Trending: Streaming Fraud Contributing to Money Laundering, Terror Financing

Trending: Streaming Fraud Contributing to Money Laundering, Terror Financing

In wake of the Russia-Ukraine military conflict, several European Union (EU) member states received much-deserved international praise for their openness in harboring displaced migrants seeking asylum. With over 6 million Ukrainian’s fleeing the country as a result of the war to date, this along with countless other citizens from countries across the globe seeking to migrate into more-attractive European jurisdictions for a variety of reasons, multiple Euro countries have begun the controversial process of altering their migration policies over recent months to make immigration and integration more challenging more forward – and for good reason. Aside from the obvious benefit of strengthening national citizenship by making said policies more stringent, the potential positive effects on crime figures across Europe are perhaps the most significant driving force behind this swift change in course. Nowhere in Europe is this evidenced more-so than in Sweden. The Nordic country was until recently arguably one of the world’s most welcoming to immigrants from all walks of life. In fact, no comparable European country has taken in more refugees in relation to its total population than Sweden since 2015.1 Yet with the country reeling from a recent run on white-collar crime, lawmakers are seeking to make Sweden less attractive for migration and subsequently restore its perception as a low-crime jurisdiction. 

The Swedish financial sector remains vulnerable to money laundering and terrorist financing activity given its role as a major regional financial center, as well as its lack of a national AML/CFT coordination mechanism (i.e. different authorities within the country do not share the same understanding of current money laundering risks, or respond to them in a coordinated manner).4 This too has made it vulnerable to foreign financial flows and individuals seeking to launder funds through the Swedish financial system. Migrants originating in the Middle East and Northern Africa, among other “high-risk” jurisdictions, have also flocked to Sweden over the better part of the past decade due to their previously unremitting hospitality. Unfortunately, many of these asylum seekers failed to successfully integrate into Swedish society, instead developing their own parallel societies within the country. This has allowed for the very criminal activity that has destabilized their respective points of origin, including drug and human trafficking, as well as financial crime carried out by organized criminal organizations and terrorist committees, to infiltrate Sweden from the inside. From bombings, to fraud, to contract killings, migrants have laid siege to this once peaceful nation. Last year alone, Sweden registered 90 successful blast bombings and another 101 cases of attempted bombings or preparations for bombings, as well as 391 shootings, 62 of them fatal, according to police reporting data.2 Similar data can be found for Sweden’s neighboring jurisdictions over recent years, creating a problem for law enforcement and national security agencies alike in ensuring the safety of their citizens.

Aside from more traditional means of laundering money through conventional financial institutions or via the real estate sector, reports of startling tech-based activities have emerged across Sweden that have further contributed to a global trend known as Streaming Fraud. Streaming fraud/manipulation is defined as the act of artificially inflating one’s views, streams, follows and/or sales in order to generate revenue or manipulate a release’s popularity with respect to charts, playlists or search results across various platforms.5 With respect to Sweden, the criminal groups that have migrated into the country – the same entities behind the aforementioned bombings and rise in gross criminal activity seen within the jurisdiction – are utilizing streaming fraud practices across popular Sweden-based music streaming platform Spotify in order to launder money, this per a groundbreaking investigative report published by Swedish newspaper Svenska Dagbladet.The report reveals that for the last several years the criminal networks in question have been using the funds derived from their illicit dealings around the world to pay for false Spotify accounts or to hire known users to facilitate the streaming of songs published by artists with direct ties to their gangs. The gang-affiliated artists get paid based off of the number of streams of their music they receive, and with the criminal organizations significantly inflating these streaming figures, these groups are effectively able to launder their funds via the payouts received from Spotify.

Svenska Dagbladet (SvD) confirmed these findings with four anonymous criminal informants operating within Swedish migrant gangs. “I can say with 100% certainty that this goes on. I have been involved in it myself,”3 said an unnamed syndicate member interviewed by the newspaper. All told, the activity utilizing Spotify to launder funds dates back to 2019, with the members of the criminal organization interviewed also confirming that their group would pay outsiders to help facilitate the pumping-up of their artist’s streaming numbers. They continue, noting that in bringing their artists to the top of the charts, the fake stream data would also ultimately lead to an uptick in real streaming activity, contributing to larger payouts. Analysts now believe that the misuse of Spotify and a number of other popular international music streaming platforms as a means of laundering money has developed significantly in the years since and is now carried out “systematically” across Sweden and a number of other countries across the globe.

Spotify’s public relations team was quick to release a statement passing blame, with representatives stating that manipulated streams are not a problem that is isolated solely to their platform. They claim that this trend is an “industry-wide challenge”, with their company working hard to address the issue. The validity of the latter statement remains in question however given how long this activity has gone on unchecked right in their own backyard. Company spokespersons also tried to downplay the severity of the problem as a whole, claiming that “less than 1% of all streams on Spotify have been determined to be artificial and are promptly mitigated prior to payouts.”2 This might sound like a small problem, that is until you consider that Spotify has hundreds of millions of active users streaming billions of songs on a day-to-day basis. This makes a number as miniscule as 1% sizable with respect to the potential sum of money available to a popular artist – let alone multiple operating on behalf of a criminal network. With this news making international headlines last week, it is likely that the countless other music streaming platforms available today will follow suit in issuing their own statements regarding this activity with respect to their own outlets. We can only hope that these services will perform their due diligence and invest in resources to hinder the activity that will undoubtedly be found in future investigations moving forward.

Citations

  1. Ciesnik, Sonya. “‘Sweden as We Know It Is Dying’: From Welcoming Migrants to Discouraging Them.” InfoMigrants, Infomigrants, 10 Feb. 2023.
  2. France-Presse, Agence. “Swedish Criminal Gangs Using Fake Spotify Streams to Launder Money.” The Guardian, Guardian News and Media, 5 Sept. 2023. 
  3. Reynolds, Stefani. “Swedish Criminal Gangs Laundering Money through Spotify: Media.” Barron’s, Barrons, 5 Sept. 2023. 
  4. “Sweden.” Financial Action Task Force. Accessed 9 Sept. 2023. 
  5. “What Is Streaming Fraud/Abnormal Streaming Activity?” TuneCore. Accessed 9 Sept. 2023. 
Share on facebook
Share on twitter
Share on linkedin
Share on email

Related Posts

About Us
businessman touching tablet
Our success is derived from the success of our clients. We pride ourselves in having assisted challenged financial service providers.

Let’s Socialize

Share on facebook
Share on twitter
Share on linkedin
Share on email
Popular Post