Missing Link: Digitalization fuels billion-dollar underground economy

The digital acceleration of society is leading to a significant increase in cyber-enabled financial and economic crime. Europol warns about this in a report that has now been published on the “multi-billion dollar criminal underground economy”. For the first time, the European Police Office independently examines “the other side of the coin” of technical networking with an analysis of crimes with an economic background in the EU and assesses the threat. However, the presentation contains some gaps and is clearly interest-driven.

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Cyber ​​component offers “a larger pool of attack targets”

According to the authority, the investigation is based on “a combination of operational intelligence and strategic information” provided by member states and partners. “The entire range of financial and economic crime that affects the EU” is covered. These included in particular money laundering, corruption, fraud, crime in the area of ​​intellectual property law and counterfeiting of goods and currencies.

“Financial crimes committed using computer technology are particularly attractive to criminals,” emphasizes Europol. It helps to conceal cash flows and achieve faster and larger profits. The cyber component offers serious and organized crime “a larger pool of attack targets,” which can often become multiple victims. At the same time, digitalization is leading criminals to develop technologies that, on the one hand, enable the anonymity of the perpetrators and, on the other hand, enable them to work together.

The horror of end-to-end encryption

Encrypted messaging apps, marketplaces on the dark web, cryptocurrencies and other privacy protection technologies conceal the identity of criminals, the authors point to the much-hyped “going dark” scenario. Accordingly, the increasing end-to-end encryption of communication services is making investigators blind and deaf.

However, a US group of experts came to the conclusion in 2016 that this horror story was not particularly valid. According to her, the business models of the majority of social network operators are based on unencrypted user data for personalized advertising. The Internet of Things also brings with it a flood of image, video and audio data that can often be intercepted in real time. European security authorities have also succeeded in intercepting communications on a large scale from more or less well encrypted services such as EncroChat, Sky ECC and Anom.

Crime-as-a-Service

Europol has identified Crime-as-a-Service (CaaS) as a further digital boost for financial and economic crime. Criminal services such as spying or intercepting data are offered, which can be ordered over the Internet. According to the approximately 50-page study, with this approach it is child’s play to rent or buy illegal digital products and technical services, even from criminals, as part of a relevant business model.

According to Europol, CaaS also enables non-technical criminals to carry out illegal activities that actually require IT knowledge. Hackers come together for short-term orders via the online ordering service for individual services. Groups of perpetrators no longer form large, fixed, hierarchically structured networks and are therefore more difficult for the police to identify. The EU prosecutors paint a similar picture to that of the Federal Criminal Police Office, which also presents CaaS as a major threat in its current cybercrime assessment.

What’s missing: In the rapidly changing world of technology, there is often time to re-sort all the news and background information. At the weekend we want to take it, follow the side paths away from the current events, try out other perspectives and make nuances audible.

FinTech as an opportunity for criminals

The report also shows that criminals also see the “rapid technological advances in the financial sector” known as FinTech as an opportunity for their sinister activities. In principle, financial technology is a reservoir for better services in the sector. It drives innovation, strengthens financial inclusion and reduces operating costs. FinTech is now firmly integrated into traditional banking as well as into the systems of non-traditional financial institutions. At the same time, this technology also offers “many opportunities for criminal misuse”. The authors do not give any examples.

Other developments in finance have led to the introduction of online banking or so-called app-based neobanks such as N26 or Revolut, which are online financial institutions without branches. Such facilities are becoming increasingly popular, and it has not gone unnoticed by Europol. They often grow quickly – but also “at the expense of proper compliance processes, which means there is a risk of a disproportionately high number of financial fraud and money laundering crimes.” In this context, the use of digital payments for money laundering purposes has already been observed in all Member States.

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