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KYC . . . why it’s so important

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Monday 4th March, 2024 | Author: Dick Smith [Member (F1520)] | Filed under: Case studies

Could this be you?

You are relatively fresh into the investigation industry. You might have a law enforcement or military background. You may be enjoying a career change, or even just starting out in working life. You are establishing yourself; getting your name known in the right circles. You have joined the ABI and you have been told that you should conduct the ‘legitimate interest’ test for each case type instruction. And then there comes an approach from a new client, perhaps originating from overseas, offering an interesting assignment which you feel is well within your capabilities. Do this one right and there is the potential for repeat business. International work . . . it all sounds very appealing!

So, imagine this: The potential new client is a bona fide Chinese company using a UK-based representative. They are asking you to trace and obtain background on a Chinese national, resident somewhere in the UK, perhaps saying it’s to reward the individual with a lucrative job due to their speciality in some industrial or scientific field. You check there is a company website, but do you really know your customer?

Now consider this: Mike McMahon was an NYPD sergeant with 75 career awards. A married man with three children, Mike quit the police following serious injury and switched to private investigation; becoming an approved government investigator [CJA], working on high profile cases. Amongst his private clients, however, was a New York based translation company for whom he was conducting typical PI business, including surveillance, background checks, and asset searches. But did he know that his client was connected to a criminal enterprise involving the Chinese Communist Party? Either way, in October 2021, he was locked up by the FBI with half-million dollar bail being posted, and now faces a range of charges, including interstate stalking and conspiracy. Additionally, he is the first US PI ever to be charged with failure to register as a foreign agent [FARA]; an offence usually reserved for lobbyists and marketing entities.

Eight other people have been indicted, the allegation being that US residents of Chinese origin were stalked and harassed in an effort to get one of them to return to face an alleged bribery charge; his family being threatened with harm were he to refuse. It is claimed that a Chinese police officer and a Chinese prosecutor travelled to the US to direct the operation, and enlisted the help of the co-conspirators.

The activities of Chinese ‘law enforcement’ abroad, has been well publicised over the past two years; highlighting further reasons why we in the investigation industry should be extra-cautious. Indeed, the Chinese government continues to build an unofficial global enforcement infrastructure carrying out “malign influence” operations. Western officials see the outposts as key to the PRC’s effort to monitor Chinese nationals overseas, including dissidents. The recent violent and shocking incident in Manchester, where UK-based Hong Kong pro-democracy activists were attacked by members of the PRC consulate general, demonstrated the current shameless attitude of Beijing to the rest of the world.

In the US, these police outposts are located across the country in Chinese community organisation facilities, commercial offices, and even restaurants; the spaces being described by the PRC embassy in Washington as, “provided by local overseas Chinese communities who would like to be helpful.” But don’t think this activity is limited to the US.

In Europe, evidence of Chinese police clandestine activity in the Netherlands and Hungary has emerged in recent months. In the UK, following the Manchester outrage, the House of Commons was informed by the chair of the Foreign Affairs Committee, that this “network of secret Chinese police stations” was being used by Beijing to hunt down dissidents. These under-cover establishments were masquerading as ordinary-looking administrative centres for Chinese nationals in Hendon, Croydon, and Glasgow. Concerns for the safety of Hong Kong students was raised by the chair of Parliament’s Intelligence and Security Committee, and Shadow Home Office minister, Holly Lynch, said: “The recent unacceptable conduct we witnessed outside the Chinese consulate in Manchester makes clear we have to act to safeguard those in the UK from increasingly belligerent measures being undertaken by those acting on behalf of the Chinese state.”

At IPFGB, we received a highly suspicious tracing enquiry through a third party, undoubtedly a disguised approach from the Chinese Ministry of State Security [MSS]. We carried out the necessary ‘legitimate interest’ exercise; our pertinent questioning of the client resulting in the enquiry suddenly evaporating. [An account was published on this site in June 2022, click here.]

All this should be another reminder to every private investigator in the UK, especially those new to the industry, not to be duped by Chinese-State requests to retain their professional services. Do your due diligence and KNOW YOUR CUSTOMER!

[Sources: “New York Times”, “i”, Yahoo News, etc.]

Dick Smith QPM
Director: IP Forensics [GB] Ltd