Operations

Fraud Across the Pond

As in the U.S., financial institutions worldwide face expanding global fraud and payment schemes.

November 01, 2010
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The lack of a cross-border vision by regulators, and no real urge to look at a much wider picture when it comes to global financial crime, gives criminals a huge advantage. It gives them the opportunity to stay out of reach of justice.

For many years, organized criminal groups have targeted neighboring countries, driving or flying from one place to the other seeking easy hits and vulnerabilities.

Fraudsters either use foreign payment cards skimmed elsewhere, phish for data on the Internet, or shop on one of the many live “dump sites” where a large variety of consumer data are sold as on an auction site.

Data of thousands of innocent customers circulates daily on dodgy websites and underground forums. When taken down, they reappear under other names with the same speed.

This happens time and time again because there are still no applicable laws in effect today to safeguard from such reoccurrences of fraudulent activity.

ATM fraud, for example, has increased significantly in the UK over the past five years, although it accounts for less than 10% of all card fraud there. Card skimming at ATMs is a growing trend, often perpetrated by organized Eastern European criminal gangs.

When perpetrators eventually are arrested, it’s often revealed that they’re foreign nationals who have data stolen from another country to buy goods in yet another country. Therefore, the local charges typically are minor and risks to the perpetrator are minimal.

Prosecutors or examining judges often don’t want to invest further efforts as the local impact often is low. In many cases, the crimes never end in conviction.

There are large differences in approach when taking into account most European Union countries, not only on the law enforcement side but also in terms of cooperation, the exchange of information, the possibility of convictions, and data privacy laws.

But the biggest questions remain unanswered: What about the money flow? Where are funds being transferred to?

There are a wide variety of “money transfer” facilities that have no interest in being compliant with anti-money laundering regulations. Such facilities provide safe havens for fraudulent transactions.

Throughout Europe, more of these small, family-owned money transfer/international phone shops are opening. It has become apparent that these types of organizations are mainly run by a weary group of people with an unclear business involvement.

Next: Terrorist funding

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