Computer Crime Research Center


THE GLOBAL UNDERWORLD: Terrorists, Drug Traffickers and Organized Crime

Date: November 01, 2004
Source: Mich News Com
By: By Jim Kouri, CPP

... at between $300 billion and $500 billion annually. In addition to proceeds from criminal activities like drug trafficking, substantial amounts of money are being transferred abroad to avoid U.S. taxes.
International criminals invest billions of dollars annually around the world to acquire legitimate businesses as fronts for criminal activity and money laundering. Criminal purchases and investments in legitimate business enterprises drive honest investors away and place legitimate business persons at a comparative disadvantage.

The use of banks and other financial institutions to launder money, finance illicit transactions, or conduct financial fraud also can undermine their solvency and credibility. For example, the collapse in 1995 of Latvia's largest commercial bank occurred because the bank had been controlled by a criminal group that used the bank to make bad loans to its front companies and defrauded the bank's accounts of as much as $40 million. That collapse provoked a major financial crisis in Latvia, contributed to a change in the government and forced Latvia to seek short term assistance from the International Monetary Fund.

Computer Crime
International criminals have the resources and funding to utilize cutting edge technologies very effectively. Emerging new electronic payment systems -- known collectively as cybercurrency -- are particularly vulnerable to criminal penetration and theft because of the speed and anonymity of these transactions and the fact that, so far, they have been largely unregulated. Cybercurrency transactions also can be conducted via the Internet, often without leaving an audit trail. The implications for the international financial system could be severe if criminals acquire the capability to hack into global financial computer networks. For example, in 1994, individuals in St. Petersburg, Russia broke into a U.S. bank's electronic money transfer system. Once inside, they attempted to steal more than $10 million by making approximately 40 wire transfers to accounts around the world. Members of the gang have since been arrested in several countries, and most of the stolen funds have been recovered.

To make matters worse, hundreds of information system vulnerabilities are discovered every day. Most of those vulnerabilities are subsequently posted publicly, usually appearing first on the Internet. World Wide Web mailing lists routinely distribute vulnerability information and software that can be used to exploit vulnerabilities. More publicity usually follows through a succession of books, magazine and newspaper articles, electronic bulletin board messages, and a growing list of Web sites that are targeted at informing a global network of hackers, crackers, "phreakers," and potentially, members of terrorist organizations and foreign intelligence services about the latest methodology for staging cyberattacks. Although broad dissemination of vulnerabilities permits system owners and operators to identify and counter them, the heavy reliance of modern infrastructure systems on information technology nevertheless makes them critical assets highly vulnerable to cyberattacks, and even more vulnerable to cyberattacks accompanied by physical attacks on infrastructure systems.

Industrial Theft and Economic Espionage
The theft of trade secrets, including research and development, production processes, corporate plans and strategies, and bidding information, undermines fair competition and results in significant losses for U.S. businesses. In many countries, industrial theft is an accepted business practice. Foreign companies also seek to outmaneuver or underbid U.S. companies, unlawfully tilting the playing field in their favor. Such activity becomes a form of espionage when foreign governments manage those companies or directly assist in theft of trade secrets. Technological advances, particularly in biotechnology, aerospace, and computer and information systems, have increased opportunities for industrial theft and economic espionage. The American Society for Industry Security, which conducts a comprehensive survey of industrial theft, estimates that theft of trade secrets by foreign competitors resulted in $18 billion in losses to the U.S. economy in 1997.

American firms are also victimized by foreign corrupt business practices. While a recently signed international convention holds the promise that many more countries will halt this practice, the United States currently has the most effective laws in this area. Those laws prohibit U.S.-based companies and companies located in the United States from paying bribes to win foreign contracts. Many other countries have legal systems that permit or even encourage companies to offer bribes as a cost of doing business. Some of these countries allow tax deductibility of bribes. One study estimates that, from May 1994 to April 1997, foreign companies offered bribes for major contracts with a total worldwide value of at least $80 billion.

International criminals produce and use counterfeit U.S. currency and other counterfeit and fictitious financial instruments to make illicit transactions and to finance illegal activities. Of significant concern is the use of counterfeit U.S. money by international terrorist groups to fund their operations. Advanced design, copying and publishing technology is enhancing the capability of international criminals to produce high-quality counterfeit U.S. currency and financial instruments. For example, the percentage of counterfeit U.S. currency passed in the United States that was produced using inkjet color copiers has jumped from 0.5% in 1995 to 39% so far in fiscal year 1998. Most counterfeit U.S. currency is produced outside the country, with about two-thirds of all counterfeit currency detected here in fiscal year 1997 originating abroad.

Threats to Global Security and Stability
As we look ahead in the 21st century, it is increasingly evident that in order for American families, communities and businesses to enjoy safety and prosperity, there must be a level of stability and security not just in this country, but throughout the community of nations. International criminal activities threaten the stability of foreign countries, exacerbate foreign regional tensions, and jeopardize the lives, property and livelihood of Americans living, working and traveling overseas. Americans took over 164 million trips abroad in fiscal year 1997. International criminal activities may also trigger the necessity for a costly U.S. response to protect American interests. They invariably undercut our efforts to promote more cooperative solutions to global problems such as environmental pollution, world hunger and arms trafficking, while also preventing democratic processes and sound economic systems from being institutionalized.

Increasing worldwide criminal activity and the growing power of organized crime groups in certain regions threaten many countries' democratic and free market systems. Using illicit proceeds from criminal activities as investment capital in legitimate businesses, criminals can gain substantial influence or even control over critical sectors of a national economy. To take one example, according to a recent study, organized crime groups controlled 20 percent of construction firms, nearly 20 percent of retail outlets, 25 percent of farm wholesalers, and 50 percent of the finance companies in Italy.

Through violent intimidation, corruption and economic influence, international criminals wield considerable power over governments to protect their illicit operations. The threat to Americans and U.S. businesses in countries where there is extensive criminal activity and corruption can be significant. Lawlessness or the absence of regulatory enforcement permitting free and fair competition leaves Americans with few means to protect their interests from criminal violence and intimidation and often effectively blocks American access to foreign markets.

In some countries with weak democratic institutions or market economies, the interaction of criminals with political elites hampers development of democratic processes and sound economic systems. It also reduces our ability to work with host governments in all respects, including in the fight against international crime.

Drug and Arms Trafficking
In many drug source and transit nations, trafficking groups act with near impunity, maintaining power through bribery, threats, intimidation and murder directed against journalists, law enforcement officials, members of the judicial system and everyday citizens. In many countries, drug trafficking violence remains at levels corrosive to democratic institutions and the rule of law. Drug-related crime, violence, corruption and social decay in some cases threatens national, and even regional, stability.

The availability of large numbers of cheap, high-quality, military-style weapons from Central and Eastern Europe and the Newly Independent States of the former Soviet Union (NIS) continues to fuel international arms trafficking. Although the illicit global arms trade has traditionally been dominated by independent brokers, Russian and Italian organized crime groups have tapped into this trade both to acquire more weapons for themselves and to profit from arms trafficking. In Latin America and the Caribbean, drug trafficking groups are major customers for illicit arms. The illegal arms trade also helps fuel regional conflicts around the world, increasing the threat to American soldiers who may be deployed in peacekeeping missions in trouble spots such as Bosnia.

Weapons of Mass...

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2005-09-01 20:39:25 - Very nice Anelia
2004-11-09 10:54:36 - This is a very good article for reading... HARRY ERIN
2004-11-02 04:15:37 - Excellent article. Very revealing. Well done. chuck miller
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