International Financial Law Prof Blog

Editor: William Byrnes
Texas A&M University
School of Law

Sunday, June 30, 2019

Alleged Cryptocurrency Fraudster Arrested in Thailand, Charged in Multi-Million Dollar Investment Scheme

In a criminal complaint unsealed, a citizen of Sweden and his company were charged with securities fraud, wire fraud and money laundering in a scheme to defraud potential investors.

In a complaint filed March 4, 2019, and unsealed today, Roger Nils-Jonas Karlsson and his company, Eastern Metal Securities (EMS), were charged with engaging in a scheme to defraud victims of more than $11 million. 

According to the complaint, since September 2006, Karlsson allegedly used websites to communicate false representations to victims in a scheme to defraud potential investors.  For example, one website, www.easternmetalsecurities.com, allegedly was registered to a fictitious person and advertised shares in a product called a “Pre Funded Reversed Pension Plan” (PFRPP).  The complaint alleges Karlsson used the website to invite potential investors to purchase shares of the plan for $98 per share in exchange for an eventual payout of 1.15 kilograms of gold per share, even though as of Jan. 2, 2019, 1.15 kilograms of gold was worth more than $45,000.  Karlsson also allegedly advised investors that, in the unlikely event that the gold payout did not happen, he guaranteed to return to them 97 percent of the amount they invested.  According to the complaint, the government found no evidence of any accounts held by Karlsson that would allow him to pay off the investors.  Instead, the complaint alleges, the funds provided by victims were transferred to Karlsson’s personal bank accounts and now appear to be tied up in real estate in Thailand.

The complaint further describes how Karlsson allegedly used a second website, www.hci25.com, to make multiple false communications to potential investors.  Karlsson allegedly brought the investors in HCI25 together with the investors in the PFRPP and posted multiple communications to delay the moment investors would realize there would be no payout.  For example, on one occasion, Karlsson allegedly explained that a payout had not occurred because releasing so much money all at once could cause a negative effect on financial systems throughout the world.  Karlsson also allegedly falsely represented that EMS was working with the U.S. Securities and Exchange Commission to prepare the way for a payout.

The complaint alleges Karlsson directed his victims to make investments using virtual currencies, such as Bitcoin.  Karlsson allegedly defrauded no less than 3,575 victims of more than $11 million. 

Karlsson was arrested on June 18 in Thailand.  The United States is seeking his extradition to stand trial in the Northern District of California.

June 30, 2019 in AML | Permalink | Comments (0)

Saturday, June 29, 2019

U.S. International Transactions, First Quarter 2019 and Annual Update

Current-Account Balance

The U.S. current-account deficit decreased to $130.4 billion (preliminary) in the first quarter of 2019 from $143.9 billion (revised) in the fourth quarter of 2018, according to statistics released by the Bureau of Economic Analysis (BEA). The deficit was 2.5 percent of current-dollar gross domestic product in the first quarter, down from 2.8 percent in the fourth quarter.

Quarterly U.S. Current-Account and Component Balances

The $13.5 billion decrease in the current-account deficit mostly reflected a decrease in the deficit on goods that was partly offset by an increase in the deficit on secondary income.

Quarterly U.S. Current-Account Transactions

Current-Account Transactions (tables 1-5)

Exports of goods and services and income receipts

Exports of goods and services and income receipts increased $7.2 billion in the first quarter to $945.9 billion.

  • Primary income receipts increased $5.3 billion to $281.8 billion, primarily reflecting increases in direct investment income and in other investment income. A decrease in portfolio investment income partly offset the increases. For more information on direct investment income, see "Effects of the 2017 Tax Cuts and Jobs Act on Components of the International Transactions Accounts."
  • Goods exports increased $2.4 billion to $419.3 billion, primarily reflecting increases in automotive vehicles, parts, and engines, mostly passenger cars, and in foods, feeds, and beverages, mainly soybeans. A decrease in industrial supplies and materials partly offset the increases.
  • Services exports increased $2.3 billion to $209.1 billion, primarily reflecting an increase in travel (for all purposes including education), mostly personal travel.
  • Secondary income receipts decreased $2.8 billion to $35.6 billion, reflecting decreases in both private and U.S. government transfers.

Imports of goods and services and income payments

Imports of goods and services and income payments decreased $6.3 billion in the first quarter to $1.08 trillion.

  • Goods imports decreased $13.4 billion to $635.9 billion, primarily reflecting a decrease in industrial supplies and materials, mainly petroleum and products.
  • Primary income payments increased $4.3 billion to $220.7 billion, primarily reflecting an increase in direct investment income.

Effects of the 2017 Tax Cuts and Jobs Act on Components of the International Transactions Accounts

In the international transactions accounts, income on equity, or earnings, of foreign affiliates of U.S. multinational enterprises consists of a portion that is repatriated to the parent company in the United States in the form of dividends and a portion that is reinvested in foreign affiliates. In response to the 2017 Tax Cuts and Jobs Act, which generally eliminated taxes on repatriated earnings, some U.S. multinational enterprises repatriated accumulated prior earnings of their foreign affiliates. In the first, second, and fourth quarters of 2018, the repatriation of dividends exceeded current-period earnings, resulting in negative values being recorded for reinvested earnings. In the first quarter of 2019, dividends were $100.2 billion while reinvested earnings were $40.2 billion (see table below). The reinvested earnings are also reflected in the net acquisition of direct investment assets in the financial account (table 6). For more information, see "How does the 2017 Tax Cuts and Jobs Act affect BEA’s business income statistics?" and "How are the international transactions accounts affected by an increase in direct investment dividend receipts?"

Direct Investment Earnings Receipts and Components
Direct Investment Earnings Receipts
Billions of dollars, seasonally adjusted
  2017 2018 2019
  Ir IIr IIIr IVr Ir IIr IIIr IVr Ip
Direct investment earnings 114.7 115.4 122.2 130.7 134.3 139.4 139.2 134.0 140.5
   Dividends 38.2 34.9 55.1 26.9 285.9 223.8 120.2 146.6 100.2
   Reinvested earnings 76.5 80.5 67.1 103.8 −151.6 −84.4 18.9 −12.6 40.2
p Preliminary | r Revised

Capital Account, Fourth Quarter (table 1)

There were no capital-account transactions recorded in the first quarter, following receipts of $2.7 billion in the fourth quarter. The fourth-quarter transactions reflected receipts from foreign insurance companies for losses resulting from the wildfires in California. For information on transactions associated with natural disasters, see "What are the effects of hurricanes and other disasters on the international economic accounts?"

Financial Account (tables 1, 6, 7, and 8)

Net U.S. borrowing measured by financial-account transactions was $37.8 billion in the first quarter, a decrease from net borrowing of $161.6 billion in the fourth quarter.

Financial assets

Net U.S. acquisition of financial assets excluding financial derivatives increased $4.3 billion in the first quarter to $151.6 billion.

  • Net U.S. acquisition of direct investment assets increased $33.8 billion to $59.5 billion. For more information on recent transactions in direct investment assets, see "Effects of the 2017 Tax Cuts and Jobs Act on Components of the International Transactions Accounts."
  • Net U.S. acquisition of other investment assets increased $9.9 billion to $151.6 billion, reflecting an increase in net U.S. provision of loans to foreign residents that was mostly offset by a decrease in net U.S acquisition of currency and deposits.
  • Net U.S. sales of portfolio investment assets increased $37.5 billion to $59.7 billion, reflecting net U.S. sales of foreign stocks following net U.S. purchases in the fourth quarter.

Liabilities

Net U.S. incurrence of liabilities excluding financial derivatives decreased $118.3 billion in the first quarter to $167.9 billion.

  • Net U.S. incurrence of other investment liabilities decreased $148.5 billion to $70.2 billion, mostly reflecting net foreign withdrawal of deposits in the United States following a net increase in deposits in the fourth quarter.
  • Net foreign sales of U.S. portfolio investment liabilities were $7.7 billion following net foreign purchases of $14.9 billion in the fourth quarter, reflecting relatively large and nearly offsetting changes in U.S. stock and debt security transactions from the fourth to the first quarter.
  • Net U.S. incurrence of direct investment liabilities increased $52.7 billion to $105.5 billion, primarily reflecting net U.S. incurrence of debt liabilities following net U.S. repayment in the fourth quarter.

Financial derivatives

Transactions in financial derivatives other than reserves reflected first-quarter net borrowing of $21.4 billion.

Statistical Discrepancy (table 1)

The statistical discrepancy was $92.6 billion in the first quarter following a statistical discrepancy of −$20.4 billion in the fourth quarter.

Updates to Fourth Quarter 2018 International Transactions Accounts Aggregatess
Billions of dollars, seasonally adjusted
  Preliminary estimate Revised estimate
Current-account balance −134.4 −143.9
    Goods balance −233.1 −232.3
    Services balance 66.1 61.2
    Primary-income balance 60.4 60.1
    Secondary-income balance −27.8 −32.8
Capital-account balance 8.9 2.7
Net lending (+)/borrowing (–) from financial-account transactions −168.3 −161.6
Statistical discrepancy −42.8 −20.4

June 29, 2019 in Economics | Permalink | Comments (0)

Friday, June 28, 2019

Should Tax Hikes Need Supermajority Vote? Bloink & Byrnes Go Thumb to Thumb

read the debate transcript here: A Democratic leader's proposal is meant to protect lower- and middle-income taxpayers.

June 28, 2019 in Tax Compliance | Permalink | Comments (0)

Thursday, June 27, 2019

Does DOL’s HRA Proposal Go Far Enough? Bloink & Byrnes Go Thumb to Thumb

full debate transcript available here: The two professors argue over whether the proposal to expand HRAs helps small businesses and their workers.

June 27, 2019 in Financial Regulation | Permalink | Comments (0)

Wednesday, June 26, 2019

IRS’ New 199A Real Estate Safe Harbor: Bloink & Byrnes Go Thumb to Thumb

read the full debate: Is the proposed Revenue Procedure that would provide a safe harbor for rental real estate businesses good?  

June 26, 2019 in Tax Compliance | Permalink | Comments (0)

Tuesday, June 25, 2019

The 10 Key Facts to Understanding Annuities

a slide show presentation by William Byrnes & Robert Bloink 

  1. There are four broad ways to classify an annuity
  2. There are four parties to an annuity contract
  3. There are Deferred Annuities, and then there are Longevity Annuities
  4. read the full slideshow and accompanying analysis paper on ThinkAdvisor here

June 25, 2019 in Financial Regulation | Permalink | Comments (0)

Monday, June 24, 2019

Focus on 401(k)s: The NUA Tax Minimization Strategy by William Byrnes & Robert Bloink

With tax season drawing to a close, clients who are nearing retirement should take stock of the assets held within their 401(k)s while it is still early in the year to determine whether the potentially valuable net unrealized appreciation (NUA) tax minimization strategy might work for them in 2019 or the coming years. read about it here on ThinkAdvisor

June 24, 2019 in Tax Compliance | Permalink | Comments (0)

Sunday, June 23, 2019

Repeal SALT Cap, Raise Corporate Tax: Bloink & Byrnes Go Thumb to Thumb

read the full debate transcript here: Democrats have proposed increasing the corporate tax rate in order to offset a repeal of the controversial deduction cap.

June 23, 2019 in Tax Compliance | Permalink | Comments (0)

Saturday, June 22, 2019

Tax Reform Ruined Roth IRA Conversions, but Hope Exists by William Byrnes & Robert Bloink

Despite this, tax reform may have actually opened a huge window for clients looking to do Roth conversions while minimizing their tax liability for these conversions. The new tax rate system, combined with the general “moodiness” of the stock market of late, have created conditions that can make Roth IRA conversions attractive for an entirely new group of clients despite the inability to undo the transaction at a later date.  With proper planning, these clients may be able to benefit substantially from a Roth conversion strategy without even jumping income tax brackets.

June 22, 2019 in Tax Compliance | Permalink | Comments (0)

Friday, June 21, 2019

A debate: SECURE Act’s Change of RMD Rules: Bloink & Byrnes Go Thumb to Thumb

Read the full debate on ThinkAdvisor here: The bill would raise the existing age threshold from 70 1/2 to age 72 for IRAs. Is this just a giveaway to wealthy retirees?

By Robert Bloink and William H. Byrnes

June 21, 2019 in Financial Regulation | Permalink | Comments (0)

Thursday, June 20, 2019

Is the Financial Transaction Tax Just a ‘Crazy Democratic’ Idea? Bloink & Byrnes Go Thumb to Thumb

Bloink and Byrnes debate their opinions on ThinkAdvisor about the viability of the tax and the implications if this bill is passed.

House Democrats introduced a bill in March that would impose a tax on certain types of financial transactions, including a 0.1% tax on various securities transactions, including sales of stocks, bonds and derivatives. While the bill would generally exempt initial securities issuances and short-term debt from the tax, most securities transactions and taxpayers who invest would be subject to the tax at some point.

We asked Professors Robert Bloink and William Byrnes, who write for ALM’s Tax Facts and hold opposing political views, to share their opinions about the viability of the financial transactions tax and the potential implications if this bill is passed.  Read the debate on ThinkAdvisor here

June 20, 2019 in Tax Compliance | Permalink | Comments (0)

Wednesday, June 19, 2019

Should Out-of-State Trusts Be Taxed: Debate between William Byrnes and Robert Bloink

read the debate on ThinkAdvisor here: The Supreme Court will decide if taxing out-of-state trusts is overkill or a way to keep the wealthy from dodging taxes.

The US Supreme Court in April agreed to resolve a conflict stemming from a case involving whether a state can constitutionally tax a trust when a trust beneficiary resided within the state, but did not receive any income from the trust.  In the case of North Carolina Department of Revenue v. Kimberly Rice Kaestner, the North Carolina Supreme Court ruled for the beneficiary in that case, finding that the North Carolina state-level tax on the New York-based trust was unconstitutional because it violated the due process clause of the U.S. constitution.

Currently, 11 states tax trusts based on the residency of trust beneficiaries—although nearly all states tax trust income once the beneficiary actually receives that income.  Courts in various states have disagreed over whether the residency-based tax is constitutional.

We asked Professors Robert Bloink and William Byrnes, who write for ALM’s Tax Facts and hold opposing political views, to share their opinions as to whether the US Supreme Court should affirm the state court decision, and the potential implications of the Court’s final decision.

read the debate on ThinkAdvisor here

June 19, 2019 in Tax Compliance | Permalink | Comments (0)

Tuesday, June 18, 2019

Who’s Responsible for Your Parents’ Nursing Home Cost? It’s Not Who You Think...

Regardless of these factors, clients have to be reminded about the importance of LTC planning—and that this is not always an issue that’s only relevant for those clients nearing retirement.

As clients’ parents age, we should remember that children may, in some cases, be held financially responsible for their parents’ nursing home costs—and that this is no longer an outlandish idea, but one that has actually been legally enforced in the courts within the last five years. Providing clients with viable LTC insurance alternatives can help them avoid the shock of unexpectedly facing the financial burden of paying for parents’ nursing home costs—whether they are legally obligated to do so, or simply want to help their parents receive the best care possible.

Full analysis on ThinkAdvisor here

June 18, 2019 in Financial Regulation | Permalink | Comments (0)

Monday, June 17, 2019

Retirees Beware: IRS Pension Buyout Stance Shifts (Again) analysis by Robert Bloink & William Byrnes

The lump sum payment versus annuity stream question has long been an issue for those clients fortunate enough to have access to a traditional pension—but the choice is one that clients usually face as they approach retirement, rather than once they have already begun to receive annuity payouts.

The recent IRS change of course on this issue may add complications into the mix and encourage lump sum offers for retired clients who are already in pay status. Because lump sum offers have historically been an attractive way for pension plan sponsors to reduce the financial exposure associated with the plan itself, a new crowd of retired clients may soon be facing the choice of whether to accept a lump sum or continue with annuity payouts—and making sure that choice is informed will be vital to protecting these clients’ future financial security.

read the full analysis here on ThinkAdvisor

June 17, 2019 in Financial Regulation | Permalink | Comments (0)

Saturday, June 15, 2019

5-Nation Tax Crime Group Cites Progress In Joint Crackdown (read it on 2019 Law360's Tax Authority)

The heads of a five-nation group that's cracking down on transnational tax crimes said Wednesday that their first year of collaboration has sparked new cases and sped development of existing ones but hasn't yet led to a prosecution.  

However, group members - from the U.S., Canada, the United Kingdom, the Netherlands and Australia - said they have been involved in over 50 investigations involving "sophisticated international enablers of tax evasion, including a global financial institution and its intermediaries who facilitate taxpayers to hide their income and assets."

read the full story on Lexis' Law360 Tax Authority: 2019 Law360 156-166

June 15, 2019 in Tax Compliance | Permalink | Comments (0)

Friday, June 14, 2019

Unpacking IRS’ 199A Regs: Final vs. Proposed Rules

While the final regulations largely follow the proposed regulations, they do contain some twists that may come as a surprise to clients who are currently in the midst of calculating their 2018 tax liability. Importantly, small business clients have the surprise option of relying on either the proposed regulations or the final regulations in finishing their 2018 taxes—although the final regulations become mandatory beginning in 2019. Despite this, clients must take an all-or-nothing approach to choosing which set of regulations to follow for 2018, making it important that they understand the important aspects of both the proposed and the final regulations now.  The analysis is here

June 14, 2019 in Tax Compliance | Permalink | Comments (0)

Thursday, June 13, 2019

Section 1035-Your Way Out of Obsolete Life Insurance Trusts by William Byrnes & Robert Bloink

The 2017 tax reform law doubled the estate tax exemption, to $11.4 million per person ($22.8 million per married couple) in 2019, meaning that, for all but the fortunate few clients, the estate tax itself may seem irrelevant. For some clients, dismantling existing life insurance trusts may be the smartest move—but not without considering both the repercussions of that approach and carefully planning for any continuing life insurance needs, where a tax-free replacement strategy may be key to safeguarding future financial protection.

June 13, 2019 in Tax Compliance | Permalink | Comments (0)

Wednesday, June 12, 2019

Improving Tax Reporting and Payment Compliance - TIGTA Semi Annual Report to Congress

Significant Quality Issues Are Being Identified on Employee Plans Examinations, but Feedback Is Not Always Provided to Examiners

According to the Department of Labor, there were more than 693,000 employer-sponsored retirement plans with reported assets of more than $8 trillion in Plan Year 2015. During FYs 2015 and 2016, the Tax Exempt and Government Entities (TE/GE) Division reported that its Employee Plans (EP) function completed nearly 17,000 examinations of employer-sponsored retirement plans. It is important that quality examinations are performed to increase assurances that millions of plan participants will receive their promised retirement benefits.

This audit was initiated to assess how the TE/GE Division selects EP function examination cases for quality review, documents results, and provides feedback to employees performing examinations. During FYs 2015 and 2016, the TE/GE Division met its statistical sampling goals by selecting and quality reviewing more than 700 EP function examinations. Detailed results for more than 30 of the questions relating to the five quality standards were documented. As a result, the TE/GE Division was able to compute an overall examination quality rate of approximately 80 percent for each fiscal year and to provide continual feedback to IRS executives on the quality of EP function examinations. The
TE/GE Division also provided indirect feedback to examiners through quarterly newsletters, lunch and learn sessions, and other methods.

However, the TE/GE Division generally did not provide direct feedback to responsible individual examiners and group managers on the results of quality reviews. We believe that additional feedback was needed because some quality issues were more prevalent for particular examiners and groups. In addition, serious quality issues were identified that were not detected during managerial reviews, suggesting that the TE/GE Division is not providing effective and timely feedback, which is key to improving employee performance.
TE/GE Division personnel stated that they were not providing this type of feedback because quality review processes were primarily designed to compile aggregate results on the quality of examinations and to ensure that the examination program is meeting performance goals. As a result, individual examiners were unaware of quality issues identified on the examinations that they conducted, and such feedback may not improve examination qualityTIGTA recommended that the IRS develop mechanisms for sharing detailed results of quality reviews with the individual examiners and group managers who were responsible for performing the examinations.

In its response, IRS management stated that it is already providing statistical and narrative feedback to area managers, managers, employees, and national level management, and that efforts would be made to share the feedback on a regular basis. We continue to believe that the IRS is missing a valuable opportunity to share detailed results of quality reviews with group managers and examiners who are responsible for performing EP function examinations. Sharing detailed review results would assist in efforts to improve employee performance.

Taxpayers Generally Comply With Annual Contribution Limits for 401(k) Plans; However, Additional Efforts Could Further Improve Compliance

IRS records show that in TY 2014 an estimated 53 million taxpayers contributed almost $255 billion to tax-qualified deferred compensation plans. A popular form of deferred compensation plan, known as the 401(k) plan, permits employees to save for retirement on a tax-favored basis. However, there are rules that limit the amount individuals can contribute to a 401(k) plan each tax year. Individual noncompliance with these rules results in revenue loss to the Federal Government. This audit examined whether IRS processes sufficiently identified and addressed excess contributions to 401(k) plans.

Our analysis of IRS records showed that the vast majority of taxpayers were complying with tax laws designed to limit the annual amount of compensation that can be contributed to 401(k) retirement plans. Nonetheless, we identified two areas in which compliance could be improved: 1) some 401(k) plans did not prevent taxpayers from exceeding the annual limit on contributions, and 2) some taxpayers exceed annual limits when contributing to multiple 401(k) plans.

Download TIGTA semiannual_mar2019

June 12, 2019 in Tax Compliance | Permalink | Comments (0)

Cypriot Police Raid FBME Bank, Which is Run By Central Bank of Cyprus and Former CBC Governors, in Money Laundering Probe

Organized Crime and Corruption Reporting Project (OCCRP) reports that: Cypriot police raided on Friday the premises of FBME Bank in Nicosia and in Limassol, looking for evidence of money laundering, two sources told OCCRP.  ... The investigation concerns “many cases” of legalization of illegal proceeds from various activities, including drug smuggling, as well as terrorism financing, he explained, adding that the bank’s owners had not been questioned yet.

FBME is run by the Central Bank of Cyprus (CBC) and has been for several years, via CBC Governors.  So this latest development is very interesting.  Are the Cyprus police investigating the activities of the Central Bank of Cyprus as these relate to CBC's control of FBME activities?  That the police were required to raid the FBME premise implies that the CBC is not cooperating in the AML investigation.  All mere speculation. But this FBME takeover by the CBC four years ago, and the FinCEN banking death penalty applied, raise many questions and issues.  To date, no bank employee or director have been charged with an AML violation?  No doubt that FBME has had AML violations.  But many banks have, and received quite different treatment, such as fines, monitors, non-prosecution agreements or deferred prosecution agreements.  What did FBME do that led FinCEN to shut it out of the US and US dollars market?  Did the CBC initiate the FinCEN action via providing FinCEN information because of something else going on in Cyprus?  Again - all speculation.  Perhaps we will never know what really happened with the FBME situation? 

Read previous articles about FBMEs long struggle with AML allegations (but no actual charges) 

June 12, 2019 in AML | Permalink | Comments (0)

Tuesday, June 11, 2019

Romanian National Sentenced for Multi-State ATM Card Skimming Scheme

A Romanian national was sentenced today in federal court in Springfield, Massachusetts, in connection with a multi-state ATM card skimming scheme. 

Assistant Attorney General Brian A. Benczkowski of the Justice Department’s Criminal Division, U.S. Attorney Andrew E. Lelling for the District of Massachusetts, Special Agent in Charge Stephen Marks of the U.S. Secret Service’s Boston Field Division, Special Agent in Charge Peter C. Fitzhugh of Immigration and Customs Enforcement’s Homeland Security Investigations (HSI) in Boston, East Longmeadow Police Chief Jeffrey Dalessio and Medford Police Chief Jack Buckley made the announcement.

Bogdan Viorel Rusu, 38, a Romanian national formerly residing in Queens, New York, was sentenced by U.S. District Court Judge Mark G. Mastroianni for the District of Massachusetts to 65 months in prison followed by 60 months of supervised release.  Judge Mastroianni also ordered Rusu to pay restitution in the amount of $440,130 and forfeit the same amount.  In September 2018, Rusu pleaded guilty to an Information that charged him with one count each of conspiracy to commit bank fraud, bank fraud and aggravated identity theft.  Rusu was arrested on Nov. 14, 2016, and initially charged by complaint in the District of New Jersey and has been in custody since.

According to Rusu’s plea agreement, from approximately Aug. 3, 2014, until his arrest on Nov. 14, 2016, Rusu engaged in a widespread bank fraud conspiracy that targeted various banks in Massachusetts, New York and New Jersey.  Rusu and his co-conspirators captured payment card account information from customers as they accessed their accounts through ATMs and then used that information to steal money from the customers’ bank accounts.

To capture the account information, Rusu and/or his co-conspirators installed electronic devices, i.e., skimming devices, which surreptitiously recorded customers’ bank account information on the banks’ card-readers at the vestibule door, the ATM machine, or both.  In addition, Rusu and/or his co-conspirators installed other devices (generally either pinhole cameras or keypad overlays) in order to record the keystrokes of bank customers as they entered their personal identification numbers to access their bank accounts.  After enough customers accessed the ATM machine, Rusu and/or his co-conspirators removed the skimming devices.  They then transferred the illegally obtained information from the skimming devices and pinhole cameras to counterfeit payment cards.  Finally, they visited other ATM machines with the counterfeit cards to obtain cash from the skimmed bank accounts before the bank or the customers became aware of their illicit conduct.

As a result of the scheme, $364,419 was lost in Massachusetts and $75,715 in New York (totaling $440,134 from 531 individual accounts), and another $428,581 was stolen in New Jersey.

June 11, 2019 in AML | Permalink | Comments (0)