The Isle of Man’s role in disrupting a major global crime network was highlighted at a Countering Financial Crime conference attended by more than 500 business professionals, regulators and law enforcement officers.
Action taken against the Prince Group was held up as an example of successful collaboration between law enforcement agencies in the US, UK and Crown Dependencies.
The conference, held at the Villa Marina on Wednesday, gave attendees the opportunity to hear from officers at the forefront of international efforts to tackle financial crime.
Among the guest speakers were three officials from the US Department of the Treasury, who outlined the international operation against the Cambodia-based Prince Group.
Two homes in the Isle of Man were raided by police in October last year as part of a joint US-Isle of Man crackdown on transnational organised crime.
The properties, Llamedos at Hillberry Green and 38 Majestic View, were raided on the same day their owner, Thet Li, was added alongside 17 others to a list of sanctioned individuals by the US Department of the Treasury’s Office of Foreign Assets Control (OFAC).
Sweeping sanctions were imposed by the UK and US on 146 targets linked to the Prince Group.
OFAC alleged the group had operated at least 10 scam compounds responsible for industrial scale cyberfraud operations targeting victims around the world.
The group was accused of profiting from transnational crimes including sextortion, money laundering, fraud, corruption, illegal online gambling, human trafficking, torture and the extortion of enslaved workers.
Prince Group chairman Chen Zhi, beneficial owner of island-based gaming company Ableton Prestige Global Limited, was subsequently arrested in Cambodia and extradited to China.
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At its height, Prince Group was described to the Villa Marina audience as ‘one of the pre-eminent money laundering, legitimate-looking facades for a huge transnational fraud syndicate’.
On the surface, it purported to be Cambodia’s premier real estate and luxury condominium business, with interests spanning casinos, aviation, cigars, a brewery, watchmaking and even a bank.
But US officials said behind that apparently legitimate operation was a much darker network involving scam compounds, money laundering and protection rackets.
One US Treasury official told the conference that Chen Zhi had started out in the ‘Wild West of the Chinese internet’, spoofing private servers for popular mobile video games and monopolising illicit advertising revenues.
Those involved were able to make ‘gobs of money’, he said, but came under law enforcement scrutiny in China before moving their operation to Cambodia in 2011-12.
He said: ‘Chen Zhi was able to leverage his hacking experience into a pretty lucrative e-gaming, online gambling, then eventually real estate turned cyber-fraud empire.
‘He was for many years operating as a seemingly legitimate business person there, given the title equivalent to Duke or Lord and was a minister-level adviser to current and former Prime Ministers of Cambodia. He became a multi-billionaire.’
The official said the scam compounds were places where people had reported being subjected to beatings, deprivation and other forms of abuse.
They were described as places where people could go in but not come out.
The conference heard how the international response sought to hit the organisation from several directions at once.
The US Treasury official said seizures took place in the Isle of Man and London as part of the joint action, while the FBI seized $14bn of bitcoin from the group’s leader and OFAC was able to designate 140 targets.
By taking action simultaneously, authorities were able to ‘flood the zone’, making it difficult for those targeted to mount any kind of defence.
‘Co-ordination is imperative,’ he said.
The case was also used to underline the role played by businesses and financial services professionals in identifying suspicious activity.
Addressing those in the audience, the official said: ‘You really are the first line of defence against these kind of scams. The SARs (Suspicious Activity Reports) are so important.
‘We are routinely able to learn about what’s going on in different jurisdictions.’
Another US official said efforts to crack down on scam compounds had so far produced mixed results.
He said: ‘We are all hoping that this time it’s serious and going to lead to a meaningful end to this industry but it’s our thought that it’s probably fracturing, downsizing and adapting to the scrutiny.’
The conference also heard about the impact of being placed on OFAC’s ‘Specially Designated Nationals’ sanctions list.
Those listed are effectively barred from the US financial system, while the designation can also lead banks in other jurisdictions to decide they no longer want them as customers.
‘It’s a far-reaching and consequential tool,’ the US Treasury official said.
Opening the conference, Chief Minister Alfred Cannan said the Isle of Man remained committed to pursuing economic growth while acting against those seeking to exploit its financial systems.
He said: ‘Financial crime is becoming more sophisticated, more technologically advanced and more organised than ever before. Professional networks operate across borders, posing a significant threat to our national security and economic stability.
‘It is vital for the Isle of Man to have a global perspective on emerging issues, particularly in such unpredictable times. We must prove that we are a strong link in the chain of responsible nations that seek to combat transnational financial crime.
‘Working together we can protect our community and reputation, while laying the groundwork for future security and prosperity.’
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