Criminals Using Crowdfunding to Launder Money

(Newswire.net — September 14, 2015) Las Vegas, NV — In recent years, Crowdfunding has exploded, becoming the go to place for a new generation of sassy and bright entrepreneurs to raise badly needed capital for their small business.

But what if criminals decided to use the system to hide stolen money?

This criminal mastermind idea allows thieves to manipulate the system without ever being caught because they can invest in themselves with a “fake’ product.

And it’s not as implausible as it sounds. In fact, it’s already happened.

In 2012, the founder of the crowdfunding platform Gittip announced that they had been the victims of money laundering.

Gittip, short for “gift tip,” is different from Kickstarter in the fact that it lets users issue small cash tips of between $1 and $24 each week for issues and causes they believe in. (Its founder Chad Whitacre calls the service, “Kickstarter for people.”)

Around October, Whitacre became suspicious of a user who went by the name of “delpan” who had only been on the site for a month, but was raking in tips as much as $60 per week. So he checked out social media to discover more about the user’s profile and nothing normal came up.

“The day will come when Gittip is used for fraud, and we need to be watchful for that,” Whitacre wrote at that time.

Sure enough, it soon emerged “delpan” was up to no good. Whitacre wrote, “It has become clear that delpan and other accounts on Gittip are in fact being used to steal money.”

The laundering scam has occurred on other sites, too, and is relatively easy to do, simply by creating two accounts — one with a stolen credit card.

The notion of money laundering on crowdfunding sites is being taken very seriously.

In fact, in July this year, the European Securities & Markets Authority (ESMA) issued a warning about how crowdfunding can be exploited by criminals and even terrorists.

According to the ESMA, “investment-based crowdfunding carries a risk of misuse for terrorist financing, particularly where platforms carry out limited or no due diligence on project owners and their projects. Project owners could use investment-based crowdfunding platforms to raise funds for terrorist financing, either overtly or secretly.”

It’s a frightening concept.

Crowdfunding expert, Jim Graham agrees. Graham has just launched Kickstarter Millionaire, a system that not only makes the entire crowdfunding operation transparent, but includes live, “in the room” training for product launches.

He agrees that abusing the fundraising system could be a dangerous future trend for canny criminals.

“If you’re looking to launder large amounts of money, crowdfunding would be ideal because you could create a fictional product or service then invest in yourself and there’s no real trace,” Graham explains. “Criminals are crafty, not stupid, so I can understand why there has been an exploitation of the crowdfunding market.”

“Obviously, there needs to be vigilance of the crowdfunding platforms to ensure this does not become the way of the future in terms of criminal activity,” he adds.

This is exactly what the ESMA advises — to get ahead of this possibility before it becomes a real issue they have stated that that crowdfunding platforms operate within the scope of Markets in Financial Instruments Directive (MiFID), which are automatically subject to anti-money laundering rules.  

But is this enough? Graham thinks it may be moving in the wrong direction.

“The entire industry is founded on grassroots level fundraising. Appealing to the individual without regulation is the heart and soul of what crowdfunding is all about. While nobody wants the industry tainted with criminals, there is no larger criminal than overregulation.”

Graham and his training system may be the answer. His webinar invites participants to not only learn, but participate in his upcoming 8-figure product launch, by being in the ‘war room’ during his next crowdfunding launch.

Transparency doesn’t get any clearer than this.

 

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