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Information technologies and money laundering

By Vladimir Golubev
Date: June 13, 2003

Stop Cyber Crime The rapid development of information technologies and their introduction in all fields of social activity increases cases of use these technologies in criminal activity.

The Ukrainian Committee on fighting organized crime and corruption pays special attention to the spreading cybercrime in Ukraine, including money theft and money laundering with the use of "conversion centers" (the criminal organizations, which are in the conversion of non-cash means into cash ).

Skilled experts in economic and financial sphere who having corrupt relations with the bank's officials, authorities and leaders of criminal groupings act as the organizers of "conversion centers". At the same time, leaders of criminal groups not only use the "conversion centers" for money-laundering, but take a direct participation in the organization of "centers'" activity. Therefore, "fictitious business" has the strongly pronounced organized character and the following attributes: the creation of criminal group^; the thorough training and planning of crimes in view of distribution of roles of each participant^; the observance of criminal "hierarchy"^; the presence of constant corrupt relations^; the conspiracy.

Experience shows that one of widespread ways of the illegal incomes legalization on territory of Ukraine is the conversion of non-cash means into cash with use of "conversion" centers. The scheme of this operation is the following: the Client - the resident of Ukraine - has an opportunity to get certain goods (as a rule, it is stolen production, the contraband, etc.).

The seller wishes to receive payment in cash. With the purpose of legalization of illegal goods the client needs documents of covering. So client contacts the dispatcher of the "conversion center" and gets the information on Essential Elements of fictitious firm, which account will be used for transfer the non-cash means. They arrange about commission and terms of performance of the order. The client transfers means from the bank account into the account of fictitious firm^; then he informs dispatcher about transfer^; specifies the sum of the transferred means, number of the payment order, a maturity date. The dispatcher of "conversion center" informs the operator of fictitious firms control centre on client's intention to transfer means to the account of fictitious firm. After transfer dispatcher informs the operator about number of the payment order, the sum and date of transfer. The operator checks the fact of receipt of money on the account of fictitious firm and prepares documents for drawing out money from the current account of fictitious firm. Then operator hands courier the documents. The courier receives cash in bank and delivers money to the center and informs the dispatcher about it. The dispatcher contacts the client and fixes reception time. The client comes to the center and receives cash. Then the client goes to the processor of documents that forges the signature of "fictitious" director and imprint on the client's documents, i.e. the client receives documents for legalization of the received money. One fictitious firm carries out about 150 operations a day. The term of existence of fictitious firm is about 10-30 days. The money turnover makes about 10-15 million Ukrainian Hrivnas (about $2-$3 million). Then the account of fictitious firm is closed.

The criminal activity of «conversion centers» causes the essential damage to economic interests of Ukraine: the tax evasion and outflow of capital.

Computer Crime Research Center

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