Luxury on the Surface: Social Media Influencers and Financial Crime

Over the last decade, social media platforms have evolved into lucrative arenas where some users strive to amass thousands of followers and generate significant revenue streams. The attractiveness of fame and fortune has led to the creation of a generation of new online personalities – the influencers – who showcase their extravagant lifestyles, perfect homes and designer wardrobes. But amid the glitz and glamour of social media, it can be all too easy to overlook the dark side.

In 2023, the global influencer market was worth $21.1 billion, a figure that has tripled since 2019. And as influencers showcase their money-making abilities, they also become attractive assets for criminal groups seeking to exploit the sector for their own benefit. Ostentatious displays of wealth can provide the perfect cover for illicit financial activity, while an influencer’s public following can add a veneer of legitimacy.

A recent scandal in Turkey has shone a spotlight on the issue. In November 2023, a high-profile influencer couple, Dilan and Engin Polat – who have a combined social media following of 8.2 million – were arrested alongside 12 others on charges of money laundering, tax evasion, and illegal betting. The couple had long captivated the interest of social media with their extravagant spending, from using 100-dollar bills as hair rollers and professing their love on a Times Square billboard to viewing their newly bought house on a helicopter ride. Amid their rise to social media fame, they also ventured into various businesses, including a chain of beauty salons spanning 36 Turkish provinces, a cosmetics line, and a diamond brand.

Yet, according to reports from the Turkish Financial Crimes Investigation Board (MASAK), the Polats funnelled around 200 million Turkish lira (approximately $7 million) into shell companies that the couple owned, using fake invoices to give the appearance that the funds were generated through trading relationships with companies which had been liquidated. While the ultimate source of the money is unclear, Turkish authorities believe it to be the proceeds of crime, and investigations are ongoing. The laundered funds were then dispersed to various family members who used it to buy luxury real estate and other high-value assets.

While the case continues to unfold, the ramifications of the Polats scandal resonate far and wide. It has prompted a wider investigation by Turkey's Labour and Social Security Ministry into 600 social media influencers suspected of similar illegal activities. While the alleged money laundering techniques may not be new, what sets this case apart is the exploitation of new avenues like social media and the brazen public demonstration of the proceeds of crime.

The concerns around the ease with which social media influencers can be involved in illicit activities does not end with platforms like Instagram or Facebook. Consider Twitch, a leading live streaming hub for gamers, where viewers can support their favourite streamers with Twitch bits (costing $0.01). These bits can be converted into a real currency and cashed out by influencers/streamers once they accumulate $100. However, the ease of creating multiple accounts and the availability of various payment options open the door for potential exploitation of the platform.

In 2021, Turkey detained around 40 suspects, including 31 Twitch influencers, for laundering over $10 million through Twitch. The investigation revealed a sophisticated scheme whereby an organised criminal gang bought Twitch bits with stolen credit cards and sent it to the influencers, who cashed them out, returning the money back to the criminals in exchange for a portion of the commission. Since this, there have been ‘CleanTwitch’ campaigns calling for the protection of the platform’s integrity against money launderers.

These cases in Turkey are not isolated incidents. There have been many cases where social media stars have been implicated in various forms of financial crime. Consider the case of Nigerian influencer Ramon Abbas – also known as ‘Hushpuppi’, with a following of 2.5 million – who received an 11-year sentence in a US federal court for his involvement in a conspiracy to launder funds derived from various criminal activities including online fraud, bank cyber-heists and business email compromise fraud. Hushpuppi was noted for his extravagant displays of wealth on his Instagram account; however, his social media posts also proved to be one of the sources of his undoing, as they were deployed as evidence to establish the charges against him, as well as being used to confirm personal information, like his date of birth. Heather Morgan, who pleaded guilty in 2023 to conspiracy to launder over $4 billion of stolen bitcoin alongside her husband, had an active social media profile as the rapper ‘Razzlekhan’, posting highly produced rap videos in which she claimed to be a ‘money-maker’. An investigation by BBC Panorama in 2021 also found that social media influencers were promoting frauds to their followers, showing off the cash proceeds of their crimes and providing ‘how to’ guides on how to commit financial crime.

Even if an influencer is not directly advertising or promoting criminal activities, their displays of extravagant wealth and glamorous lifestyles attract followers, particularly young people, who interact with their content. These followers’ desire to emulate their idols and quickly and easily earn money puts them at risk of being targeted as potential money mules. Recruiters, known as mule herders, may trawl an influencer’s posts and approach some of their followers via direct messages to entice them into becoming involved in criminal activity. This is particularly alarming given that CIFAS National Fraud Database figures released in 2023 indicate that 23% of money mule behaviour is undertaken by individuals under 21, with social media platforms being identified as one of the key conduits for recruitment efforts.

There are inherent risks associated with the unchecked pursuit of fame and fortune in the digital age. Influencers have a right to earn money, and there are many legitimate sources of income for them, such as endorsements from major brands. But it is all too easy for them to get involved, wittingly or unwittingly, in criminal activities. Several countries have already begun to grapple with the regulation of influencer marketing, and heightened scrutiny surrounding the products promoted by ‘finfluencers’ shows growing awareness of the challenges related to fraud, scams and money laundering. However, the responsibility does not end there. Banks and financial institutions should also make efforts to understand the money laundering risks associated with this new economy and take proactive steps to mitigate them. This may include Enhanced Due Diligence on customers who are ‘influencers’ and stronger monitoring to detect suspicious transaction patterns related to funds earned through online platforms. Technology firms should also step up in their role to detect and remove suspicious content, while maintaining vigilance against influencers engaged in illicit schemes.

The influence wielded by social media personalities is undeniable, but with great power comes great responsibility – a responsibility to their followers and to ensure that their activities do not stray into criminality.

The views expressed in this Commentary are the author’s, and do not represent those of RUSI or any other institution.

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