Sending Money Safely: Eliminating Money Remittance Fraud and Rewriting the African Diaspora’s Story
The moment I decided to form AiDEMONEY, I went to open a bank account. My relationship with the bank stretched back many years. Still, I brought my references, my paperwork—even my wife—to the meeting with my banker. He said that if I survived the due diligence process, I would have the account in about six months. I thought to myself, I’ve had accounts here for years. I don’t even have a speeding ticket to my name. Why wouldn’t I survive due diligence? Still, I left the meeting confident that everything was in motion.
A few days later, I left for Nigeria, where I was meeting with one of AiDEMONEY’s NGO partners. When I swiped my bank card in Lagos, it was declined. I shrugged it off as technology issues. But when I tried to buy myself dinner at the airport, my card was declined again. That’s when I realized something was wrong.
As soon as my plane touched down in Atlanta, I called the bank. They told me they had closed my account and mailed a check for the total balance to my office. When I asked them why this had happened, they said simply that I didn’t qualify for the account. I got back to my office a few hours later, and there it was: the check sitting on my desk, confirming my misfortune.
I’m the type of person who runs on parallel tracks; I always have a “Plan B.” So as the first bank was working through my applications, I also hired a consultant who said he could put me in front of five banks. However, as soon as I started talking to him, the number dropped to three. After considerable back and forth, he finally cut to the chase: Two banks balked the minute they heard I had spent any time in Nigeria. Nevermind that I have been living in the United States for decades, hold two law licenses and a CPA license, and am admitted to all the federal courts. The other three banks were struggling with whether to give me an account. The one bank that did offer me an account did so under terms no reasonable person would accept. Opening the account would have cost me $40,000 on Day One.
Why am I sharing this story? Because if I have to go through this process—an attorney specializing in tax law and anti-money laundering—then think about what other African diaspora go through on a daily basis simply to participate in the American financial system. At the heart of this roadblock is the Nigerian money scam.
Money scams do exist. Fraud happens. At AiDEMONEY, building a 100% secure money transfer pipeline is our top priority—and rightfully so. But solving the challenge requires more than regtech. It also takes education, social impact and, ultimately, a united African diaspora that tells its own story.
Putting Money Scams into Context
In the United States, it’s difficult to find a hospital without a Nigerian doctor. Like the African diaspora as a whole, Nigerian Americans are well-educated, entrepreneurial and have above-average household incomes. Yet when many people hear the word “Nigerian,” the first thing that comes to mind is “money scam.”
There’s no denying that money fraud is a serious issue. FTC data shows that romance scams are on the rise, and the COVID-19 pandemic has exacerbated fraud by limiting person-to-person transactions. AiDEMONEY has invested heavily in all the elements required to eliminate fraud from our platform, including powerful regtech software and blockchain technology. Money fraud is very real, and it’s a problem every fintech leader must take seriously. However, the common narrative would have you believe that Nigerians account for the majority of money scams—and that the majority of Nigerians are committing these acts. In reality, money fraud is limited to a few scam launder rings, or “scamlaunderings,” as they’re often called, that cycle through victim classes and money services businesses. Like so many issues attributed to one ethnic group, money scams have caused repercussions that far outweigh the problem itself.
At my law firm, we started seeing anti-money laundering cases pop up around 2015, when a series of policy changes in Nigeria made it much more difficult to transfer USD into the country. Within a year, the dam had exploded. As the Nigerian government tried to defend the dollar, it triggered increased demand for USD—and a lucrative opportunity for criminals. This laid the groundwork for the money scams that we’ve all heard about: You meet someone online. They fall in love within 30 days. Within 60 days, they’re asking you to send them money.
Banks in the U.S. responded to this dynamic with aggressive action. These changes pushed fraud out of the banks. However, they also caused the overwhelming majority of Nigerians to be denied access to those same financial institutions. Nigerians are one of the most well-educated immigrant groups in the U.S.—a trend also holds true for the entire African American diaspora. They have consistently showcased their ability to earn and prosper, and they’re eager to share that wealth with families back home. Despite this, I saw more and more African diaspora having their accounts seized or declined. It wasn’t just happening on the fringes. I quickly realized that nearly all the Nigerians I knew in the U.S.—from CPAs, doctors and lawyers to workers just trying to survive—were having multiple bank accounts closed without explanation. When I tried to open my AiDEMONEY bank account, I experienced the challenge firsthand.
By defending diaspora clients in court, I gained a full picture of the dynamics at play. The few bad actors perpetrating money scams are typically highly-educated impoverished youth with no opportunity to make a living through legitimate means. Meanwhile, the myth of widespread scams is preventing an entire generation of African diaspora from building wealth in America. Nigerians who complete legal money transfers are increasingly the targets of IRS and Department of Justice investigations, even though they’re often victims of money fraud themselves. Money fraud victims need support. The African diaspora needs support. Impoverished youth in Africa need support. But despite this complex dynamic, one player has the power to eliminate fraudulent activity almost in its entirety: money service companies.
The catch? Doing so requires them to prioritize social responsibility over profit.
The Role of Money Remittance Services
Anyone who has worked in Corporate America already knows that profit is the point of the spear. Managers and executives have one mandate: to deliver a return. By doing so, they can clean up bonuses worth tens of millions, moving on to the next company without having to account for the practices that generated those earnings. This profit-driven mentality causes challenges in any business and any sector. In the money service industry, it directly contributes to an increase in fraud. By encouraging risk-taking, the current incentive structure ignores fraudulent activity rather than combating it.
According to FTC data, gift cards and wire transfers are the most frequent payment methods for romance scams. That puts money remittance services on the front line of battle. Some companies see fraud prevention as a threat to their profit models. AiDEMONEY views it as a game-changing opportunity. By combining leading-edge technology with an impact model, we’re building a 100% fraud-free money transfer ecosystem for the African diaspora and their loved ones back home.
Regtech and Technology Advancements
The regulatory tech, or regtech, market is expected to eclipse $33 billion by 2026. This growth is spurring key advancements that directly impact the security of money transfer services. At AiDEMONEY, powerful technology is one aspect of our multi-prong approach to security. We continually enhance our strategy, protecting the African diaspora from fraudulent activity and ensuring every dollar reaches their loved ones safely.
- Blockchain technology that encourages transparency and eliminates security risks associated with traditional money transfer solutions
- Proprietary regtech software that monitors, identifies and reports irregular activity in real-time
- Machine learning modeling that allows our platform to weed out all but the most insidious fraud
Our team works closely with U.S. authorities to prevent perpetrators from joining our platform. This is just another way that our partnership mentality delivers tangible progress for the AiDEMONEY community. By uniting financial institutions, partners and customers behind our security vision, we’re building an ecosystem with fraud prevention in its DNA.
Through my work on anti-money laundering cases, I’ve gained key insights into the perpetrators of these scams. Although the dynamics are complex, Nigerian money fraud is often rooted in a singular reality: Gripped by poverty and unemployment, highly-educated young people have few legitimate routes to earning a living. In most cases, youth will become superheroes. But a few bad actors will go the supervillain route instead. If we eradicate poverty, we could experience a reduction in crime beyond what we could ever imagine—not just in the case of money fraud, but across all criminal enterprises. Instead, profit remains in the driver’s seat, intent on ignoring the hazards on the road ahead.
As a purpose-driven company, AiDEMONEY makes progress the point of the spear. By investing in communities throughout Africa, we can lift more youth out of poverty and channel the full power of ubuntu: What’s good for you is good for me. I’ve seen firsthand how this support has a trickle-down effect—tilling the ground for meaningful employment and good wages, strong communities, access to healthcare and all the other factors that ensure more youth go the superhero route. That’s the story we need to tell.
What the African Diaspora Can Do
Money transfer companies play a key role in eliminating fraud. So do technologists and regulators. But the true power lies in the hands of the African diaspora. By educating ourselves on money scam warning signs and telling our own story, we can build a stronger community in the U.S. and back home in Africa.
Watch for Red Flags
Most money scams follow a similar narrative: The person contacts you in writing, with photos. They fall in love with you within weeks. Soon, they’re asking for money for anything from work equipment to travel. If you find yourself in this situation, perform a Sherlock Holmes-level investigation to determine the person’s true intentions. This is especially crucial if you’ve never met in person. Other red flags include:
- People whom you’ve never physically met who describe themselves as “Pastor,” “Evangelist,” “Apostle” or other terms rooted in fervent Christianity. This is a common tactic used among scammers to build trust.
- Anyone who contacted you first online. If you haven’t video chatted with the person dozens of times over the last three months, don’t send money.
- Requests for money to fund things such as lost work equipment, hospital bills, or visas and airfare to America so that you can be together
- Poor writing riddled with misspellings and “xoxoxo,” despite the person claiming to be a well-educated professional seeking out love
- A request for urgent financial help paid into an account that is never in their name and changes with every new “ask”
Protect Your Family in Africa
One of the most overlooked money scam victims is the Nigerian resident with a U.S. bank account. Money scam operations often have teams in Nigeria specifically devoted to identifying Nigerians who need USD to fund their child’s tuition or gain more stability for their Naira. Once they earn the trust of the victim, the scammers offer to take the Naira and deposit USD into the person’s U.S. bank account. This gives the perpetrator a golden opportunity: claiming to be a U.S. resident with domestic companies operating in USD and Nigeria subsidiaries paid in Naira. The victim believes what he is told, receiving the dollars in the U.S. account as soon as he gives the Naira to the scammers. But 90 days later, the account is frozen, with funds seized and the FBI beginning forfeiture action in U.S. Federal Court. The victim has lost twice: the Naira paid in Nigeria, and the USD he thought he had safely and legitimately acquired.
Although this scenario might seem far-fetched, I’ve seen it happen almost weekly since the rise of money scams in 2015. If your loved ones in Nigeria have U.S. bank accounts, educate them on these operations, which have become increasingly sophisticated over time.
Choose the Right Money Transfer App
As consumers, we make countless choices each day, moving from “evaluation” to “decision” based on the criteria that matter to us personally. When you choose a money transfer service, seek out a partner that prioritizes both security and social good. Although these elements might seem disconnected, building a fraud-free ecosystem requires an investment in the root cause: poverty and a lack of opportunities for growth. What else should you look for in your money transfer service? Regtech software, a blockchain-based platform and a leadership team that is committed to preventing fraud with a cultural lens.
Telling Our Own Story
During the COVID-19 pandemic, my kids and I got hooked on Hamilton. There’s a song—an entire sequence, really—that asks the viewer to ponder three key questions. Who lives? Who dies? Who tells your story? When founding AiDEMONEY, one of my core visions was empowering the African diaspora to tell our own story. Actions of a few bad actors have shaped the money fraud narrative for years, causing a ripple effect that extends far beyond their scam operations. As the fintech world evolves and global communities become more interconnected, it’s never been more important for the African diaspora to unite behind a shared purpose: funding progress in Africa.
No one person, technology or money remittance platform can eliminate all the challenges stemming from money fraud. But by telling our own story, we can begin to reshape the narrative—empowering the diaspora in America, sending progress to our loved ones back home and, in the process, rooting out money fraud that has impacted so many in our community. It’s time to make progress the tip of the spear.