The number of fraud schemes is increasing

The number of fraud schemes targeting individuals, companies and the public sector is increasing. The COVID-19 pandemic in Europe has provided ample evidence that criminals are quick to adapt these schemes to changing conditions in order to exploit fears and vulnerabilities.

The fallout from the COVID-19 pandemic will test the resilience of our economic and social infrastructure for years to come. Law enforcement authorities across Europe must prepare themselves to counter an increasing number of cases involving economic and financial crime.

Investment fraud relies on social engineering techniques – the use of deception to manipulate individuals into divulging confidential or personal information that may be used for fraudulent purposes – making it particularly hard to counter. This type of fraud can be highly lucrative.

Below are the most common investment fraud schemes in the EU.

Boiler room schemes, where fraudsters cold call their victims and pressure them into investing in non-existent or very lowvalue stocks. The criminals often use false documents and certificates to present their company and stock as legitimate.

Ponzi schemes, also known as pyramid schemes, where fraudsters attract a group of initial investors with promises of very high returns in a very short time. To attract more victims, the fraudster will start to repay the initial investors using funds accrued from additional investors. Ultimately, the investors are left empty-handed when the fraudster disappears with the funds, which have been laundered through multiple bank accounts held by various front companies in different jurisdictions.

In mass marketing fraud criminals use a variety of communication means, such as telephone calls, social media, mass mailing, television or radio, to contact victims and solicit money or other items of value in one or more jurisdictions.

Payment order fraud, also called CEO fraud or business email compromise (BEC), relies on social engineering techniques and malware. Typically, criminals transfer stolen funds through a series of accounts in various countries before they reach destination accounts outside the EU.

Insurance fraud describes the defrauding of private and public insurance providers. OCGs are increasingly involved in fraud schemes targeting the healthcare sector.

EU subsidy fraud entails the submission of fraudulent applications for EU grants or tenders. Typically, these applications are based on false declarations, progress reports and invoices.

Procurement rigging involves the use of bribes to elicit information or directly influence the evaluation of bids in order to win public service tenders in competition with legal businesses. This type of manipulation is particularly notable in the energy, construction, information technology and waste management sectors.

Benefit fraud involves the targeting of social and labour benefit schemes and is strongly linked to trafficking in human beings and migrant smuggling.

Loan and mortgage fraud involves fraudsters using fraudulent documents to obtain bank loans which are never paid back.

Fraud schemes are among the fastestgrowing criminal threats in Europe. Fraud targets private citizens, small and medium enterprises, global corporations and critical infrastructure. During the COVID-19 pandemic, these types of online fraud have been among the most visible criminal activities.

Advance fee fraud schemes are increasingly perpetrated online involving payments using alternative payment methods such as online vouchers. Many investment fraud schemes now exclusively take place online or involve the advertising of investment opportunities on social media. Fraudsters increase

their involvement in online investment opportunities including Forex trade platforms, binary options and online crowdfunding. During the COVID-19 pandemic, this type of modus operandi has been frequently reported.