The FinFluencer Risk - Posts to Prosecutions

Not as glamorous as the lifestyle influencer or as relatable as the food influencer, the finance influencer (FinFluencer) is aspirational yet strategic, persuasive, and usually walking a fine line between advice and sales.

In 2023, a high-profile influencer couple, Dilan and Engin Polat, who have a combined social media following of 8.2 million, were arrested with 12 others on charges of money laundering, tax evasion, and illegal betting.

According to reports from the Turkish authorities, 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.

A wider investigation into 600 social media influencers suspected of similar illegal activities in Turkey, has since begun.

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 online.

Increasing numbers of young people are falling victim to scams, and FinFluencers now often play a part.

Over 70% of 18 to 29 year olds have reportedly said they trust the advice of social media influencers and 9 in 10 young followers have been encouraged to change their financial behaviour.

Steve Smart at the FCA said:

“FinFluencers are trusted by the people who follow them, often young and potentially vulnerable people attracted to the lifestyle they flaunt.

FinFluencers need to check the products they promote to ensure they are not breaking the law and putting their followers' livelihoods and life savings at risk.”

These FinFluencers are not FCA authorised and are unqualified to be giving financial advice to the younger and often very impressionable age groups who follow them.

In May 2024, the FCA charged social media influencers, with a combined Instagram following of 4.5 million people, in relation to promotions of unauthorised investments.

In 2023, France in response to the rise in online FinCrime, adopted the Influencer Act to regulate influencer marketing on social media, cracking down on what people can monetise and promote online.

This new law now makes it unlawful for influencers to create paid content promoting, online sports betting sites or financial products like cryptocurrencies and even cosmetic surgeries.

Influencers and companies caught violating the law could face up to two years in prison and 300,000 in fines and see their ability to post on platforms potentially be revoked.

There's currently no specific "Influencer Act" in the UK, influencer marketing is being regulated by the Advertising Standards Authority (ASA) and the Competition and Markets Authority. Its principles of transparency, honesty and integrity are quite subjective…

While several countries have already begun to grapple with the regulation of influencer marketing, and we await UK regulations to reflect the heightened scrutiny surrounding the products promoted by ‘FinFluencers”, FIs also need to make individual efforts to understand the FinCrime risks associated with this new economy and take proactive steps to mitigate them.

The question isn’t in what way are social media influencers affecting your financial services, the fact is that they already are.

To strengthen your personal and commercial defences with tailored solutions, I welcome the opportunity to connect.

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