We'll begin with a recent case involving criminal organizations allegedly using social media influencers (who make useful covers for bad actors) to launder their illegal proceeds.
Turkish Social Media Influencers and Money Laundering Allegations (2023)
The first real-world case takes us to where East and West entwine: Turkey. And at the time of writing, it's a case going viral.
So what happened? On 1 November 2023, only days after the fourth Plenary of the Financial Action Task Force (FATF) concluded, Turkish law enforcement arrested social media influencer Dilan Polat (who has more than 6 million Instagram followers) and her husband, Engin Polat, at an opulent residence in Istanbul for alleged money laundering offenses. Numerous family members were also detained.
Turkey's Labor and Social Security Ministry later announced a nationwide investigation into 600 social media influencers after discovering discrepancies regarding hundreds of millions of Turkish Lira (100 million Lira is equivalent to approximately 3.5 million dollars).
The investigation is ongoing by Turkey's Financial Crimes Investigation Board, and no one has yet to be found guilty of any crime.
However, according to publicly released information, a web of fake invoices, shell companies, and dubious transactions points to an alleged scheme in which illicit funds from organized crime appear to have been laundered through influencer bank accounts.
A key takeaway from the case: Organized criminal groups with large sums of dirty money to wash may find influencers (with enormous followings) attractive in the placement and layering stages of money laundering. Why? Because illicit funds can easily appear legitimate when mixed with legal revenue popular influencers already generate.
An Intriguing FATF Grey List Twist to the Case
To conclude this example, there is a curious twist AML professionals may find interesting. As sanctions.io reported in October 2023, following the FATF's fourth Plenary, Turkey remained on the so-called Grey List, which contains jurisdictions with weaker anti-money laundering and counter-terrorist financing (AML/CTF) measures.
According to reports, Turkey's Minister of Treasury and Finance, Mehmet Simsek, was quoted as saying he had been told at the FATF plenary that this issue was one of the reasons why Turkey remains on the Grey List.
Days after the FATF meeting in Paris in late October 2023, Turkish law enforcement made arrests in the social media influencers case.
Influencer 'Ray Hushpuppi' Jailed Over $300m Money Laundering Plan (2022)
The previous example demonstrated how criminal organizations can launder illicit proceeds by using social media influencers.
But the next case involves a different modus operandi. How so? In this scenario, the influencer also commits crimes that produce illegally gained funds, which must then be laundered to appear legitimate.
Here is what happened in this extraordinary case: In November 2022, a US court in Los Angeles, California, sentenced influencer Ray Hushpuppi to 11 years in federal prison for conspiring to launder millions of dollars from online scams.
Ray Hushpuppi - real name Ramon Olorunwa Abbas - had more than 2 million followers and 'bragged' on Instagram about his lavish lifestyle in Dubai.
And it's important to remember that this isn't a minor money laundering case made fascinating because the felon was an influencer. Here is what Don Alway, Assistant Director in Charge of the FBI's Los Angeles Field Office, said:
"Ramon Abbas, a.k.a. 'Hushpuppi,' targeted both American and international victims, becoming one of the most prolific money launderers in the world."
According to US federal prosecutors, his crimes involved the following:
- Business Email Compromise (BEC) scams
- Helping to launder $14.7m stolen by North Korean hackers
- Helping launder millions of pounds stolen from a British company and a professional football club in the UK
- Getting a New York-based law firm to transfer nearly $923,000 to a criminal account
- Helping to defraud an individual in Qatar who sought a $15 million loan to build a school
A key takeaway from the case: Financial services companies (performing KYC and AML processes on new and current customers) should not accept large and unusual financial transactions flagged by AML systems are explainable simply because the customer is an influencer with millions of followers and likely to have legal, high-value revenue streams.
Adequate enhanced due diligence (EDD), often performed on high-net-worth customers or larger transactions, is always imperative.
Ghanaian Influencer Charged With Romance Scams and Money Laundering (2023)
Our third real-world example involves a social media influencer whom US federal prosecutors accuse of running numerous scams that netted her and her alleged cybercrime group millions of dollars.
Here is what happened: In May 2023, the US Attorney's Office, Southern District of New York, announced that it had charged Mona Faiz Montrage, a Ghanaian influencer with more than 4 million Instagram followers, with a series of romance scams.
A romance scam is an online fraud where individuals establish romantic relationships to exploit their victims for financial gain. According to prosecutors, Montrage targeted 'older, lonely Americans.'
The UK-based influencer - who was extradited from the UK to the US - was also charged with laundering the proceeds from the scams. This case is ongoing, and more details have yet to emerge since the US Justice Department's initial press release.
However, in one scam (according to US prosecutors), the influencer used her real name and spoke to the victim several times by phone. The victim subsequently sent Montrage around 82 wire transfers totaling approximately $89,000 (to purportedly help with costs associated with her father's farm in Ghana).
Key takeaway: Money laundering is a distinct financial crime, different to frauds and scams. However, this example should remind financial crime fighters that they are also highly connected and can occur together - as allegedly happened in the Ghanaian influencer case.
In recent years, an integrated approach to managing fraud and money laundering risk (traditionally siloed into distinct areas) has gained momentum. This approach is known as 'FRAML' (Fraud detection + AML = FRAML).
How sanctions.io Can Enhance AML Risk Management for Your Organization
Sanctions, politically exposed persons (PEPs), and criminal watchlist screening are vital aspects of anti-money laundering (AML) compliance and risk management for financial institutions and companies.
Social media influencers - like all customers and business partners - should be screened due to the financial, legal, and reputational risks they pose to your business.
sanctions.io is a highly reliable and cost-effective solution for sanction checking. AI-powered and with an enterprise-grade API with 99.99% uptime are reasons why customers globally trust us with their sanctions screening needs. To learn more about how our sanctions, PEP, and criminal watchlist screening service can support your organization's compliance program:
We also encourage you to take advantage of our free 7-day trial (no credit card is required).