The UNODC Paper on Organised Fraud – a real and present danger

The UNODC recently released an Issue Paper on Organised Fraud during the 12th Session of the Conference of the Parties to the United Nations Convention on Transnational Organized Crime (COP12) in October 2024

This paper delves into the complexities of organised fraud, discussing its drivers, offending patterns, and effective deterrence measures

The paper highlights several key areas:

• Preventing organised crime: Strategies to stop fraud before it happens.
• Pursuing criminal groups: Methods to track and prosecute those involved.
• Protecting victims: Ensuring support and protection for those affected by fraud.
• Promoting cooperation: Encouraging partnerships at all levels to combat fraud.

The UNODC Paper presents several notable findings:

1. Sophistication of Fraud Schemes: Organized fraud schemes are becoming increasingly sophisticated, often involving advanced technology and cross-border operations.
2. Economic Impact: The financial losses from organised fraud are substantial, affecting individuals and businesses globally.
3. Victim Profiles: Organized fraud victims come from diverse backgrounds, highlighting the need for tailored support and protection measures.
4. Law Enforcement Challenges: Due to organized fraud's complex and transnational nature, law enforcement agencies face significant challenges in detecting and prosecuting it.
5. Importance of International Cooperation: Effective combat against organised fraud requires robust international cooperation and information sharing among countries.

These findings underscore the need for comprehensive strategies to prevent, detect, and respond to organised fraud.

The UNODC Paper includes several case studies to illustrate the various types of organised fraud and the challenges in combating them. Here are a few notable examples:

1. E-commerce Fraud: A case study from Singapore highlights a sophisticated e-commerce fraud scheme where criminals created fake online stores to steal payment information from unsuspecting customers
2. Employment Fraud: Another case study details an employment scam in the Philippines, where fraudsters posed as legitimate recruiters to collect fees from job seekers for non-existent jobs
3. Investment Fraud: A case from Brazil showcases an investment fraud operation that promised high returns on investments in a fake cryptocurrency, leading to significant financial losses for victims

These case studies provide valuable insights into the methods used by organised criminal groups and the importance of international cooperation and robust legal frameworks to address these crimes effectively.

The UNODC’s Paper also provides some fascinating insights that are noteworthy in managing fraud risk:

• "Scam compounds" in Southeast Asia have industrialised fraud unprecedentedly. They employ thousands of workers, many being university graduates with advanced tech skills, who are sometimes trafficked and coerced into perpetrating fraud.
• Criminal groups now use AI-powered tools like "FraudGPT" to automate scams. This technology can create sophisticated phishing emails and other fraudulent content at scale, making scams harder to detect.
• There's a booming underground "crime-as-a-service" economy where criminals can rent or buy ready-made fraud tools. One criminal marketplace had 200,000 users and processed $1 billion in transactions before being shut down!
• Identity theft has evolved far beyond stealing credit cards. Criminals now steal "digital fingerprints" from compromised devices to perfectly mimic victims' online behaviour and bypass security systems.
• Some fraud groups use "SIM farms" - devices that hold multiple SIM cards to simultaneously send thousands of scam messages. They've industrialised traditional scam methods using modern technology.
• Cryptocurrency has revolutionised money laundering for fraudsters. They can now instantly move stolen funds across multiple blockchain networks to hide their tracks, making it extremely difficult for law enforcement to follow the money.
• Modern fraud groups often don't fit traditional organised crime models. Instead of rigid hierarchies, they form fluid networks of specialists who come together for specific "projects" and then disperse.
• Contrary to popular belief, young tech-savvy professionals increasingly become fraud victims, especially in cryptocurrency investment scams. It's no longer just older adults being targeted.
• The most successful fraudsters often don't use complex technical methods. Instead, they excel at social engineering and psychological manipulation, sometimes grooming victims over months or years to gain their trust.
• Perhaps most surprisingly, many countries still don't treat fraud as a severe crime despite some groups stealing billions. Legal frameworks haven't kept pace with the evolution of modern fraud techniques.
• In some regions, successful fraudsters are seen as role models due to their visible wealth, making it harder to prevent young people from being recruited into fraud schemes.

Source:  

(1) UNODC launches new Issue Paper on Organized Fraud at COP12. https://www.unodc.org/unodc/en/organized-crime/news/2024/issue-paper-on-organized-fraud.html.

(2) Organized Crime - Issue Paper - United Nations Office on Drugs and Crime. https://www.unodc.org/documents/organized-crime/Publications/IssuePaperFraud-eBook.pdf.