Business Essentials for Professionals


Cyberterrorism: the electronic banking system at risk

Once hailed for the increased financial security it would provide, the digital revolution is now showing its dark side, with a new and potent form of digital threat. Across the world, increases in fraud are alarming consumers and leaving law-enforcement agencies faced with a task they are ill-equipped to tackle. To make matters worse, the cashless revolution aims to eliminate the fallback solution: currency.

Police headquarters around the world are scratching their heads at a new epidemic, they’re not sure how to tackle. With the slow and creeping advance of the cashless world, online payment systems have developed into a massive and intricate system, which many users don’t understand fully and in which they place all of their financial savings. Hailed as a new, modern and safer way of making payments, the online markets filled up with impressive speed. Of course, it wasn’t long before thieves (1) spotted the new opportunity and followed the pot of gold online. It turns out that online money is no safer than physical money, quite the opposite. Accountancy Daily writer Pat Sweet writes (2): “In the year to 30 September 2016, the ONS reported an estimated 11.8 million incidents of crime in England and Wales. For the first time, the official figures revealed an estimated 3.6 million fraud incidents, of which 1.9 million (53%) were cyber-related. In the same period, there were around 623,000 fraud offences, including online fraud, recorded by the National Fraud Intelligence Bureau (NFIB) from citizens and businesses. The NAO says the large difference between estimated and recorded fraud suggests that less than 20% of incidents are reported to the police. ‘Card not present’ fraud increased by 103% between 2011 and 2016, from 709,000 to approximately 1.4 million and the NAO says if the current rate of growth continues, the volume of these frauds could reach 2.9 million by 2021.” Because many frauds are left unreported or even undetected, it is difficult to establish a certain number. But all experts agree that rates (3) are soaring.
Online fraud is a new form of threat, sometimes beyond borders, where police forces are helpless (4). Be it domestic or foreign, the specific nature of online fraud makes it very difficult for regular law enforcement agencies to contain it. The space and timeframe in which online theft occurs is very different from the usual parameters of regular mugging. The perpetrator is usually distant from the victim, making any witnesses or camera surveillance irrelevant. Additionally, the victim is often unaware of the theft for some time before it is reported, having left plenty of time to move on, close the temporary accounts used for the fraud and escape the law. When the fraud is being committed from abroad, matters become worse, with basically no deterrence at all for thieves. National law enforcement agencies will seldom - read: never launch international actions against petty thieves. Washington Post Nick Selby writes (5): “Investigating these garden-variety cyber-scams falls to untrained local cops, and that means many of them are never investigated or prosecuted at all. Only big city departments have cybercrime squads with trained detectives like me, and they are critically backlogged. Police wouldn’t refuse to investigate an insured stolen car, but when a bank card is skimmed and then used to fraudulently buy goods, some officers will refuse to investigate....” A few local and specialized units have been set in place, but with little to no result.
Until now, cash has always been the lifesaver. Cash theft is generally not very serious and amounts to a few banknotes. Online fraud goes way deeper in the consequences: lost identity, frozen accounts, unknown invoices getting in through the mailbox, with legal implications sometimes. The Cash Repository writes (6): “Cash is less open to fraud: In 2005, the Bank of England took out of circulation around 505,000 counterfeit banknotes with a total face value of just over £10 million. In comparison, total card fraud in the UK reached almost £440 million in the same year. A 2006 pan-European consumer survey reveals that 11% of adults polled across eight key European countries have had their card details stolen or used without their permission. This equates to around 22.8 million people, or the combined populations of Belgium and Sweden.” Cash was a last-ditch solution with which a citizen whose identity had been stolen could avoid seeing their entire life on lockdown. But even that security is at risk if the cashless trend keeps getting pushed by the banks - which they will. For several decades, regulatory and economic powers have been under quiet but strong and constant pressure by banks to eliminate cash and turn economies fully digital. In several countries, including European ones such as Sweden (7) and Denmark (8), the rates at which cash is used has fallen to a historical residual low. The trend represents a golden opportunity for online fraudsters. A cashless world would be a better one for thieves: bigger loots, and no sanctions.
Government agencies are beefing up their arsenal to face this new form of theft. The British government recently published the Cyberaware (9) website, to entice people and businesses to report cybercrime and learn how to stay safe online. But, of their own admittance, cyber-crime is by essence discreet and remote, often too much so to warrant costly international police cooperation. And with the guarantee of being left able to commit thousands of crimes before the law eventually acts, cybercriminals are not expected to step down anytime soon.

Joseph Radcliff

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