The watchdog's head of enforcement says digital anonymity allows criminals to commit fraud and run scams from distant jurisdictions on a far larger scale. 

The average tech scam is becoming so ubiquitous that it is becoming a regular part of daily life. For anyone who remains skeptical, just try to post something to sell or buy on a social media website and see how many bids are real.

In at least one out of three instances, if you answer, you will be enticed to hurry up and do something you hadn’t wanted to, like drop a package off for subsequent payment, or be asked to provide your personal or banking information.

Changed Landscape

Although those kinds of red flags are usually easy for most individuals to quickly figure out, it is all just the tip of the iceberg, according to Christopher Wilson, the head of enforcement at the Hong Kong Securities and Futures Commission (SFC).

In a keynote address at the GIR Live: Asia-Pacific Investigations Summit 2024 in Singapore on Tuesday, he went one step further, saying that technology and digital anonymity have «completely changed the landscape» when it comes to financial crime.

Deluge of Data

«Criminals can now commit fraud, run scams and perform other misconduct on a much larger scale from faraway jurisdictions, using increasingly sophisticated techniques,» he maintained.

Part of the issue many enforcement departments currently face is the deluge of data from digital devices, which creates «enormous challenges» for investigators.

Millions of Digital Images

Wilson said that the SFC’s investigators review more than 30 million digital image files because of seizures while sending out thousands of notices asking for transaction records.

«In other words, we are drowning in data but often starved of actionable insights,» he says.

Growing in Scale

He also maintains that the financial crimes the SFC investigates are growing in scale and complexity and often «involve market players from two and sometimes all three of our investigation categories» (market, corporate, and intermediary misconduct).

An example is the proliferation of so-called ramp-and-dump schemes where a syndicate of «bad actors» agrees with the management of a listed company and social media influencers to get retail investors to buy a thinly traded stock.

Conceptually Similar

From the point of view of finews.asia, the scary implication here – and for the financial industry – is that such schemes are so conceptually similar to what happened with Credit Suisse in 2023 before the Swiss government forced UBS to save it.

«To tackle these schemes, we now frequently form task forces traversing two or three of our investigation teams to share intelligence and forensic capabilities and sometimes simply to provide additional manpower,» Wilson maintains.

AI to the Rescue

The SFC has also established a so-called Strategy and Technology team as a central function to help drive strategic initiatives and it is adopting AI to help fuse information from segregated data sources into a more unified view. According to him, that will help better identify patterns, trends, and hidden links between members of a crime syndicate and similar.

«This team includes financial engineers, data scientists and forensic specialists, and it is really a force multiplier for our investigation teams,» he indicates.

Big Swings

He also had some takeaways for the financial sector, saying that players should not necessarily see enforcement outcomes «as binary». Even if it does not lead to public action, it can help the SFC identify gaps between rules and market practices that it can potentially «codify» in future legislation.

«Sometimes, we take a big swing at a high-profile case, knowing that even if we miss, the visibility of our efforts may be sufficient to deter wrongdoers and alert investors,» Wilson maintains.