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Criminal Money Flows on the Internet: Methods, Trends

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Criminal Money Flows on the Internet: Methods, Trends www.coe.int/moneyval www.coe.int/cybercrime MONEYVAL (2012) 6 9 March 2012 Typology research Criminal money flows on the Internet: methods, trends and multi-stakeholder counteraction1 1 th Adopted by MONEYVAL at its 38 Plenary meeting (5-9 March 2012). Criminal money flows on the Internet – March 2012 Table of contents 1 Introduction ................................................................................................... 6 1.1 Objective of the study .........................................................................................................6 1.2 Methodology ......................................................................................................................7 2 Overview of initiatives and issues involved ...................................................... 9 2.1 Context .............................................................................................................................9 2.1.1 Measures against cybercrime ...........................................................................................9 2.1.2 Measures aimed at money laundering and the financing of terrorism, and at the search, seizure and confiscation of proceeds from crime .......................................................................................10 2.1.3 Key international standards ...........................................................................................11 2.2 Cybercrime: threats, trends, tools and infrastructure ............................................................12 2.2.1 Types of cybercrime......................................................................................................12 2.2.2 Cybercrime tools and infrastructure ................................................................................13 2.2.3 New platforms for cybercrime.........................................................................................17 2.2.4 Organising for cybercrime..............................................................................................18 2.3 Proceeds generating offences on the Internet.......................................................................20 2.3.1 Fraud ..........................................................................................................................21 2.3.2 Other proceeds generating offences on the Internet ..........................................................30 2.4 Mapping cyber laundering risks and vulnerabilities................................................................33 2.4.1 Technological risks........................................................................................................34 2.4.2 Anonymity ...................................................................................................................34 2.4.3 Licensing and supervision limitations...............................................................................35 2.4.4 Geographical or jurisdictional risks..................................................................................36 2.4.5 Complexity of laundering schemes ..................................................................................37 2.4.6 Other risks...................................................................................................................37 3 Typologies and selected case studies ............................................................. 38 3.1 Criminal money flows on the Internet and money laundering methods, techniques, mechanisms and instruments ...........................................................................................................................38 3.1.1 Money remittance providers ...........................................................................................39 3.1.2 Wire transfers /take over or opening of bank accounts ......................................................41 3.1.3 Cash withdrawals..........................................................................................................43 3.1.4 Internet payment services .............................................................................................44 3.1.5 Money mules................................................................................................................47 3.1.6 International transfers...................................................................................................50 3.1.7 Digital/electronic currency .............................................................................................51 3.1.8 Purchase through the Internet........................................................................................52 3.1.9 Shell companies ...........................................................................................................53 3.1.10 Prepaid cards ...........................................................................................................54 3.1.11 Online gaming and online trading platforms .................................................................56 3.2 Indicators of potential money laundering activity: money laundering red flags/ indicators .........56 4 Countermeasures .......................................................................................... 59 4.1 E-crime reporting .............................................................................................................63 4.1.1 Internet Crime Complaint Centre (IC3)............................................................................64 4.1.2 MELANI .......................................................................................................................64 4.1.3 National Fraud Reporting Centre .....................................................................................65 4.1.4 Internet Crime Reporting Online System (I-CROS)............................................................65 2 Criminal money flows on the Internet – March 2012 4.1.5 Signal Spam ................................................................................................................65 4.1.6 E-Crime reporting: using a common data format ..............................................................66 4.2 Prevention and public awareness ........................................................................................66 4.3 Regulatory and supervisory measures .................................................................................66 4.3.1 Risk management and due diligence measures.................................................................66 4.3.2 Due diligence for registrars and registries ........................................................................68 4.4 Harmonised legal framework based on international standards...............................................69 4.4.1 Implementation of the Budapest Convention on Cybercrime...............................................69 4.4.2 Implementation of the Convention on Laundering, Search, Seizure and Confiscation of the Proceeds from Crime and on the Financing of Terrorism..................................................................69 4.5 Establishment of specialised units for high-tech crime ...........................................................70 4.6 Inter-agency co-operation .................................................................................................72 4.6.1 Germany: Project group “Electronic payment systems” .....................................................72 4.6.2 Albania: Memoranda of co-operation ...............................................................................73 4.7 Public-private co-operation and information exchange...........................................................73 4.7.1 The Irish Bankers Federation (IBF) High Tech Crime Forum ...............................................73 4.7.2 Hungary: Incident management working group ................................................................74 4.7.3 US National Cyber-Forensics & Training Alliance - NCFTA...................................................74 4.7.4 Information Sharing and Analysis Centres (ISAC) for the financial sector.............................75 4.7.5 European Financial Coalition against Commercial Sexual Exploitation of Children Online ........76 4.7.6 Electronic Crimes Task Forces (US Secret Service)............................................................76 4.7.7 The European Electronic Crime Task Force (EECTF)...........................................................76 4.7.8 Contact Initiative against Cybercrime for Industry and Law Enforcement (CICILE) ................77 4.7.9 Guidelines for law enforcement/ISP co-operation in the investigation of cybercrime ..............77 4.8 Training ..........................................................................................................................78 4.8.1 The European Cybercrime Training and Education Group (ECTEG) ......................................78 4.8.2 The University College Dublin Centre for Cybercrime Investigation (UCD CCI) ......................79 4.8.3 South-eastern Europe – law enforcement training strategies ..............................................79 4.8.4 Council of Europe training concept for judges and prosecutors............................................79 5 Findings........................................................................................................ 81 5.1 Cybercrime and criminal money flows .................................................................................81
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