Financial Crime and Its Role in Funding Terrorists

Posted January 16, 2018

Financial Crime and Its Role in Funding Terrorists

As 2018 gets underway, a troubling confluence of geopolitical, ideological and technological developments threaten to make cyber-fraud prevention more than just a matter of protecting businesses against new and emerging forms of financial crime.

Increasingly, it’s also about national security.

From North Korea With Love

On December 19, the U.S. Department of Homeland Security officially accused North Korea of perpetrating last May’s massive “WannaCry” ransomware attack, which crippled businesses, hospitals and transportation systems across 150 countries.

As USA Today reports, North Korea has trained thousands of hackers to pose a “weaponized cyber threat to its neighbors and the world,” ready to engage in the kind of “digital warfare” that former Secretary of Defense Leon Panetta once warned could one day result in a “cyber Pearl Harbor.”

But lately, the regime of Kim Jong-un has been using its cyber warriors to unleash a host of financial crime activity and make money—lots of it—through schemes such as the $82 million cyber-heist at the Bank of Bangladesh in 2016. Presumably this and other cyberattacks have been designed to help bankroll the country’s nuclear ambitions amid heightened tensions with the U.S.

It seems other nefarious characters have decided that North Korea’s notorious leader may be onto something.

Storm Clouds Ahead

Just before Christmas, a global crackdown on transnational money laundering uncovered nearly $37 million in illicit money transfers linked to cybercrime.

Many of these transfers involved so-called money mules and cryptocurrencies, which authorities say are central to operatives funneling proceeds to murderous causes, including terrorist groups such as Boko Haram, the Islamic State and Hezbollah.

What’s more, with military operations destabilizing militant strongholds in Iraq, Syria and elsewhere, extremist groups appear to be turning to online financial crime to bankroll radicalization and recruitment efforts within Western nations, as well as firearms for smaller, lone-wolf attacks.

In the year ahead, homegrown extremists in Western nations may also be looking to put cybercrime proceeds toward testing new technologies. According to experts, there’s a good chance weaponized commercial drones will be used in a terrorist attack in 2018.

According to Yury Fedetov, executive director of the United Nations Office on Drugs and Crime (UNODC), this growing nexus between transnational organized crime and terrorism won’t be easy to stop.

“Cybercrime has emerged as a truly borderless threat,” he says, adding that the use of the dark web and cryptocurrencies “are providing new avenues for moving and laundering criminal proceeds, straining the knowledge and capacities of law enforcement agencies to keep up.”

Army of Darkness

As mentioned in a previous blog post, we are seeing a convergence of financial crime and cybercrime, and this trend is helping fund extremist and criminal activity.

Today, drug dealers, nation states, child pornographers, terrorist groups, human traffickers and others are harvesting billions of the credentials stolen through corporate data breaches and made available on that dark web.

Using these credentials, they’re free to take out fraudulent loans, hijack user accounts, and make illegal purchases with abandon—including the $35,600 plundered every minute from financial institutions over the past six years and counting. What’s more, they can funnel the proceeds through those same interconnected online networks, feeding what some have described as “deviant globalization.”  

Neutralizing a Nexus of Evil

Criminals always seem to be one step ahead of the law, and cybercriminals are no exception.

No longer lone wolves looking to make a quick buck, they have developed organized criminal networks that use the latest technology to pull off their nefarious schemes.

But, the battle against these sophisticated cybercriminals and the illegal activates funded by their activities isn’t the sole province of governments and law enforcement agencies. Digital businesses from all industries play an important role in this ongoing fight.

Protecting your systems from fraudsters attempting to open fake accounts or taking over legitimate accounts can help keep your customers’ funds safely in their accounts and out of the hands of cybercriminals.

It’s a partnership that is growing in importance on an almost daily basis. And, given the mounting threats taking shape in 2018 and beyond, let’s hope it is a successful one.

Frank Teruel

Frank Teruel

SVP/GM, ThreatMetrix

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