Organized crime trends

1
Organized crime trends

• No longer predominantly homogeneous ethnic groups
  with distinct rules of conduct, ie Godfather
  film
• OC is now best understood as small, loosely
  structured, multi-ethnic networks that adapt
  quickly to any opportunity in the market place
• Regroup, merge, disband on a regular basis due to
  police intervention, competition and other
  opportunities.

2
OC in Canada

• No single dominant OC group in Canada
• A number of significant criminal organizations,
  operating out of keys areas Vancouver, Toronto
  and Montreal.
• Within past 5 years, number increased from 600
  groups to 900 groups (better collecting info)

3
Criminal specialists and niche skills

• Where critical skills necessary to facilitate
  criminal activities are absent within a criminal
  group, skilled outsiders are recruited or
  exploited to provide this service. The
  individual may be considered an outside
  contractor or part of the criminal network.
  Services can range from accountants, lawyers,
  hackers and cyber criminals, money launderers and
  those with access to vast quantities of financial
  data.

4
Global Trends and Opportunities

• Rapidly Growing Economies such as China and
  India will continue to grow their middle classes
  as industry and commerce expand. OC will flourish
  in these environments as well as legitimize their
  proceeds and industries. Also potential to
  undermine the political mechanisms of such
  countries through corruption and manipulation of
  the economy.

5
The Counterfeit food industry

• Worth an estimated 49 Billion a year and the
  demand for inexpensive food virtually guarantees
  the problem will persist and grow.
• e.g. In 2008 in China milk adulterated with
  melamine (a chemical that makes the milk appear
  to have a higher protein content) caused 900
  infants to be hospitalized for kidney problems, 6
  of whom died.

6
The Counterfeit Goods Industry

• A wide range of counterfeit products, of varying
  quality, have infiltrated the N.A. marketplace.
  Counterfeit goods are smuggled into N.A. from
  Asian countries, particularly China, although
  major sites are also located in Thailand, Turkey
  and Russia. OC groups will continue to capitalize
  on opportunities to expand the availability of
  counterfeit goods via the Internet through
  fraudulent online stores, unregulated pharmacies
  and loosely monitored auction and classified ad
  sites.

7
The European Union Emission Trading Scheme

• Largest multi-national greenhouse trading system
  in the world, worth about 140 Billion
• Companies in Europe that produce emissions like
  carbon dioxide are given an allowance to emit
  without penalty, if company exceeds its limit it
  must buy emission credits from companies that
  produce less then their limit.
• Europol reports that between Oct. 08 and Dec. 09,
  7B was defrauded by EU OC.
• 2012 Western Climate Initiative is scheduled to
  take place in N.A.

8
Reducing Emissions from Deforestation and
Degradation

• UN backed effort to Reduce Emissions from
  Deforestation and Degradation (REDD) will provide
  opportunities for fraud. REDD aims to offer
  billions of dollars to developing countries to
  conserve and restore their forests by allowing
  them to earn carbon credits that can be sold to
  developed countries that need credits to meet
  greenhouse gas emission reduction targets.
  Fraudulent schemes could claim carbon credits for
  non-existent forests.

9
Smartphones

• Becoming more and more common and their use has
  expanded with the ability to manage finances and
  contain records of all types of personal
  information. In Japan they have essentially
  become the new wallet, allowing users to buy
  food, drinks and transit fare, among other
  things. Many of these new technologies are
  becoming available in N.A. and are opportunities
  for criminals to target to steal information and
  money.

10
Cloud Computing

• Refers to software and resources that are
  accessible on the Internet and that were
  previously stored on company and individual
  computers.
• This method of storing and accessing data is
  expanding and being spearheaded by companies such
  as Google (e.g. Google Docs allows users to store
  documents online and access them from any
  computer).
• Provides opportunity to acquire all manners of
  personal and business info from centralized
  locations rather than millions of individual
  computers

11
Securities Fraud (AKA investment or stock-market
fraud)

• Current global economic conditions exposed
  several large-scale investment frauds (e.g.
  Ponzi Schemes) as investors sought to withdraw
  their cash only to discover it was no longer
  there. Building on investor fears and mistrust of
  the major banks, fraudsters see an opportunity to
  represent fraudulent investments as being secure
  and highly profitable. Re-victimization.

12
Ponzi Schemes

• Commonalities/trends seen in recent cases
• Tended to rely on infinity fraud targets
  religious groups, business groups, seniors
  groups, ethnic groups, social clubs. Fraudster
  was either a member, know someone in the group or
  posed as a member.
• People less likely to question advice that comes
  from someone they know
• Victims also often reluctant to report them to
  authorities or testify against them
• Unregistered financiers offering impossible
  returns

13
Securities Fraud Contd

• Starting to see more and more hybrid market
  manipulations combine elements from several
  schemes.
• Mass Marketing (e.g.Boiler rooms) are still
  prolific. However online social networking sites,
  such as MySpace and facebook, bulletin boards
  like Craiglist and Kijijij are providing new
  mediums.
• Using VoIP no fixed address, extremely
  difficult to locate and dismantle.

14
Securities Fraud contd

• Using virtual marketplaces, electronic trading
  systems and wire remittances to access victims,
  buy/sell data, and transfer funds anonymously
  through multiple jurisdictions.
• Brokerage account hijackings are increasing due
  to the availability of black-market websites that
  illicitly sell the tools and services required to
  hack into secure accounts.

15
Credit Card Fraud

• A transition from magnetic stripe debit and
  credit cards to ones embedded with microchip
  technology is currently underway in Canada, with
  a complete implementation to take several years.
  
• Expected to reduce credit card fraud but will see
  displacement of using Canadian credit data to
  places without this technology and also when used
  to purchase items online, by phone or mail order,
  i.e card-not-present transactions.

16
Increase in online banking usage

• Hackers target online sites and use malware and
  keystroke-logger programs to steal credit card
  data in order to bypass the need for skimming
  activity. This trend will continue to increase as
  online banking continues to grow in popularity.

17
Mortgage Fraud

• Involves the cooperation of mortgage industry
  insiders, such as bank employees, real estate
  agents, mortgage brokers, lawyers, credit agency
  employees, lenders and title insurers.
• Knowingly or unknowingly accept false personal or
  financial info, use inaccurate appraisals, or
  transfer mortgage funds to an individual knowing
  they will be misused.
• Criminal groups recruit (or coerce) new
  immigrants to act as nominees on fraudulent
  mortgage applications.

18
Charity Fraud

• Online crooks have become more skilled at
  masquerading as legitimate organizations
  soliciting disaster-relief funds
• Trying to predict the next big natural disaster
  and scooping up domain names that sound like
  charitable donation sites
• Unsolicited emails directing them to official
  looking websites

19
Law Enforcement Challenges

• Lack of resources to pursue all cases limited
  number of resources and budgets, more and more
  cases
• Investigations span years
• Lack of skilled investigators, turnover rate,
  high competition between units for skilled
  investigators

20
Law Enforcement Challenges contd

• Lack of ongoing training no formalized training
  courses (except 2 week introductory level
  course), training is ad hoc
• No minimum sentences maximum sentence in
  current law is 14 years for fraud over 5000, and
  2 years for fraud under 5000, but no minimum
  sentence,

21
International Roadblocks

• Unlike criminal organizations, police are
  hampered by jurisdictional boundaries
• Only a limited number of MLATs in effect
• MLAT requests take months
• MLAT process is very complex and long
• Mistrust between police in one country against
  another

22
International Roadblocks contd

• Dependent on the other police organization and
  may not have the same skill level
• Lack of corresponding offences
• Refusal to provide assistance
• Delay in processing the request by the other
  police organization (not same priority)

23
2009 Statistics

• Thirty-eight percent of Canadians have been
  approached with a fraudulent investment, 11 of
  which actually invested money in a fraudulent
  investment. Across Canada, 4 of population
  report being fraud victims.
• Canadians are mostly targeted for investment
  fraud through email (33), by a stranger on the
  telephone (28) or through a friend, family
  member, neighbor or co-worker (18).

24
2009 Statistics contd

• Twenty-one percent of victims are victimized
  twice.
• Eight percent of fraud victims report being
  victimized three to five times.
• The average amount invested in fraudulent
  investments was 7,634. Thirty-eight percent
  invested over 5000.
• Most money is never returned to the victims. 70
  of victims never recover any money.

25
Victim Profile

• Anyone can be a victim of fraud but a recent
  Canadian study of investor fraud shows that there
  are certain risk predictors of those who are most
  likely to invest in a fraudulent investment
• Over-confidence individuals who dont share
  decision-making with someone in the household and
  are very confident about making investment s
• Frequent traders individuals who trade on a
  weekly

26
Victim Profile contd

• Risk-oriented individuals who consider
  themselves aggressive, agree that the greater the
  risk the greater the reward and tend to feel that
  they must act immediately to get in because they
  may miss the good opportunity.
• Highly educated of fraud victims surveyed, half
  have college or university undergraduate degrees,
  and 10 had postgraduate degrees.

27
Final Thoughts

• OC is so pervasive it demands coordination and
  sharing of information among all government
  agencies, law enforcement agencies, intelligence
  agencies, private organizations and the public.
• No single organization has the sole
  responsibility for addressing this problem. We
  must share information and work together.
• OC transcends borders and access over many law
  enforcement jurisdictions and therefore need
  better integrated law enforcement, laws and
  treaties.