Romance scams reach six-year high, Moody's reports

Moody's has reported a significant increase in cases of romance scams globally, identifying 1,193 new entities and individuals with potential links to such scams in 2024, marking a six-year high.

The identification of these new cases is crucial because criminals commonly try to launder money obtained from romance scams including sextortion through the traditional financial infrastructure. This activity poses substantial reputational risks and potential fines for banks involved in handling these transactions.

The rise in romance scams was exacerbated during the Covid-19 pandemic, as isolation amplified the need for social interactions and, consequently, increased vulnerability. Sextortion, a subset of romance scams, predominantly targets teenagers, especially boys. Criminals create fake profiles to coax their victims into sharing explicit content, which they later use to blackmail victims by threatening to release the material publicly.

According to the data, the number of new entities and individuals connected to romance scams has seen a noticeable rise of 14% compared to 2023 figures. Moody's database observed a 29% decline in new romance scam profiles in 2020; however, there was a subsequent 57% increase in 2021 coinciding with the global onset of lockdowns. In 2024, the United States represented over a third (38%) of the new romance scam profiles. Other leading countries include Nigeria (14%), India (12%), the UK (11%), and others such as Malaysia, China, the Philippines, Brazil, Canada, and Australia.

Specifically in Australia, there was an 8% increase in entities and individuals potentially linked to romance scams in 2024 when compared to the previous year.

Moody's compiles these findings from a range of sources, including negative news stories, sanctions, government watchlists, and data about politically exposed persons. This gathered information is then synthesised into 'risk profiles' that help financial institutions perform due diligence and comply with anti-money laundering (AML) and combating the financing of terrorism (CFT) requirements.

Sextortion is an increasingly prevalent online crime targeting teenagers, particularly teenage boys according to the Federal Bureau of Investigation (FBI). Perpetrators often pose as peers using fake profiles to solicit explicit images or videos from their victims. Once received, the images that have been obtained are used to extort money, using threats. Criminals will use threatening tactics, playing on the victims shame and embarrassment, saying they will expose the images to friends and family or on social media if their demands are not met.

Victims of sextortion may be pressured to provide additional images, and blackmail can escalate rapidly, leading to severe psychological distress, including self-harm or, in the worst-case scenario, suicide. According to FBI data, over a 17-month period from October 2021 to March 2023, sextortion involved at least 12,600 victims—primarily boys—and led to at least 20 suicides.