Computer Facilitated White-Collar Crime
Module 7 explores how advancements in computer technologies have reshaped the landscape of financial and corporate crimes. Students will learn how embezzlement has evolved from manual manipulation of records to sophisticated schemes involving digital banking and financial software, making it harder to detect and trace. In addition, the module covers how technology has expanded the opportunities for money laundering using online banking, digital currencies, and for the most adept would-be cybercriminal, anonymous transactions to conceal illicit funds across borders. Students will also analyze the impact of technology on corporate espionage, examining how hackers and insiders use digital tools to steal sensitive information, disrupt business operations, and gain competitive advantages. Moreover, particular attention is given to the rise of identity theft and fraud in the digital age, highlighting how criminals exploit the internet, social media, and data breaches to commit these crimes. Finally, students will explore the role of money laundering in financing criminal enterprises, both domestically and internationally, enabling activities such as drug trafficking, terrorism, and organized crime. By understanding these concepts, you will gain a comprehensive view of how technology influences modern financial crimes, the risks they pose, and the importance of developing strategies to combat these evolving threats.
Learning Objectives
After completing this module, you should be able to:
- describe how computer technologies have altered the ways in which embezzlement is committed.
- explain how computer technologies have increased the opportunities to commit money laundering.
- analyze how computer technologies have affected the crime of corporate espionage.
- discuss how computer technologies and the increasing use of the Internet have affected identity and fraud crimes.
- identify how money laundering aids in the financing of various types of criminal enterprise both domestically and internationally.
Summary
Computer technologies have revolutionized nearly every aspect of modern life, including the landscape of financial crimes such as embezzlement, money laundering, corporate espionage, identity theft, and fraud. The digital era has not only transformed traditional methods of committing these crimes but has also introduced new vulnerabilities and opportunities for criminals to exploit.
The advent of sophisticated computer technologies has significantly altered the methods by which embezzlement is committed. Digital platforms and electronic financial systems enable perpetrators to siphon funds with greater subtlety and scale. The automation of financial transactions and the complexity of electronic banking systems have provided cover for embezzlers to manipulate accounts, transfer funds across borders, and disguise illicit activities behind the façade of legitimate operations.
Computer technologies have exponentially increased the opportunities for money laundering. Cryptocurrencies and online banking platforms offer anonymity and a lack of regulatory oversight, making it easier for criminals to conceal the origins of illicitly obtained funds. Digital payment systems, peer-to-peer transfer services, and the global nature of the internet facilitate the layering and integration of dirty money into the legitimate financial system, complicating the efforts of law enforcement to trace and recover these assets.
Corporate espionage has been significantly affected by the proliferation of computer technologies. Hackers and corporate spies now employ sophisticated methods such as phishing, malware, and advanced persistent threats (APTs) to infiltrate corporate networks, steal sensitive information, and sabotage competitors. The global internet infrastructure allows for the theft of intellectual property and trade secrets from anywhere in the world, raising the stakes for corporate security.
The increasing use of the internet has made personal and financial information more accessible, leading to a surge in identity theft and fraud. Cybercriminals exploit weak passwords, unsecured Wi-Fi networks, and phishing scams to harvest personal data, which is then used for unauthorized transactions, opening of fraudulent accounts, or selling on the dark web. Social engineering tactics have become more sophisticated, leveraging the vast amount of personal information available online to manipulate victims into divulging sensitive data.
Money laundering plays a pivotal role in the financing of criminal enterprises, both domestically and internationally. By disguising the proceeds of crime, organizations can fund operations ranging from drug trafficking and terrorism to human trafficking and illegal arms sales. The digital transformation has facilitated the rapid movement of large sums of money across jurisdictions, challenging traditional law enforcement methods and requiring international cooperation to combat these networks effectively.
Computer technologies have not only transformed the way financial crimes are committed but have also expanded the scope and scale of these illicit activities. The digital age demands a sophisticated and coordinated response from individuals, corporations, and governments to safeguard the integrity of financial systems and protect against the evolving threats of cybercrime.
Key Takeaways
Transformation of Financial Crimes – The advent of computer technologies has significantly changed the landscape of financial crimes, introducing new methods and opportunities for crimes like embezzlement, money laundering, corporate espionage, identity theft, and fraud.
Embezzlement – Digital platforms and electronic financial systems have made it easier for perpetrators to discreetly siphon funds, enabling embezzlement on a larger scale and with greater subtlety by exploiting the automation and complexity of financial transactions.
Money Laundering – The rise of cryptocurrencies and online banking platforms has increased opportunities for money laundering, offering anonymity and complicating the tracing and recovery of illicit funds by law enforcement due to the ease of concealing fund origins and integrating them into the legitimate financial system.
Corporate Espionage – Advanced computer technologies have enhanced the capabilities of corporate espionage, with hackers employing sophisticated techniques to steal sensitive information and intellectual property, impacting global corporate security.
Identity Theft and Fraud – The accessibility of personal and financial information online has led to a surge in identity theft and fraud, with cybercriminals using tactics like phishing and social engineering to exploit personal data for unauthorized transactions or sales on the dark web.
Financing of Criminal Enterprises – Money laundering is crucial for funding criminal operations globally, with the digital era facilitating the rapid and obscured movement of large sums across borders, challenging traditional enforcement efforts.
Need for Sophisticated Response – The digital transformation of financial crimes demands a coordinated and response from individuals, corporations, and governments to protect financial systems and combat the evolving threats of cybercrime, underscoring the necessity for international cooperation.
Key Terms/Concepts
Computer Fraud Abuse Act of 1986
Corporate/Industrial Espionage
Cyber Incident
Cyber Investigation
Embezzlement
Internet Fraud Scheme
Money Laundering
NW3C
U.S. Secret Service
White-Collar Crime
Modern Example
AI: White-Collar Crime and the Future
Artificial Intelligence (AI) can facilitate white-collar crime in several sophisticated ways, leveraging its capacity for data analysis, pattern recognition, and automation to conduct or enhance illicit activities. While AI has numerous beneficial applications, its misuse in the context of white-collar crime presents unique challenges and opportunities for criminals.
AI can be used to create more convincing fake identities, documents, or communications. For example, deepfake technology, which generates realistic video and audio recordings, can be used to impersonate officials or executives to commit fraud or manipulate stock prices.
AI algorithms can analyze vast amounts of data to identify vulnerabilities in security systems or to optimize hacking strategies, making it easier to steal sensitive corporate data, intellectual property, or personal information.
AI can automate the process of siphoning funds from accounts or manipulating financial transactions. It can also analyze financial systems to find loopholes or weaknesses to exploit for unauthorized fund transfers.
AI can assist in layering and integrating illicit funds into the legitimate financial system with greater efficiency. By analyzing patterns that evade detection and optimizing the process of moving money through complex networks of transactions and accounts, AI can make it harder for authorities to trace the origins of dirty money.
AI can be used for high-frequency trading strategies that manipulate market prices. Algorithms can execute a large number of orders at high speeds to create artificial market movements, benefiting certain positions at the expense of others.
AI-powered tools can process large datasets to identify potential targets for identity theft, optimize phishing campaigns, or crack passwords and security measures more efficiently. In addition, AI systems used in credit scoring, hiring, or legal sentencing can be manipulated to produce biased or favorable outcomes through data poisoning or model manipulation.
The facilitation of white-collar crime by AI highlights the need for advanced cybersecurity measures, ethical AI development practices, and robust regulatory frameworks to counteract these threats. It also underscores the importance of AI literacy and vigilance among individuals and organizations to protect against sophisticated AI-enabled crimes.
White Collar Crime 101: How to Defraud a Company
- Related article: Jordan News. Does artificial intelligence facilitate white-collar crime? (Hamza Alakaleek, Sep. 2023)
Read, Review, Watch and Listen
- Read the Federal Bureau of Investigation’s (FBI) definition of white-collar crime and how the FBI is combatting it.
- Read about FinCEN priorities: Anti-Money Laundering and Countering the Financing of Terrorism National Priorities, U.S. Department of Treasury – Financial Crimes Enforcement Network (FinCEN).
- Read Identity Theft Publications National Institute of Justice (NIJ, 2022).
- Review Fraud.org – take time to review resources, e.g., 2022 Top Ten Scams.
- Review the five most recent Common Scams and Crimes as listed on the FBI’s Scams and Safety page.
- Review the Internet Crime Complaint Center (IC3) – IC3 Internet Crime Report 2023
- Watch What is CFAA? – Computer Fraud and Abuse Act Explained (Solutions Review Glossary, Aug. 2021) located below.
- Watch NW3C – What We Do (2023) located below.
- Listen to any one SANS’s Trust me, I’m Certified Podcast of your choice.
Activity
STOP!!! Students should review the course syllabus to determine the assignment of this activity.
This is a copy of the module’s activity that students find within Blackboard. For that reason, refer to the Activities page to submit your work for review.
Purpose
The purpose of this week’s activity is to advance the student’s understanding of the role and activities performed by the United States Secret Service Cybercrime Investigations division.
Overview
The U.S. Secret Service has a long and storied history of safeguarding America’s financial and payment systems from criminal exploitation. The agency was created in 1865 to combat the rise of counterfeit currency following the Civil War. As the U.S. financial system has evolved – from paper currency to plastic credit cards to, now, digital information – so too have our investigative responsibilities.
Today, Secret Service agents, professionals, and specialists work in field offices around the world to fight the 21st century’s financial crimes, which are increasingly conducted through cyberspace. These investigations continue to address counterfeit, which still undermines confidence in the U.S. dollar, but it is credit card fraud, wire and bank fraud, computer network breaches, ransomware, and other cyber-enabled financial crimes, that have become the focus of much of the Secret Service investigative work.
Instructions
- Review the United States Secret Service’s Cyber Investigation’s investigative mission.
- Review the United States Secret Service’s Cyber Investigations page.
- Go to the Financial Investigations page and Learn More about ATM & POS Skimming, Business Email Compromise, and Don’t Be a Mule.
- Read Cyber Incident Reporting: A Unified Message for Reporting to the Federal Government (DHS, 2021).
Answer the following questions:
- In a sentence or two, describe each of the three forms of financial crimes reviewed within step #3; that is, ATM & POS Skimming, Business Email Compromise, and Don’t Be a Mule.
- Identify which agencies are part of the USSS asset and threat response.
- Explain how asset and threat response agencies support the work of the USSS
- Describe how technology has changed the nature of investigations and investigative techniques used by the USSS.
Key Terms/Concepts
A cyber investigation is the process of investigating, analyzing, and recovering forensic data for digital evidence of a crime.
A cyber incident is any action taken using an information system or network that result in an actual or potentially adverse effect on an information system, network, and/or the information residing therein.
Asset Response refers to the measures taken by the United States Secret Service (USSS) to protect critical infrastructure, financial systems, and other national assets from cyber threats, fraud, and other criminal activities. It involves the deployment of resources, expertise, and technology to detect, mitigate, and respond to incidents that could compromise the integrity of key national assets.
The U.S. Secret Service has a long and storied history of safeguarding America’s financial and payment systems from criminal exploitation. The agency was created in 1865 to combat the rise of counterfeit currency following the Civil War. As the U.S. financial system has evolved – from paper currency to plastic credit cards to, now, digital information – so too have our investigative responsibilities.
Threat Response refers to the actions taken by the United States Secret Service (USSS) to detect, assess, mitigate, and neutralize threats that could harm the safety and security of individuals, infrastructure, or national interests. This involves a combination of proactive and reactive measures aimed at preventing and responding to threats, such as physical attacks, cyber incidents, and other criminal activities.
Discussion Questions
- How have computer technologies transformed traditional financial crimes like embezzlement and money laundering? Discuss the role of digital platforms and electronic financial systems in changing the landscape of these crimes.
- Considering the complexity of electronic banking systems and the automation of financial transactions, what are the primary challenges in detecting and preventing embezzlement in the digital age?
- How do cryptocurrencies and online banking platforms complicate the efforts of law enforcement in tracking and combating money laundering? Discuss the impact of anonymity and the global nature of the internet on these efforts.
- With the advancement of computer technologies, corporate espionage has taken on new forms. How do methods such as phishing, malware, and APTs (Advanced Persistent Threats) affect corporate security, and what measures can be taken to mitigate these risks?
- Discuss the factors contributing to the rise of identity theft and fraud with the increasing use of the internet. How have cybercriminals exploited personal and financial information, and what strategies can individuals and organizations employ to protect themselves?
- Explore the significance of money laundering in the context of criminal enterprises and its impact on global security. How does the digital transformation facilitate the movement of illicit funds, and what international cooperation is required to address this challenge?
- What are the key components of a sophisticated and coordinated response to protect against financial crimes in the digital age? Discuss the roles of individuals, corporations, and governments in maintaining the integrity of financial systems.
- Speculate on the future trends in financial crimes as technology continues to evolve. What new threats might emerge, and how can society prepare to combat them effectively?
Supplemental Readings
- National White-Collar Crime Center (NW3C)
- Internet Crime Complaint Center (IC3)
- Cyber Crime – FBI
- Office for Victims of Crime (OVC) – Financial Crimes
- NBC 5 Chicago How to Spot, Avoid Virtual Kidnapping Scams Targeting Illinois Families (March 5, 2022)
Read, Review, Watch and Listen to all listed materials by the due date listed within the course LMS site.
Click HERE to report any needed updates, e.g., broken links.
Amends the Federal criminal code to change the scienter requirement from "knowingly" to "intentionally" for certain offenses regarding accessing the computer files of another.
Describes a series of covert activities in the corporate world such as the theft of trade secrets by the removal, copying, or recording of confidential or valuable information in a company. The information obtained is meant for use by a competitor (Investopedia, 2021).
Any action taken using an information system or network that result in an actual or potentially adverse effect on an information system, network, and/or the information residing therein.
The process of investigating, analyzing, and recovering forensic data for digital evidence of a crime.
The fraudulent appropriation of property by a person to whom such property has been entrusted, or into whose hands it has lawfully come. It differs from larceny in that the original taking was lawful, or with the consent of the owner, while in larceny the felonious intent must have existed at the time of the taking (US DOJ, 2021).
Use of Internet services or software with Internet access to defraud victims or to otherwise take advantage of them. Internet crime schemes steal millions of dollars each year from victims and continue to plague the Internet through various methods (US DOJ, 2021).
The illegal process of making large amounts of money generated by a criminal activity, such as drug trafficking or terrorist funding, appear to have come from a legitimate source. The money from the criminal activity is considered dirty, and the process "launders" it to make it look clean (Investopedia, 2021).
Since 1978, NW3C has developed and delivered economic crime investigation, high-tech crime investigation, digital forensics, criminal intelligence, and other criminal justice training and technical assistance. Federal funding allows us to provide training and other services at no cost to state, local, tribal, and territorial criminal justice practitioners throughout the United States. Understanding that criminals and crime do not stop at jurisdictional or geographic boundaries, NW3C uses other funding sources to develop and deliver similar high-quality, industry-leading training to state, local, and federal agencies, the private sector, and criminal justice professionals worldwide.
The U.S. Secret Service has a long and storied history of safeguarding America’s financial and payment systems from criminal exploitation. The agency was created in 1865 to combat the rise of counterfeit currency following the Civil War. As the U.S. financial system has evolved - from paper currency to plastic credit cards to, now, digital information - so too have our investigative responsibilities.
The term “white-collar crime” was reportedly coined in 1939 and has since become synonymous with the full range of frauds committed by business and government professionals. White-collar crime is generally non-violent in nature and includes public corruption, health care fraud, mortgage fraud, securities fraud, and money laundering, to name a few. White-collar scams can destroy a company, devastate families by wiping out their life savings, or cost investors billions of dollars (or even all three).
