This article also featured contributions from Amber Scott, MBA, CAMS, CIPP/C and Ryna Ferlatte, CPA(USA), CA-IFA of MNP's Investigative and Forensic Services team.
November 5, 2012----There is a new scam targeting Canadian not-for-profit organizations – in which they are contacted by purported donors claiming to want to make a large donation, according to Matt McGuire, National Leader of MNP’s Anti-Money Laundering practice.
The fraudsters claim that in order for the donation to be processed, the charity must have an International Anti-Money Laundering Clearance Certificate. Although official-sounding, an International Anti-Money Laundering Clearance Certificate is a fraudulent document that is not issued, recognized or required by any government agency.
The fraudsters will then recommend a company that issues such certificates for a fee of several thousand dollars. Once the charity has paid this fee, the promised donation and “donors” disappear. The perpetrators in these cases are generally overseas and difficult to trace. Once money has been paid for a fraudulent certificate, it is almost impossible to recover.
This type of scheme is commonly referred to as an advance fee fraud. The fraudsters will reach out to a charity claiming that they are looking to make a sizable donation but that they must have some sort of certification from the charity before they do so. They may refer to a website, include forms or ask for a processing fee to be paid.
Whether the information is collected online, through a form or from a cheque, the outcome is the same. The fraudsters use the information that they have collected to access the charity’s bank accounts and empty them. The donation in question is always fictitious, as are any certificates that may be issued.
Top 5 Warning Signs:
In a climate where charities must fight for every dollar, the offer of a significant donation may be hard to resist. When dealing with potential donors, be cautious of any of the following which may be a red flag:
- The “donor” requests an International Anti-Money Laundering Clearance Certificate. There is no such legitimate document.
- The “donor” requests that you pay a “processing fee.”Legitimate donors should not require this.
- The “donor” uses the names of government agencies or banks, or names that are close to the names of real government agencies or banks. This is another attempt to sound legitimate. The “donor” asks for banking information or other personal information. A legitimate donor will not require this information.
- The donation offer is time sensitive. This technique is used to create a sense of urgency and rush you into providing the requested information.
- The “donor” is located in a country you have no affiliation with. Foreign fraudsters are harder to trace or prosecute.
What To Do If You Are Targeted
“If you have been the victim of a fraud, or have been contacted by fraudsters, I strongly recommend that you take action,” says McGuire.
First, make a list of all of the information that you have provided to the “donor.” If you have provided banking information, it can be helpful to contact your bank so that they can be on the alert for fraudulent transactions. If credit card information has been provided, your credit card issuer can cancel the existing card and issue a new credit card number. If your own personal information has been provided, the Canadian credit bureaus can help you take measures to help prevent the fraudsters from trying to apply for credit in your name. In all cases, you should contact your local police department and the Canadian Anti- Fraud Centre.
“Even if you haven’t provided any information to the fraudsters, reporting can help law enforcement to catch the bad guys, and to issue warnings to other organizations about the types of fraud that are going on. By heeding the warning signs and listening to their instincts, charities are able to protect both their reputation and their bank accounts. Protect yourself by being aware of the warning signs and taking action when needed. The extra vigilance and caution could pay off,” says McGuire.
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