Fraudsters target DIFC in $5bn scam

Banks operating in the Dubai International Financial Centre (DIFC) have been the target of a reported $5 billion fraud.

The Dubai Financial Service Authority (DFSA) said individuals tried to get loans from authorised companies operating out of the DIFC by posing as representatives of two fictitious organisations - Heritage Private Banking, which claimed to be from the UK, and the Genesis Foundation Alliance 'of Hong Kong'.

The fraudsters attempted to pass off forged documents including letters of commitment and pledges from international financial institutions, the DFSA said.

The Financial Times said these financial institutions included UBS, the US Federal Reserve and Citibank in Singapore and put the attempted fraud at $5 billion.

The DFSA said no financial loss was suffered within the centre.

The regulator was made aware of the scam by Lloyds TSB, which in May reported an attempted use of fraudulent documents.

The DFSA then alerted banks in DIFC, before making a public announcement on June 28.

“Lloyds TSB International Private Banking takes its obligations to combat financial crime extremely seriously and reported an attempted use of fraudulent documents to the DFSA in the appropriate way in early May,” a spokesman for Lloyds TSB said.

“This is now a matter for the regulator and we will, as we would always do, co-operate fully with any investigations they undertake," the spokesman added.

Ian Johnston, DFSA managing director, said the regulator had done a good job of preventing the fraud and did not expect any repeat attempts of this kind.

“I can’t imagine that anyone could try to get away with this in the centre now,” Johnston told ArabianBusiness.com.

For criminal charges to be brought against those responsible for the scam, Lloyds TSB would need to submit a written complaint to Dubai Police as the DFSA has no criminal jurisdiction.

Lloyds TSB would not confirm whether it has filed a complaint, or even if it plans to do so, and Dubai Police has so far declined to comment on the incident.

Johnston said the DFSA has “always had very good cooperation with Dubai Police”, but would not comment on whether it requires more powers to bring suspects to trial in such cases.

The scam is just the latest in a string of foiled fraud attempts to hit the DIFC.

In April, the DFSA reported that it had uncovered a Dubai-hosted website being used to front an unlicensed investment company designed to lure customers in Eastern Europe into investing in pre-IPO securities in the US.

The case follows two earlier discoveries by the DFSA of internet scams aimed at conning investors out of money by pretending to operate out of DIFC.

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