Because most fraud today is conducted online, or enabled by information shared in such environments, those who want to mitigate risks need to understand the landscape. An experienced figure in the areas of risk and security examines the terrain.

The following article, which addresses physical security and risk awareness, comes from Mike LaCorte, chief executive of Conflict International – a UK-based organisation, which was set up in 2008 by Mike LaCorte (pictured) and Jon Fawcett. CI, which has a core team of 25 agents in the UK, US, Spain and Cyprus, draws on a network of over 100 specialist agents, who operate across various jurisdictions. (This publication interviewed LaCorte last year about the firm's work.)

The topics that the author addresses here are important, and urgent. We’re grateful for these insights. Needless to say, the usual disclaimers apply to view of outside contributors. If you want to enter the conversation, email tom.burroughes@wealthbriefing.com.

The numbers of wealthy young people have swelled and are expected to grow by 28 per cent in the next five years (source: Knight Frank). Although anyone with money to their name is a target, the danger for young people is, perhaps, more acute.

The reason for this is elementary. Most fraud today is conducted online, or facilitated by information shared publicly on the internet, and so it logically follows that younger people who spend more time in cyberspace are at greater risk of fraud. Their digital footprint is simply bigger: and with a bigger footprint comes more information for a fraudster to exploit.

That is not to say that the internet presents nothing but risk, or that it should be avoided entirely, but that careful and thorough due diligence has never been more important.

The backdrop
From cryptocurrencies to non-fungible tokens, the internet presents whole new vistas of opportunity. Many wealthy young people have made money by staying ahead of the curve, successfully jumping on the next Big Thing whilst it was a mere acorn of a trend. 

But while such an approach can be highly profitable, the sudden accumulation of wealth means that the infrastructure needed to protect against fraud – not least the presence of the right advisors – may not quite have kept up with their business’ growth. What’s more, the fast-moving nature of online business means that younger people may try and move quickly, at times subordinating the need for careful due diligence to the desire to make money quickly.

Crucially, though, due diligence can act as a preventative measure against fraud and unearth potentially vital information about fraudsters posing as employees or shady prospective business partners. With employee fraud becoming increasingly common, it’s crucial that individuals check backgrounds – and here, social media feeds and other publicly available open-source information can prove vital in unearthing potential red flags. A past bankruptcy or reports of a deal falling through, though revealing a heightened degree of financial risk, are not in themselves indisputable proof. A string of bankruptcies and a paper mountain of deals falling through, and evidence of previous criminal litigation, could suggest something altogether more sinister at play. The internet, in short, can both facilitate fraud and prevent it.

Due diligence doesn’t just apply to their work. Wealthy individuals are as vulnerable in the bedroom as they are in the boardroom. It is becoming increasingly common for fraudsters to pose as prospective love interests to access and steal sensitive business information. A recent report even found that romance fraud accounted for one in 10 cases of fraud involving high net worth individuals. While screening suitors may throw up ethical and legal questions, young millionaires should use social media to vet potential love prospects, looking for the obvious red flags, namely the lack of any social media presence and vagueness about backgrounds.

Safely using social media
Social media is not just playing an increased role in our personal lives, but our business lives, too. Significant numbers of wealthy young people will be successfully making money through platforms such as Instagram and TikTok, with carefully curated posts designed to capture the attention of their target market. A presence online is often no longer an optional extra, but the lifeblood of modern business.

And though this presents opportunities, it also presents risks. After all, the nature of fraud has changed: gone are the days of the “spray and pray” email from faux princes, replaced instead by sophisticated scams based on months of careful research, often using information gathered from social media profiles.

Indeed, the sharp growth in sexploitation cases, often targeted at wealthy young people, is arguably being facilitated by the online footprints of young people. That is not to say that they should avoid sharing information online, but that they should take care not to overshare: an image of addressed post here, or a car registration plate there. Innocuous at first glance, such material provides vital information for those planning to construct elaborate – and crucially – believable deceptions.

Proactive and preventative
The digital age places additional emphasis on the need for HNW individuals and young millionaires to instil the correct mechanics to stay best placed against fraud prevention. Awareness of the different methods of fraudsters remains a key preventative tool for fraud.

Screening is also vital in maintaining a secure network. Know Your Client (KYC) and Know Your Clients’ Client (KYCC) checks are a form of screening that will correctly identify the background of the individual and can often prevent theft of company intelligence or assets. From LinkedIn, Companies House filings, and entries in the Register of Ultimate Beneficial Owners, cyberspace is awash with information, which can often easily be accessed through simple open-source searches. 

Entrepreneurship and the desire to make money quickly, combined with the evolution of fraud sophistication, can sometimes cause people to neglect the importance of screening and become subject to fraud. Due diligence is a crucial step that can protect individuals or businesses in the long run, making them less vulnerable to fraud and targeting. Screening has the ability to reveal crucial information such as historical litigation or red flags, which are often not otherwise uncovered. It provides a preventative barrier against fraudsters and it’s the best way to shake a target off your back.