Advance fee fraud: trends and issues in the Caribbean
| DOI | https://doi.org/10.1108/13590790710758512 |
| Date | 24 July 2007 |
| Published date | 24 July 2007 |
| Pages | 320-339 |
| Author | Olubusola H. Akinladejo |
| Subject Matter | Accounting & finance |
Advance fee fraud: trends and
issues in the Caribbean
Olubusola H. Akinladejo
Faculty of Business and Management, University of Technology,
Kingston, Jamaica
Abstract
Purpose – The purpose of this paper is to discuss the trends and issues involved in advance fee fraud
in the Caribbean.
Design/methodology/approach – The paper offers a definition of advance fee fraud, describing its
practice in the context of the Caribbean. The paper outlines the current state of the law in the region,
the need for action and the legislative and enforcement strategies required.
Findings – International and regional efforts have been geared towards drug trafficking and money
laundering and, in more recent times, terrorism. The time is now ripe for these international and
regional efforts to add to their focus advance fee fraud in all its versions and variations. The need to
take proactive and decisive measures against advance fee fraud is even more evident in the context of
the growth in the use of technology in commerce due to the obvious economic advantage. Advance fee
fraud is not just a trick or reward for greed, it is an economic crime and there must be a drastic
response from the region. The region should not be complacent towards the fraud in light of far
reaching negative effect that the fraud is likely to have in the region.
Originality/value – The paper adds insight into the practice of advance fee fraud in the Caribbean
and the need for action to combat it.
Keywords Fraud, Crimes,Caribbean
Paper type Research paper
Introduction
For thousands of years, unscrupulous people have devised and used incredible ways to
persuade others into giving away their money, usually with the expectation of earning
more (Delimpasis, 2001). This criminal act is what is generally known as fraud. Fraud
has been described as occurring when a person intends by deceit to induce a course of
conduct in another, which puts that other person’s economic interest in jeopardy (Pinto
and Evans, 2003). It is a generic category of conduct that involves the use of dishonest
or deceitful means to obtain some unjust advantage over another person or entity
(Parliament of Victoria Drugs and Crime Prevention Committee, 2002). Even though
criminal fraud is less dramatic to individuals than crimes of violence, at the community
level the damage is immense, some times involving millions of dollars (Parliament of
Victoria Drugs and Crime Prevention Committee, 2002). Fraud as a crime has recently
been taken to another level by this hybrid known as advance fee fraud.
Advance fee fraud may be described as a confidential scheme whereby fraudsters
request funds to be transferred by unsuspecting victims to bank accounts as advance
payments, usually stated as intended to offset incidental expenses for moneys or goods
to be subsequently received by those victims (United States, Department of State,
The current issue and full text archive of this journal is available at
www.emeraldinsight.com/1359-0790.htm
This paper is based on a dissertation submitted by the author for the LLM in Corporate and
Commercial Law, University of the West Indies.
JFC
14,3
320
Journal of Financial Crime
Vol. 14 No. 3, 2007
pp. 320-339
qEmerald Group Publishing Limited
1359-0790
DOI 10.1108/13590790710758512
Bureau of International Narcotics and Law Enforcement Affairs, 1997). It also refers to
an upfront payment by the victim to the fraudster to allow the victim to take part in a
much larger financial transaction which he believes will either bring him a profit or
will result in credit being extended to him (Collier, 2006). The requested fee is advanced
but no money, goods or credit is ever received. Initially, the fraud was associated with
Nigerians and West Africans in the 1980s and early 1990s, however some countrie s
have recognised that advance fee fraud is more than a West-African problem.
These countries see advance fee fraud as an external threat and an invasion of the
privacy, economic rights and freedoms of their citizens and they have therefore
formulated policies and strategies to combat the fraud. Unfortunately, most countries
in the Caribbean do not see this fraud as a major threat as evidenced by the state of the
various laws that deal with fraud.
Whilst fragments of advance fee fraud may be traced as far back as 1840
(Smith et al., 1999), the Nigerian criminals in the 1980s re-packaged the crime and
took it to another level. From the late 1990s, this fraud has been taken even
further by the use of technology and, arguably, with assistance from financial
institutions they seem to have succeeded. It appears, however, that criminals in
other jurisdictions, including developed countries and the Caribbean have realised
how lucrative this re-packaged crime can be, and have joined the bandwagon of
fraudsters from West Africa in the advance fee fraud fast lane. Advance fee fraud
in this decade is no longer a West-African problem, but a global problem which
appears to be slowly eating deep into the fabric of most countries, including
countries in the Caribbean.
Advance fee fraud was perceived to be the problem of greedy individuals with a
“get rich quickly” syndrome. This perhaps accounted initially for the delayed response
on the part of governments and the ineffective response from the Nigerian Government
and those of other West-African states. The trend however is fast changing. The
menace of advance fee fraud has now reached epidemic proportions[1], with innocent
persons wanting to do legitimate business becoming targets and victims. In addition,
it has been suggested that proceeds of advance fee fraud are used to support other
serious and even violent crimes, such as narcotics trafficking, and there have been
known cases of deaths of victims linked to advance fee fraud (United States, Secret
Service, 2006).
Over a decade after the crime surfaced, the USA formerly recognised advance fee
fraud as a major problem in its jurisdiction at the 105th Congress 2nd session of the
House of Representatives on 20 May, 1998, when it passed a bill cited as the Nigerian
Advance Fee Fraud Prevention Act of 1998 (www.securitymanagement.com/library/
hr3916.txt). It was the sense of Congress at that session that the USA should work with
the international community to ensure the prosecution of Nigerian scam artists
involved in advance fee frauds and take all steps necessary to educate the public about
the fraud and to prevent future occurrence. It was perhaps short-sightedness on the
part of Congress, for not seeing the bigger picture of advance fee fraud as late as 1998
when advance fee fraud was already becoming a world-wide epidemic carried out by
criminals of different nationalities, including Americans, to have viewed the problem
from the perspective of the Nigerian letters alone, even though the very high volume of
the advance fee correspondence emanating from Nigeria and West Africa generally is
conceded.
Advance fee
fraud
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