What to do on cross-border fraud - Mark Schaub

Mark Schaub

Cross-border fraud in China is on the rise, says Shanghai-based lawyer Mark Schaub in Lexology. And when it happens, you should take action right away. First he paints what could happen.

Mark Schaub:

It was an ordinary Tuesday morning in February when Mandy, a senior accountant in MCA Corporation Ltd, a major US machinery manufacturing company, received 2 emails from company’s CEO Steve Green. This email address was not Mr. Green’s usual one but Mandy did not pay much attention to this since Mr. Green did on occasion use alternative email addresses. 

The email came with the subject ‘Urgent and Confidential’.  The first line of Mr. Green’s email stated “Below information is highly confidential, please communicate with me via this email and do not copy in anyone else”.  Mandy read on. According to the email, Mr. Green was currently in China conducting a top secret M&A deal and was being supported by a firm named Elite Consulting. The email attached two bills from Elite Consulting requesting immediate payment of in total USD$4,320,000. As prompt and efficient as Mandy always is, she wired the amount on the same day to the Chinese bank accounts that was indicated in the email. 

The next morning, Mandy was shocked to see Mr. Green pass by her office thinking ‘shouldn’t he be in China?’ All of sudden, the unfamiliar email address with nobody else copied, the mysterious consulting firm, top secret communications, urgent payment to China all pointed to MCA having been the victim of a fraud. 

The above scenario, with slight variation, has become relatively common in the last 18 months. In addition to the above scams international companies increasingly need to be wary of cross border fraud involving phishing attacks, trade financing frauds, money laundering and many others. 

Cross-border fraud involving China is strongly on the rise. The victims of the cross-border scams suffer millions of dollars in losses every year to criminals who operate across borders and behind shell companies. These sophisticated criminals are difficult to catch and funds can be difficult to trace.

Tips to act at Lexology.

Mark Schaub is a speaker at the China Speakers Bureau. Do you need him at your meeting or conference? Do get in touch or fill in our speakers´request form.

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