Brian Maloney Jr. faced a bewildering lawsuit in January, claiming his Boston-based family business, Middlesex Truck and Coach, was involved in a cryptocurrency scheme that defrauded a New Jersey man of $133,565. The suit alleged Middlesex “controlled and maintained” a Chase bank account used for the fraudulent payment. Maloney Jr. was flummoxed, stating, “For God’s sake, we fix trucks and still have AOL,” and confirming his company had no Chase account.
Exploiting Bank Accounts
Maloney’s investigation at Chase revealed a troubling pattern. Chase had allowed an unknown individual, who applied online with no identification, to open an account under Middlesex’s name. This account subsequently received hundreds of thousands of dollars from fraud victims, including the disputed $133,565. Middlesex’s experience is reportedly part of a global problem plaguing the banking industry. These fraudulently opened accounts act as “way stations” in a sophisticated, multi-step money laundering process that funnels money from U.S. scam victims to crime syndicates in Asia.
The ‘Pig Butchering’ Phenomenon
An explosion in international online fraud has occurred in recent years, with “pig-butchering” schemes being particularly widespread since 2022. This macabre term refers to a process where scammers meticulously “fatten” victims by encouraging increasing investments in seemingly successful schemes before “butchering” them by stealing all deposits. These operations are often run by Chinese gangs from prison-like compounds in Cambodia, Laos, and Myanmar. A U.S. Institute of Peace report estimates pig-butchering in South-east Asia has reached a staggering $44 billion per year, likely affecting millions globally, calling these syndicates the “most powerful criminal network of the modern era.”
Banks’ Role as Gatekeepers
A substantial portion of this fraud is transacted in cryptocurrency. However, many scams begin with victims wiring dollars from traditional bank accounts to swindlers, who then convert these funds into crypto for cross-border movement. Bank accounts are so crucial that a thriving international black market has developed to rent them for fraud. This, reportedly, is how the Chase account in Middlesex’s name became a repository for scam proceeds. Banks have a vital, U.S.-law-mandated responsibility to act as gatekeepers, preventing criminals from opening accounts or laundering money.
Failures in Oversight
Banks consistently fail to prevent money laundering, with institutions from the U.S. to Singapore, Australia, and Hong Kong implicated. Global lenders like Bank of America, Chase, Citibank, HSBC, and Wells Fargo are implicated. Despite efforts to combat fraud, the American Bankers Association acknowledges that bad actors can still get through with over 140 million accounts opened annually. Other industries, like telecom and social media, need to take more action.
Unique Challenges for Banks
“Pig-butchering” scams pose unique challenges for banks, as victims often thwart their own banks’ attempts to prevent fraudulent transfers. Foreign-based scammers exploit U.S. middlemen to leverage the banking system. Banks have never been targeted at this scale, and cyber-enabled fraud operations in South-east Asia have taken on industrial proportions. There are no real standards for detecting fraud or money laundering, and regulations don’t mandate effectiveness, allowing flexibility in diligence.
The Black Market for Accounts
A thriving black market exists for renting bank accounts. On Telegram, ads for “cars” or “fleets” (bank accounts for stolen funds) are readily found, with some boasting “firsthand” control and direct bank transfers. One channel, KG Pay, offered accounts for various pig-butchering scams, accepting wire transfers, making U.S. bank withdrawals, and converting deposits to crypto for scammers.
KG Pay reportedly handled up to $1 million in deposits by slicing amounts to avoid suspicion, and if accounts froze, agents would call customer service to unfreeze them. A video showed easy cash sending via the Chase app. Telegram deleted the KG Pay channel after ProPublica inquired, stating it “expressly forbids money laundering, scams, and fraud.”
South-east Asian Scam Hubs
In Sihanoukville, Cambodia, a gambling hub, there is a significant demand for money laundering. Workers from hotels are reportedly matching cyberscam gangs with account providers to move illicit funds. Huione Group, a prominent Cambodian financial services firm, is accused of laundring funds for pig-butchering and North Korean heists.
Tracing the Network and Legal Recourse
Middlesex Truck and Coach was targeted by a fraud scheme that involved wire transfers from Cambodia to New Jersey. A victim, Kevin, wired $716,000 to accounts in Boston, New York, California, Hong Kong, and other cities. He wired money to 10 companies, including Chase, Cathay, and Singapore’s DBS Bank. Kevin sued the companies, but Chase responded with a refund.
Other victims have also filed lawsuits for lax account opening. The American Bankers Association states that over 140 million bank accounts are opened every year, and the American Bankers Association urges other industries to do more to prevent fraud. Other countries, like the UK, Australia, and Thailand, have taken aggressive steps to protect their customers. However, the US lacks such rules and Congress and the Trump administration show no prioritization. Bank accounts remain easy targets for fraudsters.
