When Ti-to Ibn-Sheikh was arrested, he had in his possession 12 iPhones, ten bank cards in different names and 14 identity documents.
The 12 iPhones ensured that different contact details were available for the various false identities that he had created and then successfully used to open bank accounts.
Ibn-Sheikh – the 35-year-old son of the infamous hate cleric Abu Hamza – was recently jailed for three years and nine months at Southwark Crown Court after pleading guilty to two counts of conspiracy to launder money, possessing articles for use in fraud, possession of 14 identity documents with fraudulent intent, and possession of more than £12,000 in criminal cash.
The ease with which Ibn-Sheikh was able to set up bank accounts with HSBC and then use them to launder dirty money shows how banking systems – particularly those of the longer established banks – are not fit for purpose when it comes to preventing identity fraud.
Mortgage lenders
It also underlines the need for vigilance among financial services providers such as mortgage lenders, who could easily have been taken in by him if he applied for a loan using one of his false identities, complete with genuine bank account and seemingly genuine contact details and identity documents.
The court heard that Ibn-Sheikh carried out his scam between 2018 and 2019 by obtaining a genuine identity document and then creating fake supporting documents.
Unfortunately, this is not an isolated case, and it will by no means be the last until there is a mandatory requirement for banks and other financial institutions to use electronic verification, which can thwart attempted money laundering through use of comprehensive KYC/AML checks including credit reporting.
The way in which banks in the UK have become a magnet for money-launders was recently highlighted in the recent publication ‘The UK’s Kleptocracy Problem’ by the Chatham House think tank, and was also laid bare in the leaked Pandora Papers about hidden wealth, tax avoidance and money laundering.
Systemic weaknesses
Clearly there is a pressing need for UK banks to address systemic weaknesses in tackling attempts by organised criminals to launder money through their systems. This activity has increased dramatically as a result of the pandemic, with fraudsters taking advantage of social distancing and lack of face-to-face contact to make online applications using fake documents.
The FCA is taking an increasingly tough approach, and recently went beyond it historical practice of imposing civil financial penalties and undertook its first ever criminal prosecution which resulted in NatWest being fined £264.8 million for anti-money laundering failures.
The next obvious step will be for the government to take a harder line and bring in legislation making electronic verification mandatory, as the present system of identity checking clearly is undeniably failing to prevent identity fraud and money laundering.
However, with no indication as to when the electronic verification will be made mandatory for the UK’s financial services sector, the onus is upon professionals such as mortgage lenders to be proactive rather than waiting for legislation to be brought in.
By investing in electronic verification to detect identity fraud and money laundering they can keep their own systems in order, even if the banks are unable to do so.
Martin Cheek is managing director of Smartsearch
