Bojan Ilic – Chairman & Global Director at Swiss Security Solutions, expert in Security & Investigations.
Switzerland’s financial sector is renowned for its stability, but it is also a target for rogue investments and illicit trading activities. The rise of complex financial instruments, digital assets and cross-border investment opportunities has created new avenues for fraudulent actors to exploit unsuspecting investors.
Switzerland has experienced a notable increase in white-collar crime in recent years. Some cases include embezzlement, social security and insurance fraud, money laundering, obtaining personal data without authorization, etc. My Switzerland-based company is in the security and investigations space, and I’ve seen through our work that not all fraud cases are reported to the police, even if they were correctly identified by the victims or company or private detective agencies.
Fraudulent schemes and unauthorized trading practices have cost investors hundreds of millions of dollars, euros and Swiss francs. To mitigate financial risks, investors, capital firms and family offices must employ rigorous safeguards. Here are seven proven strategies from my experience to help protect against rogue investments and rogue trading in Switzerland.
1. Conduct thorough due diligence.
Before engaging in any investment or trading activity based in Switzerland or connected with Switzerland, you need to conduct comprehensive due diligence. Fraudulent schemes often appear legitimate, featuring well-crafted marketing, testimonials and even falsified regulatory approvals.
Hidden financial dangers can be uncovered by checking businesses, credit scores, debts and financial statements; examining previous performance both online and offline; and speaking with impartial specialists at private detective offices or agencies. Investors should also evaluate compliance with Swiss and international financial regulations (like anti-money laundering) and cross-check the business histories of important management and shareholders.
2. Perform comprehensive background checks.
A key indicator of potential investment or trading fraud is the background of those managers and directors promoting the investment or trading opportunity to potential investors, capital firms and family offices. Professional background checks on executives, financial advisors and firms can uncover prior fraudulent activity, undisclosed bankruptcies or legal disputes that may indicate a high-risk financial engagement.
From our experience, we have noticed that in the past few years, fraudsters have a very specific modus operandi: They take some old registered Swiss company that is not active and without internet presence and offer investments, trading services or real estate loans. They may even personally meet with their targets in other countries before the payment is made.
3. Carry out cyber checks and digital forensics.
Many Swiss rogue traders and fraudulent investment schemes rely on digital deception, including fake identities, cloned websites, cloned phone numbers and manipulated trading data. Advanced cyber investigations and data audits can help. Tools such as IP tracing, forensic metadata analysis and domain verification can help detect fraudulent operations before making any financial commitment.
Investing in cyber investigations as a prevention is far better than loss of the investment. Cyber investigations often help find out who is really behind the investment or trading offer and can help mitigate financial risks and prevent financial loss.
4. Screen for adverse media.
Keeping track of adverse media coverage is essential to identifying potential financial and security risks. Investors, capital firms and family offices should monitor global news sources, sanctions lists, regulatory filings and legal databases to detect any allegations, lawsuits, debt enforcement or regulatory infractions associated with a company or individual. Fraudsters often rebrand and relocate, making adverse media screening a crucial tool in uncovering past misconduct and crimes.
Adverse media screening, a.k.a. negative news searches, can help investors avoid potential alliances with organizations or actors who could be involved with money laundering or other financial crimes. It is a proactive approach to identifying potential financial risks.
5. Verify Swiss regulatory compliance and licenses.
Despite Switzerland’s financial regulations, fraudsters might exploit loopholes and present fake compliance documents. Investors should verify an entity’s regulatory status directly with Swiss authorities, such as the Swiss Financial Market Supervisory Authority. However, investors should check beyond FINMA and can also verify company details through the Swiss commercial register or a self-regulatory organization, which some companies register with instead of FINMA. Switzerland has 11 FINMA-approved SROs ensuring compliance with anti-money laundering laws.
However, keep in mind that even if a company is listed with a regulator such as FINMA, this does not guarantee legitimacy or authorization for investment activities. Particularly when dealing with multi-jurisdictional operations, many operations exist in a gray zone, requiring in-depth financial and intelligence investigations. Additionally, family offices, fintech firms, financial consultants and digital asset companies sometimes operate without requiring a FINMA license. In such cases, thorough due diligence, investigative research and intelligence gathering are crucial to determine whether these entities are operating legally.
6. Consider working with a detective agency or private investigator office.
Due to the complexity of rogue investments and illicit trading schemes, hiring a professional detective agency or private investigator could be a wise decision. Specialists in this field, my company included, conduct investigations to uncover hidden relationships and follow financial trails to confirm the legitimacy of an investment or Swiss trading entity. However, investors should ensure the specialist has proven experience in financial crimes and adheres to Swiss and international legal and compliance standards.
7. Exercise skepticism with high-yield and digital asset investments.
In my experience, many fraudulent schemes in Switzerland revolve around high-yield investment promises and digital asset-based trading. While some digital asset investments are legitimate, they are inherently high-risk and frequently exploited by scammers. Warning signs include guaranteed returns; pressure to invest quickly; unsolicited calls, mostly with U.K. and U.S. phone numbers; and non-transparent business structures.
Final Thoughts
Rogue investments and illicit trading in Switzerland can pose significant threats to investors, capital firms and family offices. Through my extensive experience in law enforcement and financial fraud investigations, I have witnessed how insufficient risk assessment can lead to devastating financial losses. Implementing these seven strategies—due diligence, background checks, cyber verification, adverse media screening, regulatory verification, engaging investigative professionals and maintaining skepticism—can help investors significantly reduce exposure to fraudulent schemes. Protecting your wealth requires vigilance, expertise and proactive risk management.
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