Payment Processor Labeled Transnational Criminal Organization for Helping Scammers

Chris Gaetano
Published Date:
Oct 12, 2016
Money Laundering

It seems near every day some new scam comes out that finds novel ways to part people from their money, sometimes from thousands of miles away. But who actually processes these ill-gotten gains and turns them into usable profit? The U.S. government has accused a Canadian company, PacNet Services, of doing just that for thousands of unsavory clients across the world, according to CNN Money. In fact, authorities say that, after their investigation of the firm, the company was set up for the explicit purpose of being the payment processor of choice for the criminal world, its main function being to facilitate mail fraud. 

One client, for example, was responsible for a multi-million dollar fraud where a supposed psychic would write a letter to someone about a vision they had about a valuable financial opportunity for them, and asked for money to make it happen, a scheme that was shut down by the Justice Department in 2014. CNN said that PacNet would process funds from scams such as this through working as an intermediary between the fraudsters and legitimate financial institutions. If a bank refused to deal with PacNet, it would set up a front company to act in its place instead or, alternately, simply bribe bank officials to let it set up an account. CNN said PacNet also sent cash across borders to deposit the funds, but told customs officials that they were mailing legal documents instead. Sometimes, instead of mailing the cash, it would transport it via private plane. 

But it did more than process payments--CNN also said that it maintained private mailboxes for its clients in Ireland to receive its ill-gotten gains, collected and sorted consumer responses and payments and was even able to use PacNet's private plane to transport the mail.

PacNet itself has denied the allegations entirely, saying they're completely without merit. None the less, the U.S. government has seen it fit to designate the company a transnational criminal organization, a label that is more often applied to groups such as drug cartels and organized crime gangs. 

Click here to see more of the latest news from the NYSSCPA.