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Fraud, Asset Tracing & Recovery

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Fraud, Asset Tracing & Recovery INSOLVENCY AS A TOOL How and when to use in asset recovery BITCOIN BATTLES Tracing and seizing cryptoassets Commercial Dispute Resolution COVID-19 FRAUD CDR Recovering assets lost in the pandemic www.cdr-news.com Spring 2021 ESSENTIAL INTELLIGENCE: Fraud, Asset Tracing & Recovery Contributing Editor: Keith Oliver Peters & Peters Solicitors LLP 4 WELCOME TABLE OF CONTENTS EXPERT ANALYSIS New threats for 2021 and beyond 06 France Andrew Mizner Commercial Dispute Resolution 90 Thomas Rouhette, Nicolas Brooke, Ela Barda & Jennifer Melo Signature Litigation Insolvency used as a tool in asset recovery 10 Andrew Stafford QC & James Chapman-Booth Guernsey Kobre & Kim 100 Simon Florance, John Greenfield & David Jones Carey Olsen Cryptocurrency fraud and asset recovery 17 Syedur Rahman Rahman Ravelli Hong Kong 110 Dorothy Siron Zhong Lun Law Firm Corruption in the pandemic and the importance of 22 asset recovery India Angela Barkhouse Quantuma Advisory Limited 124 Shreyas Jayasimha & Aakash Sherwal Aarna Law Fraud and asset tracing investigations: the role of 28 Ireland corporate intelligence - part II 132 Karyn Harty & Audrey Byrne McCann FitzGerald Alexander Davies & Peter Woglom BDO Japan International civil or criminal law tools that can be 144 42 Hiroyuki Kanae, Hidetaka Miyake & Atsushi Nishitani used to aid in asset recovery Anderson Mōri & Tomotsune Olga Bischof & Theodore Elton Brown Rudnick Confiscation proceedings and civil recovery: 152 Jersey 48 proportionality and abuse of process Marcus Pallot, Richard Holden & Daniel Johnstone Colin Wells 25 Bedford Row Carey Olsen Luxembourg 160 Max Mailliet E2M – Etude Max Mailliet COUNTRY CHAPTERS Singapore 168 Lee Bik Wei & Lee May Ling Allen & Gledhill Bermuda 56 Keith Robinson & Kyle Masters Carey Olsen Spain 178 Héctor Sbert & Maria de Mulder Lawants British Virgin Islands 63 Alex Hall Taylor QC, Richard Brown, Tim Wright & Switzerland Simon Hall Carey Olsen 188 Dr. Claudia Götz Staehelin, Dr. Florian Baumann & Dr. Omar Abo Youssef Kellerhals Carrard Cayman Islands 72 Jan Golaszewski, Denis Olarou, Sam Dawson & Peter United States Sherwood Carey Olsen 198 Joe Wielebinski, Toby Galloway & England & Wales Matthias Kleinsasser Winstead PC 79 Keith Oliver & Amalia Neenan Peters & Peters Solicitors LLP COMMERCIAL DISPUTE RESOLUTION CCommercialD DisputeR Resolution 5 PREFACE It is with great pleasure that we welcome you to Society by Van Dijk, suggested that ‘the monitor the Second Edition of the CDR Essential Intelligence is everywhere…it is not merely a medium for reproduc- Series. Peters & Peters Solicitors LLP has been tion which increasingly dominates mass communication’. delighted to serve again as the Contributing Perhaps this foreshadowed the rise (and rise) of Editor to this all-encompassing and comprehen- ‘Zoom culture’ and the like that we are so heavily sive guide on the practice of global fraud, asset dependent on now. It is consequently ever more tracing and recovery litigation. vital that we adapt to the pace set by the March The past 12 months have been trying for us of Technology. Nevertheless, in 2021 we have all. According to the PwC Global Economic Crime found opportunities to flourish, to effectively and Fraud Survey 2020, 47% of companies world- meet these new challenges head on, and as a wide were victim to fraudulent attacks over the result the fraud, asset tracing and recovery land- past two years. Another report published by the scape has never been busier. Association of Certified Fraud Examiners estimates The intention of this guide, therefore, is to that organisations lose approximately 5% of their provide a clear and cogent overview of the revenue to fraud each year, which taken collec- practice of fraud, asset tracing and recovery tively, amounts to a global figure of over $4.5 litigation in varying countries around the trillion. Compound this growing trend with the world, working towards global innovation and economic uncertainty caused by the COVID-19 best practice through the sharing of knowl- pandemic. A breeding ground for fraudulent acts edge and expertise. We would like to take this now prevails. Fraudsters have been quick to make opportunity to thank the tireless efforts of our use of the international mass migration to online contributing authors, who include some of the platforms. Cyber-criminality is now one of the world’s leading law firms, a wide range of expert most prevalent issues to impact the sector. The practitioners, barristers’ chambers and forensic surge in online commerce, the increasing reli- accountants. Their generous contributions to ance on artificial intelligence and the introduc- this project have created an invaluable holistic tion of virtual justice are but to name a few of the picture of the international legal response, driving forces that have become commonplace which we hope will be useful for our readers over the past year. The 1999 book, The Network both now and in years to come. Keith Oliver Head of International Peters & Peters Solicitors LLP CCommercialD DisputeR Resolution FRAUD, ASSET TRACING & RECOVERY 2021 6 THE YEAR AHEAD New threats for 2021 and beyond The pandemic is not the only agent of change keeping lawyers, experts and clients on their toes this year. Technologically sophisticated frauds, cryptocurrencies and increased regulation will all require close observation COMMERCIAL DISPUTE RESOLUTION CCommercialD DisputeR Resolution 7 Andrew Mizner one of many that capitalises on data exposed by breaches, alongside automated methods such as Commercial Dispute “script creation – using fraudulent information to Resolution automate the creation of an account, [or] credential stuffing – using stolen data”, says Galloway. “The industry is going to have to move away from user- names and passwords. Two-factor authentication is certainly better.” Regulation Rising Then there are cryptocurrencies. “Cryptocurrency After a turn of events which transactions are a concern from a sanctions no-one could have foreseen when Fraud & Asset perspective,” says Rahman, “cryptocurrency is Tracing 2020 was published, many of the past harder to trace, it is easy to launder many times decade’s business certainties have been challenged, over, and it is by and large independent from most as the pandemic has created global economic government regulations”. uncertainty and led to greater reliance on online Regulators are taking notice of this new world. systems. In February, the United States Department of the There will, of course, be frauds stemming from Treasury’s Office of Foreign Assets Control COVID-19 itself, such as fake treatments, the (OFAC) accepted USD 507,000 settlement supply of fake or non-existent personal protective from BitPay, an Atlanta-headquartered Bitcoin equipment (PPE) and corruption by government payment provider, to settle charges that it allowed officials, all of which are expected to emerge in customers in Crimea, Cuba, North Korea, Iran, high numbers later in 2021. Sudan and Syria to make payments in violations of The increased pressure on online business has US sanctions. also led to greater risks, and in an era when tech- The United Nations has warned that North nology is moving incredibly quickly and the finan- Korea is stockpiling Bitcoin to pay for its weapons cial markets are vulnerable, businesses have to be programme, while it has been suggested that more alert than ever. Venezuela is using cryptocurrency to bypass On top of the existing dangers of ransomware sanctions. attacks and fraud emanating from the dark web, With regulators catching up, companies which one growing threat comes from push apps – mobile operate in this space must be aware of their applications which allow the makers to send noti- increasing liability. “Cryptocurrency moves in fications. Fraudsters are infiltrating businesses and milliseconds, extremely quickly and everybody is using push apps to trick staff into illicit payments, having to play catch up with it,” Rahman continues. explains Syed Rahman, a partner with United When it comes to fraud however, Angela Kingdom firm Rahman Ravelli. “Before you Barkhouse, Caribbean managing director for advi- know it the clients are chasing their tail, because sory firmQuantuma , argues that it is a misconcep- they paid an invoice and it has all gone wrong.” tion that assets can be made to disappear through Perhaps even more sophisticated is what Toby cryptocurrency exchanges. “Transactions are Galloway, based in Texas as co-chair of securi- publicly recorded and available in a ledger and yes, ties litigation and enforcement for Winstead, calls there are ways and means of hiding or obscuring “synthetic identity fraud”. the trail of money flows, but actually they are still “The fraudster uses a combination of real and traceable in very many circumstances,” and good fake information to create an entirely new identity”, firms are finding it easier to quickly identify and combining details gleaned from data breaches trace the assets, whereas traditional fiat currencies with false information and using artificial intelli- are more problematic. gence to create “Frankenstein faces”, combining “facial features from different people. This creates Market Concerns a humongous challenge for businesses that rely on Regulators will also be looking at more conven- facial recognition technology as a significant part tional markets. Rahman warns of rising abuse of of their fraud detection and prevention compliance special purpose acquisition companies (SPACs), strategy”. which allow businesses to
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