Archive for the ‘Money Laundering’ Category

Technology playing an important role in financial crimes

Tuesday, March 10th, 2009

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Money related crimes have seen an increase in the past decade. This has been attributed to the recent technological advances that the world has seen. With the advent of the internet and wireless technologies, it has become more than easy to perform crimes. On the other hand, it has become more difficult for crime prevention units to combat them. Among the high tech crimes that have affected the society, Currency counterfeiting, money laundering, intellectual property crime, payment card fraud, computer virus attacks and cyber-terrorism have been named by the Interpol as few of the most dreaded crimes committed by criminals across the globe.

Money laundering and currency counterfeiting have the potential to destabilise national economies and threaten global security, as these activities are sometimes used by terrorists and other dangerous criminals to finance illegal activities or conceal their illegal money. Intellectual property crime has turned out to be a major financial concern for car manufacturers, luxury goods makers, media firms and drug companies to name a few, with the World Health organization claiming that more than 60% of the pharmaceuticals out in the market are fake.

Whilst new technologies benefit people in numerous ways, they open up many possibilities for criminals to carry out traditional financial crimes in ways never imagined before. One of the most widely used tactics employed by criminals over the internet is ‘Spam’.  Spam is used by criminals across the globe to fraud customers in increasingly sophisticated ways combined with ‘phishing’ to commit fraud and even money laundering.

Authorities in USA had busted up an international racket and charged a gang of 38 people who sought innocent parties’ personal information through phishing emails and smishing (sending SMS text messages via cell phones). The gang used phishing by luring users who clicked on links contained in spam e-mails into a fraudulent website – posing as a legitimate online bank, where they were tricked into entering sensitive information like passwords and bank details. This information was being sent into the gang’s personal database to be then later used for conducting frauds and money laundering.

Criminals can use another individual’s Internet access, which would guarantee the unauthorised user a great degree of anonymity. This can then be used to get into the individual’s bank accounts, or spy software can be installed on the computer to gather sensitive information like usernames and passwords for bank accounts. Hackers with an extensive knowledge of computers and networking can “hack” into databases and retrieve account information.

In the internet world, there is a high price for this kind of sensitive information. Information such as credit card numbers are traded over IRC channels on the internet, and they are bought by criminals. The hackers lack the skills to do anything with the data they steal and the old-time criminals lack the technical skills to get the data. The internet is the meeting point for these two different types of people.

Technology clearly has two faces. While one face of technology benefits people by making it easier to manage their finances, the other face of it is exploited by criminals to gain access to easy money. It is easily apparent that people are being increasingly exposed to the technological era of crime, and they need to be more careful than ever before, to keep their hard earned money safe from the hands of these high-tech money stealers.

Money Laundering – is it a common thing?

Monday, March 9th, 2009

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Money Laundering - by definition means to hide illicit income, or disguise it in a form that it no longer appears to be illegitimate. This can be done in a variety of ways. Money laundering can be as simple as stashing away illicit cash in a big bag, so that apart from the person hiding it, nobody else knows about it.  In the modern world however, criminals tend to lock up their illicit money in foreign banks, with less stringent bank laws, or hide it in the form of investment in a business, or discreetly purchase personal property.

Money laundering is a punishable offence by law. In October 2005, U.S congressman Tom Delay was charged with money laundering, forcing him to step down as House Majority Leader. In U.S the average prison sentence for Money laundering is six years.  In late December 2006, the Chinese authorities uncovered a five billion Yuan (633 million U.S Dollars) money laundering scandal, the country’s biggest ever. Apparently this scandal was only accidently exposed following a probe into false business registrations, raising fears over how money laundering can be easily concealed.

With the rise of global finances, money laundering has become easier than ever. Countries with bank secrecy laws are directly connected with countries with bank-reporting laws, making it easy to carry out anonymous transactions to deposit “dirty” money. Also, with recent technological advances, money can zip through two countries in a flash. Considering that an estimated 700,000 wire transfers occur daily in the United States moving well over $2 trillion, illicit wire transfers are easily hidden.

The advent of internet and electronic cash has made money laundering an easy affair, and extremely difficult to trace. DigiCash, a form of electronic cash introduced by an Amsterdam based company is said to be the most secure form of electronic cash available. It uses a technology called ‘blinding’ which makes it unconditionally untraceable, thus making it a boon for money launderers across the globe. Recently UK authorities busted a gang of international criminals trying to launder £229 million from a City bank by exploiting the high-tech security measures designed to protect money transfers.

That brings us to our next question. Is money laundering only used by individuals to hide their illegitimate money? Recently, the United Nations’ crime and drug watchdog has indicated that “dirty” money  made in the illicit drug trade has been used to bailout large banks in the global financial crisis, since it was the only form of liquid capital available. The amount of money involved in this bailout is said to be hundreds of billions, which could make this the largest money laundering operation in the history of the world.

While it is impossible to ascertain the statistics of money laundering, a frequently cited figure places it to be about 2-5% of the worldwide global economy. With no discreet data available for the statistics these are just mere guesses and the actual figures are estimated to be much higher. Money laundering is a huge problem, and although current money laundering laws apply to cyber laundering, their efficiency is rather limited.

The truth is that although Money laundering may not be a common thing now, technology has created the means and ability to launder money by use of completely untraceable digital currency, and the future may have something different in store for us.