US authorities urge banks to target proceeds from crypto romance scams as Americans lose ‘billions’ to fraudsters

In a move that underscores mounting concerns about the growth of crypto romantic-investment scams, a key US law enforcement agency is urging financial institutions to flag transactions tied to perpetrators.

On Friday, the Financial Crimes Enforcement Network (FinCEN) issued an alert calling on banks and other firms to submit “suspicious activity reports” to help authorities crack down on these scams, which are called “pig butchering.”

FinCEN said multiple law enforcement agencies estimate Americans are losing billions of dollars to “virtual currency investment frauds.”

Investors lost at least $429 million to romantic crypto scams in the US in 2021 alone, according to the FBI.

Romance and riches

“This scam has impacted far too many Americans, which is why FinCEN is sounding the alarm and asking financial institutions to report suspicious activity indicative of this scheme,” said Acting Director Himamauli Das.

Promising romance and riches, fraudsters target consumers online and use sophisticated tactics to get them to deposit their savings on cryptocurrency platforms. Investors then lose access to their funds and the fraudsters disappear.

In a special report published last week, one victim told DL News how she lost $80,000 in a pig butchering scam and is now fighting back with a non-profit group called the Global Anti-Scam Organisation.

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Pig butchering scams have doubled in 2023 compared to 2022, according to a report published by Binance in August, citing its own internal data. The company predicted the number is “almost certain” to increase.

Losses from cryptocurrency investment fraud rose 183%, to $2.6 billion, in 2022 from the prior year, according to the FBI’s annual Internet Crime Report.

Online criminality

US law enforcement faces a daunting task in combating pig butchering because the scammers are predominately based in Southeast Asia.

Organised crime groups are scaling up pig butchering in Southeast Asia.

NOW READ: Asian crime gangs force hundreds of thousands to perpetrate crypto romance scams

They operate semi-autonomous compounds in Myanmar, Cambodia, and other nations and are forcing hundreds of thousands of online telemarketers and software developers to hook and fleece unwitting victims, according to the Office of the United Nations High Commissioner for Human Rights.

Many of these workers are “forcibly engaged into online criminality,” having been lured to the area on the promise of legitimate jobs.

Callan Quinn, DL News’ Hong Kong correspondent, covers the crypto industry in Asia. Have a tip? Contact the author at callan@dlnews.com.