London, 10 January 2003 - Playing on human greed, criminals are constantly coming up with new scams to rob gullible investors - losses that could be prevented with a little common sense and basic knowledge.

An ICC special report, Preventing Financial Instrument Fraud, alerts financial service providers and individual investors to the danger signals. It explains how the frauds are mounted and, equally important, the psychological manipulation upon which they are based.

The report says that intelligence gathered by CCB operatives from numerous sources over the last two years points to a rise in the use of financial instrument fraud as a money laundering tool and "a generator of wealth for the criminal/terrorist fraternity."

Based on experiences over 10 years of the Commercial Crime Bureau - an arm of ICC Commercial Crime Services - the book's authors, Jon Merrett and Paul Renner, explore the minds of the fraudsters to show how they use the banking system to deceive investors.

They quote a simple definition of financial fraud: "Offering nothing for something to people who want something for nothing."

The authors say that fraudsters exploit two emotions influencing investor judgments, greed for gain and fear of losses. "This is where the art of the fraudster comes into its own."

The fraudster satisfies both emotions by offering the perfect investment in the form, for example of a High Yield Investment Programme (HYIP) that guarantees staggeringly high profits - satisfying greed, at absolutely no risk - removing fear.

And thousands of investors somewhere in the world fall for the HYIP and other scams every day. "The myth that these programmes actually deliver is so pervasive that even fraudsters believe they are real," the authors say.

They give examples of the scale of lures on offer: 10% per week programmes; 5% per trade, three trades a day programmes; a 30-day programme allegedly sanctioned by the US Federal Reserve paying a cool 100% and even a United Nations programme paying up to 1,000% per year.

The report goes into detail about how fraudsters blind investors with science by referring to genuine or fictitious financial instruments to impress their victims and lull them into a false sense of confidence. References to widely known and respected institutions, like the International Monetary Fund, World Bank or International Chamber of Commerce are used to bolster the illusion.

One chapter analyses fraudulent documents and investment pitches to show the anomalies and inaccuracies that betray their true nature.

Said Jon Merrett: "Anybody who reads this book is fully briefed on how to avoid being a sucker."

Preventing Financial Instrument Fraud may be ordered from ICC Publishing and its online Business Bookstore, from ICC Commercial Crime Services, and from ICC national committees throughout the world.

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