Romancing the Pig Butcher

 Romance and Pig Butchering Scams: History, Impact, and Prevention

By Eina JL Schroeder, CAMS/CFCS

Romance Scams

Imagine your single, ready to mingle and hop on a well-known dating site or two. Or maybe you’re cruising through social media and some hot person sends you a message. Perhaps you struck up a romance through that “accidental” text message that came in and you responded to. How ever you started your new romance, they’re the one, perfect in every way. The way they look, the things they say, the time you spend together getting to know one another, the sound of their voice. Next thing you know you’re in love. They’re in love with you. It’s so wonderful, and dreamy. You’ve messaged, you’ve talked on the phone, you’ve even had video calls. Some might have been rough, but others perfect. Until one day your romance becomes insidious. Like a slow gas leak before a crisis hits: an auto accident, jail, lost wallet. They need money, now, to get out of this jam. They have plenty of money, the promise to pay you back. For some great excuses you brush off, they never do. Your money is gone. You’re in love. You think nothing of it and send money. Every time. Rinse, Lather, Repeat. One day you realize you are deep in debt; you may have even lost the roof over your head and have nothing left to live on in retirement. You’ve been had. As soon as the scammer either knows they have sucked every ounce of money they can from you or you caught on sooner, they turn on a dime. Some have the gall to say nasty, crude and indelicate things to their victims, some simply vanish. This was a romance scam. However short, or long, the impact is the same: heartbreak and robbery.

Pig Butchering Scams

You met this cool new friend. Could be online, could have been in person. They heard you’re into investing and they think you’d like to get in on this investing platform they use that’s been making them lots of money. It’s cryptocurrency (or maybe Forex). Not to worry though, they’ll teach you everything you need to know, it’s simple. You’ll be doing this on a well-known trading platform, so it’s safe. They even give you a link to the platform so you don’t have to hunt for it. So helpful. You happily install the app, enter your bank account information and transfer a small amount in. Wonders of all wonders! You’re already making a hefty profit! You transfer in more, the cycle continues. You’re going to be rich! One day you go to login to the trading platform and you can’t. It’s gone. Poof. Along with all your money. You’ve been fattened up and pig butchered — robbed!

Increasing prevalence and financial impact

While these stories are shortened for example purposes, the outcome is the same. All your money is gone. Taken away by a talented grifter who has either spent years honing their manipulations or learning from a master. You were an easy target, now poorer, while they are richer. If people start thinking before parting with their money these instances wouldn’t be so profitable and continue to proliferate. In 2021, the IC3 received reports from 24,299 victims who experienced more than $956 million in losses to Confidence Fraud/Romance scams (https://www.ic3.gov/Media/PDF/AnnualReport/2021_IC3Report.pdf). While pig butchering is newer and less widely reported, these scams have seen explosive growth. Most recently KCRG reports that Pig Butchering scams have reached a crisis level (https://www.kcrg.com/video/2024/09/19/pig-butchering-scam-has-reached-crisis-level). Beware of people who start messaging on dating apps, professional platforms, social networking or text and then want to move the conversation to WhatsApp or some other secure chat platform. None of these people are up to any good. Be suspicious, be wary, hold tight to your money and don’t let it go. Don’t fall in love with someone you have never spent time with in real life, outside of the internet, chats and video calls. Video calls can also be faked with AI. Globally, losses are estimated to be in the billions of dollars annually for what romance scammer rake in. With pig butchering scams, individual losses can be extremely high, with some victims reporting losses in the hundreds of thousands or even millions of dollars. Combined, these scams are responsible for billions in losses annually. The emotional and psychological impact on victims is significant and long-lasting. This can happen to both young and old alike. It’s important to note that these figures likely underestimate the true impact, as many victims feel too embarrassed to report their losses or may not realize they’ve been scammed.

Origins of romance scams

How did romance scams even start? Well, romance scams emerged in the early 1990s with the rise of the internet, evolving alongside online communication platforms. As email and chat rooms gained popularity, scammers adapted traditional fraud techniques to this new medium. The launch of dating websites in the late 1990s, such as Match.com in 1995, provided fertile ground for these scams to flourish. Fraudsters created fake profiles to lure unsuspecting users, gradually developing more sophisticated tactics. They crafted elaborate backstories, used stolen photos, and exploited the concept of long-distance relationships to explain the impossibility of in-person meetings. The early 2000s saw further refinement of these techniques, with scammers taking advantage of the increasing willingness of people to form romantic connections online. As the internet became more globally accessible, these scams spread internationally, often originating from countries like Nigeria, adapting tactics from earlier email fraud schemes to the realm of online romance.

Emergence of pig butchering scams

Pig butchering scams emerged in the late 2010s, originating primarily in Southeast Asia before spreading globally. These scams represent a more sophisticated evolution of traditional romance and investment fraud. Unlike typical romance scams, pig butchering involves a longer-term approach where scammers “fatten up” their victims before “slaughtering” them financially. The name derives from this metaphor. These scams gained significant traction with the rise of cryptocurrency and the COVID-19 pandemic, which increased online interactions and financial vulnerabilities. Scammers initiate contact through various means, including wrong number texts, social media, or dating apps, and build trust over time. They then introduce seemingly lucrative investment opportunities, often involving cryptocurrency or forex trading. Using fake trading platforms and manipulated returns, they encourage victims to invest increasingly large sums before disappearing with the funds. The complexity and long-term nature of these scams often result in much higher individual losses compared to traditional romance scams.

Technological Facilitation

Technology has been a key enabler for romance and pig butchering scams, significantly enhancing their reach and effectiveness. The internet, social media platforms, and dating apps have provided scammers with a vast pool of potential victims and easy means of initial contact. Sophisticated fake profiles, using stolen photos and AI-generated images, help create convincing online personas. Encrypted messaging apps allow for private, untraceable communications. Digital payment systems, particularly cryptocurrencies, facilitate anonymous money transfers. Additionally, scammers exploit data breaches to obtain personal information for more targeted approaches. The global nature of the internet also makes it challenging for law enforcement to track and prosecute these criminals across international borders.

How Romance Scams Work

So you wanted a romance? One for the ages. You wanted to be proud of this perfect partner you found online. You’re so lucky and want to share it with the world. This isn’t a scam, it can’t be, you‘ll die on this hill. These scams work because romance scammers skillfully build emotional connections with their victims before exploiting them for financial gain. They begin by creating attractive online profiles and initiating contact through dating sites, social media, or apps. The scammer quickly establishes rapport by identifying common interests and showering the victim with attention and affection, a technique known as “love bombing.” They share personal stories, often involving tragedy or hardship, to evoke sympathy and deepen the emotional bond. Regular communication and promises of a future together further strengthen the victim’s attachment. Once a strong emotional connection is established, the scammer invents a crisis or opportunity that requires financial assistance. Exploiting the victim’s feelings of love and trust, they manipulate them into sending money. This cycle may continue with new crises and requests, or the scammer may disappear once they’ve extracted maximum funds. The process preys on fundamental human needs for connection and the desire to help loved ones, making it a particularly effective and damaging form of fraud. Then, you’re left heartbroken and penniless.

How Pig-Butchering Works

On the other end, maybe you’re just looking to fatten your portfolio. Invest in good stocks with a great return. Maybe you’re saving for a nice vacation, or retirement. You may even be living off the dividends you’re making now. You’re in investment clubs, dabbling in research, reaching out to other investors for tips and tricks. Then the trickster comes in.

Pig butchering scammers groom victims for long-term financial exploitation through a carefully orchestrated process:

The scammer initiates contact, often through a seemingly innocuous message or “wrong number” text. They cultivate a friendly or romantic relationship over weeks or months, building trust and rapport without rushing to financial discussions. This relationship may remain platonic or develop romantic undertones, depending on the victim’s receptiveness.

Once trust is established, the scammer introduces the idea of investments, typically in cryptocurrency or forex trading. They present themselves as financially successful and offer to “help” the victim achieve similar success. The scammer guides the victim through setting up accounts on legitimate-looking (but fraudulent) investment platforms.

Initially, they encourage small investments and may allow the victim to withdraw profits, building confidence in the scheme. As trust grows, they push for larger investments, often using psychological tactics to create a fear of missing out on lucrative opportunities. The scammer continually reassures the victim, addressing any doubts with plausible explanations.

This grooming process can last for months, with the scammer patiently “fattening up” the victim before going for the big “slaughter” — either by encouraging a massive investment or slowly draining the victim’s resources over time. When the victim can no longer invest or becomes suspicious, the scammer disappears with all the funds, leaving the victim with substantial financial losses.

Common Tactics Used Against The Victim

Scammers will employ a range of common tactics to deceive and manipulate their victims. They often create fake online profiles using stolen photos and fabricated personal information to appear attractive and credible. Love bombing is a frequent strategy, where scammers shower victims with affection and attention to quickly build trust. They craft compelling backstories, often involving tragic circumstances or lucrative career opportunities, to evoke sympathy or admiration. Scammers frequently claim to be working or traveling abroad to explain their inability to meet in person. They use isolation tactics, encouraging victims to keep the relationship secret from friends and family. Urgency and pressure are applied when requesting money, citing emergencies or time-sensitive investments. Scammers also manipulate victims’ emotions, alternating between expressions of love and creating guilt or fear. They often use scripts and work in teams to maintain consistent, convincing communication. Additionally, they exploit current events and trends to make their stories more believable and relevant.

Far-Reaching Consequences

The ramifications of romance and pig butchering scams extend far beyond immediate financial losses, impacting victims on multiple levels. Financially, victims often suffer devastating losses, with some individuals losing their life savings or incurring significant debt. The emotional and psychological toll is equally severe, leaving victims with broken trust, depression, anxiety, and in some cases, suicidal thoughts. Many experience shame and isolation, reluctant to share their experiences with friends and family. These scams can damage personal relationships, as victims may have borrowed money from loved ones or neglected other relationships during the scam. Long-term effects include difficulty forming new relationships and persistent financial instability. On a broader scale, these scams erode trust in online interactions and legitimate financial platforms, potentially hampering digital economic growth. They also strain law enforcement resources and can fund other criminal activities. The collective impact of these scams represents a significant drain on global economies and individual well-being, with repercussions that can last for years after the initial fraud.

Prevent/Protect/Spread Awareness

Prevention and protection against romance and pig butchering scams focus on awareness, caution, and proactive measures. Key strategies include:

· Educating yourself about common scam tactics and red flags.
· Verifying the identity of online contacts through video calls or in-person meetings.
· Conducting reverse image searches on profile pictures.
· Being skeptical of requests for money or personal information.
· Researching investment opportunities thoroughly and independently.
· Avoiding sharing financial details or making investments based solely on online advice.
· Maintaining open communication with friends and family about new relationships.
· Using reputable dating sites with safety features.
· Being wary of individuals who refuse to meet in person or always have excuses.
· Trusting your instincts if something feels off.

Additionally, it’s crucial to report suspected scams to local authorities, relevant online platforms, and financial institutions. If victimized, seek support from trusted individuals and consider professional counseling. Remember, legitimate romantic interests will never ask for money, and authentic investment opportunities don’t require secrecy or pressure tactics.

Conclusion

Romance and pig butchering scams are sophisticated forms of fraud that exploit human emotions and desires for connection and financial gain. These scams have evolved with technology, becoming increasingly prevalent and damaging. Key points to remember: scammers build trust over time, use elaborate backstories, and often claim to be in distant locations. They eventually request money for emergencies or entice victims into fraudulent investments. The impact of these scams extends beyond financial losses, causing severe emotional distress and eroding trust in online interactions. Prevention is crucial: always verify identities, be skeptical of unsolicited contacts, never send money to people you haven’t met in person, and research thoroughly before making any investments. Stay vigilant and trust your instincts. If something seems too good to be true, it probably is. We all have a role to play in combating these scams. Spread awareness by sharing information with friends and family, especially those who might be vulnerable. Report suspicious activities to relevant authorities and platforms. By staying informed and alert, we can collectively reduce the impact of these harmful scams and protect our communities

I’m an experienced professional with a diverse skill set spanning governance, risk, and compliance (GRC), financial crimes prevention, and technical support for over 20 years. I have a proven track record in implementing robust GRC frameworks, conducting risk assessments, and ensuring regulatory compliance. My expertise in anti-money laundering (AML) and fraud detection strategies within the financial sector has been an amazing and rewarding journey. I am proficient in PC hardware diagnostics, repair, and maintenance, with a strong foundation in IT troubleshooting and digital investigations. My ability to combine analytical thinking with technical aptitude enables me to drive effective solutions across multiple domains and organizations. https://einajlschroeder.com

3 Biggest Problems Faced When Considering Evidence

  

I have been working financial crimes and cyber investigations for over 20 years.

Since starting as a computer geek and working my way up to financial crimes investigations, I have learned a lot about what it takes to solve some of the biggest problems people face in our industry. In fact, they are a lot easier to solve than most people think. You just need to change how you're thinking about them.

Here they are (in a nutshell), and how to solve them:

#1: Not following applicable laws: How to solve it: Investigators must thoroughly familiarize themselves with applicable laws, particularly the Rules of Evidence. These crucial regulations, typically adopted by statute, are codified into formal legal documents that guide investigative procedures and admissibility of evidence.

#2: Not authenticating your evidence: How to solve it: Authenticating evidence typically requires witness testimony. For digital evidence, this may involve a witness with personal knowledge of the item in question. For example, someone who shared a computer with the accused and directly observed the relevant document or file on that device could serve as an authenticating witness.

#3: Not defining your evidence: How to solve it: Learn how to define the different types of evidence. Evidence in investigations can be both digital and physical, and it's often the combination and correlation of different types of evidence that builds a strong case.

See? That wasn't so hard.

Obviously, these are very surface samples of what problems can be faced when considering evidence. Keep tuned for future posts that will help elaborate on these critical issues regarding evidence.

I'd love to hear your viewpoints!

#fincrime #investigations #financialcrime #banks #cybersecurity #evidence #court #witnesses #documentation #authentication #laws #jurisdictions

3 Ways to Tank Your Growing Business - And How To Avoid It (Intro)

 

Mistake #1: No Policies & Procedures - Why this can lead to misconduct

Someone just microwaved fish in the lunch room. Lucy in the mail room is using her personal email address for business. Jack just installed some software on his station to work from home. It's absolutely amazing how many businesses I have come across that are in the process of growing and expanding, yet have never considered policies and procedures to be important. Policies are good practice guidelines that you and your employees should follow on a daily basis. There should also be a formal process in place for employees to sign and agree to the terms of the policies. Procedures are things that you do on a daily basis, but are documented so they can be replicated if needed by a new employee. Policies and procedures set clear expectations for employee behavior and job performance. They provide guidance on how to handle various situations, which can improve decision-making and reduce confusion or conflicts in the workplace.

Mistake #2: No Disaster Recovery or Incident Response - Why this can lead to legal risks

Hackers are knocking at your door. Your network is under siege. You never saw this coming. That is the failure of not having a good incident response plan in place. Without being able to detect incidents before they happen you'll be unable to protect your network and your data sufficiently. During an incident, stress levels are high and time is critical. A pre-established plan provides a clear framework for decision-making, ensuring that team members know their roles and can act decisively rather than panicking or making poor choices in the heat of the moment. Without this you face increased liability in case of data breaches or other security incidents. This puts you in a weakened legal position if faced with lawsuits from affected parties (e.g., customers whose data was compromised).

Your data's being held up by ransomware. Somewhere in your organization, someone invited malware in and it's running rampant through your network. You're facing a flood, an electrical nightmare or maybe a typhoon or apocalypse. You have to shut everything down. Only you have no plan to recover from this disaster. Disaster recovery plans can cover everything from basic recovery to more complex recovery based on your environment. Loss of critical data and systems, make it especially difficult or impossible to rebuild operations. You may even have difficulty obtaining insurance payouts without proper documentation of pre-disaster assets and processes. Completely avoidable.

Mistake #3: No Business Continuity - Why this can lead to unrecoverable damage

You couldn't recover from the disaster. Your customers are losing trust in you. The media is raining on your parade. All because you didn't create a business continuity plan to recover from a disaster and carry on. If you manage to scrabble your way out of the rubble, you may find that regaining customer trust is almost impossible. A business continuity plan prepares an organization to maintain essential functions during and after a crisis or disaster. This could include natural disasters, cyberattacks, pandemics, or other unexpected events. By identifying critical processes and resources in advance, the organization can respond more effectively to disruptions, minimizing downtime and financial losses.

What is a growing company to do so they are protected against external and internal threats?

Invest in a solid governance, compliance and risk program. Simply starting with policies and procedures will go a long way to protecting your organization against legal, regulatory, compliance and financial risks.

My GRC expertise is ready to assist in determining your current security stance and help you on your path to affordable, better compliance. Contact me today to request a consultation.

The Evolution of Anti-Money Laundering (AML) in the AI Era

   

The Stakes of Financial Crime Prevention

The battle against financial crimes is critical, supporting efforts to combat organized fraud, human trafficking, and drug trade. This fight demands that investigators be increasingly agile, efficient, and thorough in their approach. The consequences are significant, often a matter of life and death.

Emerging Skills in AML

The AML field is evolving, with key skills now including:

• Proficiency in Generative AI (GenAI)
• Understanding of Large Language Models (LLMs)
• Application of Machine Learning (ML) in fraud detection and transaction monitoring

These technological advancements require:

• Human oversight
• Model risk management
• Strong ethical foundations

The integration of these skills is creating new roles that leverage human expertise in:

• Enhanced due diligence investigations
• AML policy development
• Cybersecurity threat hunting

Current Limitations and Proper Use of AI in AML

At present, AI should not be relied upon for tasks requiring judgment or decision-making. Instead, it serves best as:

• A rewording and summarization tool
• A technology assistant to enhance work output

It's crucial to understand that AI does not replace AML professionals. Rather, it should be viewed as a resource to augment human capabilities, providing summarizations and approximate information.

Challenges with AI: Hallucinations and Generalization

AI hallucinations remain a significant concern. Key points to remember:

• AI may combine factual and non-factual information
• It aims to provide desired responses, not necessarily accurate ones
• AI doesn't distinguish between truth and falsehood
• GenAI generalizes information, potentially leading to inaccuracies with highly specific queries

Essential Skills for the AI-Augmented AML Professional

1. Reviewing and validating AI responses and conclusions
2. Identifying mistakes, especially in compliance, investigations, and risk management
3. Understanding AI's strengths, weaknesses, and information processing methods
4. Recognizing and mitigating inherent biases in AI training
5. Adhering to a "verify before trust" approach

Getting Involved in AI within AML

To engage with the growing role of AI in AML:

1. Pursue introductory coding classes or self-paced certificate courses (including free resources)
2. Utilize reputable AI tools like ChatGPT, Copilot, and Dolly
   • Remember: While these tools are legitimate, they are still AI and require verification
   • GenAI aims to provide preferred answers, not necessarily correct ones

By embracing these technologies responsibly, AML professionals can enhance their capabilities and adapt to the evolving landscape of financial crime prevention.

How do you think GenAI will affect future AML jobs? Big, small or insignificant? Why? 

Where do you think GenAI could help in the AML space?

3 ways generative AI can help with financial crime investigations:

 

1. Pattern recognition and anomaly detection: Generative AI models can analyze vast amounts of financial transaction data to identify unusual patterns or anomalies that may indicate fraudulent activity. By learning normal transaction behaviors, the AI can flag deviations for further investigation.

2. Natural language processing of documents: AI can rapidly process and extract key information from large volumes of unstructured text like emails, chat logs, and financial documents. This can help investigators quickly sift through data to find relevant evidence and connections.

3. Predictive modeling of criminal networks: By analyzing historical data on known financial crimes, generative AI can create models to predict potential criminal networks or forecast likely future criminal activities. This allows investigators to take a more proactive approach.

(A Couple) Technology Mistakes in FinCrime and how to avoid them

Over the past decade, technology in financial crime prevention has evolved significantly. When properly utilized, it serves as a powerful ally for financial institutions in their battle against fraudsters and in safeguarding customer assets. However, if misused, this same technology can become a destructive force, enabling theft, embezzlement, and devastating personal lives.

Modern innovations like sophisticated behavioral analysis, AI, machine learning, and robotics offer valuable tools for this purpose. When implemented effectively, these technologies can enhance the detection of suspicious activities, minimize false alarms, and accelerate response times.

The trick is understanding how to use this technology, when and where. It's onerous, it's expensive and as transactional volumes increase, so do the potentials for mistakes.

You Can't See Me: Illicit actors establish numerous fraudulent accounts through shell companies to facilitate the laundering of their unlawfully acquired funds. The proliferation of digital banking has intensified this issue, allowing for the rapid global transfer of immense amounts of money in near real-time.

Developing a secure technological infrastructure for the transparent and trackable sharing of customer data, disseminated via digital pathways under the control of sanctioned users, offers a solution to this challenge. This system, akin to a digital passport, can foster trust among participants.

You can have your privacy, but security too? How do global governments and regulatory bodies balance preserving their citizens' privacy with implementing sufficient oversight and transparency to safeguard against criminal activities? What's the optimal approach to simultaneously uphold citizens' rights and ensure their protection? There needs to be an innovative structure of working to combat these kinds of illegal activities via a collective, collaborative effort by both the public and private sector.

Enhancing protocols for financial institutions to verify suspicious activities would be a crucial first step. Ultimately, this issue revolves around trust: individuals must have faith in their governments and banks regarding the appropriate use of their information, while banks and regulators need increased certainty about account holders' identities.

Missing evidence is not the same as missed evidence or evidence that is lost.

  

Missing evidence is not the same as missed evidence or evidence that is lost. When I speak of missed evidence it relates to evidence that could have been found had the right avenues been followed down.

One notable case is the O.J. Simpson murder trial from 1995. There was delayed collection of evidence wherein police waited hours before thoroughly searching the crime scene, potentially allowing evidence to be contaminated or lost. Among other errors there was overlooked evidence: A bloody fingerprint on a gate near the crime scene was not properly documented or analyzed. These investigative errors were exploited by Simpson's defense team to cast doubt on the prosecution's case, potentially contributing to his acquittal in the criminal trial.

This could have been avoided by:

• Following proper evidence collection procedures and handling,
• Following proper documentation procedures in criminal investigations

Instead, the playing field was leveled through time and age.

Thankfully, lessons were learned and have significantly influenced modern forensic science and criminal investigation procedures, leading to more rigorous standards and practices in evidence handling across the legal system.

Blueprint to avoid the 5 biggest mistakes in FinCrimes investigations

I love financial crimes and digital investigations. My aim is to guide other FinCrime Investigators to be the best they can be. I hold certifications in AML, Financial Crimes & Digital Investigations. I'm introducing a new and completely FREE min-course on improving your Financial Crimes Investigations.  You can see more here:  Better Financial Crimes Investigations