The nature of transnational crime today can be broken down into three fundamental steps. Collection, Monetization and Laundering. This is not anything new yet the evolution of "Policing The Globe"
has made dramatic leaps in the past few years. New Legal Attaches (Legats), Memorandums of Understanding with INTERPOL and other national law enforcement entities has created an increased coordination and cooperation across borders and continents.
Data warehousing, convergence of records data and more sophisticated methods for link analysis from companies such as i2
has made the detection and investigation of potential incidents more effective.
When the Collection phase
is focused on harvesting Personal Identifiable Information (PII) for the purpose of ID Theft using Botnets or other cyber-related ploys the consumer will consistently suffer the direct effects. The retail banking institutions will be the ultimate target of the next phase of the criminal life cycle, the Monetization phase
Using PII to gain access to bank accounts is taking on different forms these days, especially during times of economic hardship. The HELOC refinancing trends are upon us and at the same time the unsuspecting homeowner may be giving up vital equity that still exists in their loans or lines of credit, to criminal elements. Once any of these scams and frauds are completed the funds are quickly turned into cash using wire transfers, ACH and or even the old reliable ATM using 3rd parties. And it doesn't even have to go this far, when you can sell PII for cents or dollars per record in terms of it's quality and whether the targets have a stellar credit score or deep equity.
And finally we find that funds are then turned around into other business ventures to help conceal the source or origin of the proceeds, so that the money goes through the enevitable Laundering phase
Now let's look at it through the lens of an OPS Risk
"Pirates, bandits, and smugglers have bedeviled governments since time immemorial. Politicians and media today obsess over terrorism and trafficking in drugs, arms, people and money. Far less is said or known, however, about the expanding global reach of the police, prosecutors, and agencies like Interpol and Europol charged with targeting transnational crime."
Peter Andreas and Ethan Nadelmann in their book, "Policing The Globe
: Criminalization and Crime Control in International Relations" provide analysis and bridge the connections between justice and politics.
To what degree does your institution actually initiate proactive due diligence on your own, to try and identify who is attacking your organization or your assets? The nexus with Operational Risk has to do with the legal compliance and transnational agreements with other nations on what the "Rules of the Game" are for privacy, investigations and obtaining evidence. More importantly what are the coordination and cooperation activities with your own domestic and the foreign jurisdictions for a prosecution strategy, especially if you have employees and operations in-country?
This morning an explosive device
was detonated in front of a defense recruiting office in Times Square, New York City by a bicyclist. This incident could be a precursor to a potential terrorist suicide attack or most likely, just a disgruntled war activist. A few days earlier, domestic Ecoterrorism
is suspected in the burning of three high value homes in the Seattle, Washington area.
"The mention of a bicyclist raised possible links to a May 2005 bombing at the British Consulate and an Oct. 26 explosion at the Mexican Consulate," the New York Daily News notes. "In both cases, police said, the suspect was possibly riding a bicycle when hollowed-out grenades - filled with black powder and a fuse - were tossed into the consulates. No arrests were made in those attacks."
Whether the ID theft crimes are committed online collecting zeros and ones from unsuspecting consumers or businesses without the proper controls in place or the direct physical attack on specific or symbolic assets, the transnational question is in the forefront of many peoples minds.
While it's too early to try and connect these two incidents to the same individuals or to countries outside the United States, one thing is certain. The laws, tools and capabilities of International Law Enforcement are accelerating at a more rapid pace, as new operational risks emerge on a global scale. Politics will in some cases, try to influence the agenda and to unleash sanctions that diplomats and State Departments will work on collaboratively to achieve preemptive law enforcement agendas.
Here then are some of the steps the State Department said Barbados
had taken in recent years to prevent fraud and money laundering:
- Extended the money laundering laws to cover offenses other than those involving drugs.
- Forced financial institutions to report suspicious transactions that may involve criminal activities, such as terrorism.
- Enabled the police to pursue "all potential prosecutions" of money laundering.
Placed the burden of proof on accused persons to demonstrate that property in their possession was "derived from a legitimate source". Failure to do so could lead to a presumption that it was acquired through illegal means.
The transnational ecosystem of crime control and international relations will continue to be a challenging arena for global enterprises. Ensuring that Operational Risk Teams are well equipped to provide assistance to investigators, law enforcement and government agencies is essential. Simultaneously preparing your employees for their inevitable exposure to these cases, law suits and incidents is a proactive strategy executives are actively investing in.
Liechtenstein remains vulnerable to money-laundering despite efforts by authorities to tighten regulations, International Monetary Fund and Council of Europe experts said Wednesday.
The tiny Alpine principality, currently at the heart of an international tax evasion scandal, offers "discreet and flexible legal structures, strict bank secrecy and favourable tax arrangements," the IMF said in a report.
Around 90 percent of Liechtenstein's financial services business is provided to non-residents, it noted.
"By it's nature, Liechtenstein's financial sector business creates a particular money laundering risk," the IMF said.