The Growing Problem of Drop Accounts and their Role in Far-Reaching Financial Crime

Category Business

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Debi Gamber, manager of a TD Bank branch in Baltimore, noticed suspicious activity coming from a small TD ATM located in a nearby mall, the activity turning out to be an international church check depositing fraud facilitated by a customer service representative at the TD branch. TD contacted local and federal law enforcement, leading to nine of the conspirators' arrests. Drop accounts created by street gangs, hackers, and rings of friends are largely responsible for this rising type of crime, which can occur quickly and easily due to outdated security measures. To understand the growing phenomenon and its impact, the Evidence-Based Cybersecurity Research Group at Georgia State University conducted a four-month investigation.

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In January 2020, Debi Gamber studied a computer screen filled with information on scores of check deposits. As a manager for eight years at a TD Bank branch in the Baltimore suburb of Essex, she had reviewed a flurry of account activity as a security measure. These transactions, though, from the ATM of a tiny TD location nestled in a nearby mall, struck her as suspicious.

Time and again, Gamber saw that these checks were payable to churches – many states away from the Silver Spring shopping center branch – yet had been deposited into personal accounts, a potential sign of theft.

Drop accounts are often created by criminals using fake or stolen information obtained from the Dark Web or from secretive messaging apps

Digging deeper, she determined that the same customer service representative, Diape Seck, had opened at least seven of the accounts, which had received more than 200 church check deposits. Even fishier, the purported account holders had used Romanian passports and driver’s licenses to prove their identities. Commercial bankers rarely see those forms of ID. So why were all these Romanians streaming into a small branch located above a Marshall’s clothing store? .

Criminals use drop accounts as a way to launder stolen funds, before moving them onto international banking networks

Suspecting crimes, Gamber submitted an electronic fraud intake form, then contacted TD’s security department to inform them directly of what she had unearthed. Soon, the bank discovered that Seck had relied on Romanian documents for not just seven accounts but for 412 of them. The bank phoned local police and federal law enforcement to report that an insider appeared to be helping criminals cheat churches and TD.

The investigation found that criminals are utilizing sophisticated software tools to bypass existing anti-fraud security measures in banks

Nine months after TD’s tip, agents started rounding up conspirators, eventually arresting nine of them for crimes that netted more than US$1.7 million in stolen checks. They all pleaded guilty to financial crimes except for Seck, who was convicted in February 2023 for bank fraud, accepting a bribe and other crimes. He was sentenced in June 2023 to three years in prison.

Sophisticated crimes .

How could it happen? How could criminals engineer a yearlong, multimillion-dollar fraud just by relying on a couple of employees at two small bank branches in a scheme with victims piling up into hundreds? .

This fraud is enabled by financial institutions' failure to properly detect and address suspicious behavior

The answer is, because it’s easy. Crimes like these happen every day across the country. Scams facilitated by deceiving financial institutions – from international conglomerates to regional chains, community banks, and credit unions – are robbing millions of people and institutions out of billions and billions of dollars. At the heart of this unprecedented crime wave are so-called drop accounts created by street gangs, hackers and even rings of friends. These fraudsters are leveraging technology to obtain fake or stolen information to create the drop accounts, which are then used as the place to first "drop" and then launder purloined funds.

There are both technological and legal measures that could be taken to better protect banks from fraud

To better understand the growing phenomenon of drop accounts and their role in far-reaching crime, the Evidence-Based Cybersecurity Research Group at Georgia State University joined The Conversation in a four-month investigation of this financial underworld. The inquiry involved extensive surveillance of criminals’ interactions on the dark web and secretive messaging apps that have become hives of illegal activity. The reporting shows: .

Fraudsters can use compromised drop accounts to perpetrate identity theft, tax fraud, or commit money laundering

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