into the MoneyGram system, it can be picked up at any office location worldwide, regardless of the location you indicated on the transfer form.  For instance, you can send money to London that is picked up in Lagos, Nigeria.  All that is required is corresponding ID which, as stated above, is easily faked.  

Western Union's Consumer Protection page

MoneyGram's Consumer Protection page

ALTERNATIVE MONEY TRANSFER SYSTEMS: hawala, hundi, chit, chop, flying money, money brokers

We could provide you with a quick overview of alternative money transfer systems; however, FinCEN's Patrick M. Jost and Interpol's Harjit Singh Sandhu have written an excellent, easy to read and understand paper published on Interpol's web site.

Quote from the Executive Summary:

"This paper presents a description of the hawala (also referred to as hundi) alternative remittance system. Hawala is an ancient system originating in South Asia; today it is used around the world to conduct legitimate remittances. Like any other remittance system, hawala can, and does, play a role in money laundering. In addition to serving as a 'tutorial' on hawala transaction, this paper will also discuss the way in which hawala is used to facilitate money laundering."

The hawala alternative remittance system and its role in money laundering, Interpol General Secretariat, Lyon, January 2000 http://www.interpol.int/Public/FinancialCrime/MoneyLaundering/hawala/default.asp

eCURRENCY: Non-bank digital currency systems, Digital Currency Exchangers (DCE), Digital Gold Currency (DGC)

e-Currency is an Internet trade system in which an individual buys a quantity of gold or silver through an exchange service, then stores the gold with a private, self-regulated corporation.  The individual can then buy and sell online using the metal reserve as the backing for the transaction.  Generally, the cost of the transactions is more expensive than a simple bank-to-bank transfer.

In an ideal world, it is an ideal solution to international trade and investment.  However, in the real world there is no way to guarantee that your money will buy any gold or silver at all, nor that it will be exchanged, nor that the corporation will secure your reserve.  There are no assurances whatsoever.

One of the most alarming aspects of digital currency exchange systems is that there is no oversight for transactions, meaning there is no watchdog, no financial regulatory agency, there are no compliance and risk-management requirements, there is no insurance, and there is no recourse when things go wrong.  Plus, it is an arena of rampant money laundering.

Widely used on hundreds of hyip¹ scam sites, in the fraud-fighting community it is known for being a system favored by scammers worldwide, particularly those based in Russia, Asia, Panama, and Indonesia.  Many DCE's located in countries with strong financial regulatory laws have come under investigation for money laundering and operating financial exchanges without proper license.  Some have been closed, others have had to drastically modify their business practices².

Additionally, digital exchange currency systems have facilitated the financing of terrorist activities, income tax evasion, and other criminal activities since nothing more than an email address is required to open an account, and as no valid name or physical address is needed to open an email account, transactions are anonymous³.

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¹ HYIP (High-Yield Investment Program) and hyip clubs are both Ponzi schemes in which investors are offered an [impossibly] high return for a comparatively low investment.  HYIP scammers target large dollar investors (typically $10,000 to several million per victim), while hyip clubs and their hundreds of web sites target small dollar investors ($5 to $10).

²  United States of America v. E-Gold, Ltd, United States District Court for the District of Columbia, 11 May, 2006 (indictment). e-money & payment, Caslon Analytics, http://www.caslon.com.au/about.htm.

³  Digital Currencies and the Financing of Terrorism by William Hett, Copyright© 2008, Richmond Journal of Law & Technology, Vol. XV, Issue 2.    Research on Money Laundering Crime under Electronic Payment Background, by Peng Weibing, Copyright© 2011, Journal of Computers, Vol. 6, Number 1.  Regulators worry about digital gold currency's potential as tool for criminal activity, By Dorothy Kosich, Copyright© 2008, International Business Times.

Wire transfer systems: Introduction   Fedwire   SWIFT   Other wire transfer systems