Economic Crime

The low risk and high profits associated with fraud make it a very attractive activity for organised criminal groups. The likelihood that fraud will be detected and prosecuted are low because of the complexity of the investigations required. This is particularly so for cases of fraud that can be uncovered only through international cooperation, and for internet offences, for which jurisdiction needs to be established.

Organised criminal groups operating at an international level benefit from differences in national legislation. Individual and organisational vulnerabilities such as a lack of awareness on the part of victims and low risk perception by target groups are enabling factors for most types of fraud.

Economic-crime areas of specific interest to Europol joint investigation teams include missing trader intra community (MTIC) fraud and excise fraud, which result in lost revenue running into the billions of euro for EU Member States. The former involves the criminal exploitation of value-added-tax (VAT) rules in the EU, while the latter refers to the smuggling of highly taxed commodities such as tobacco, alcohol and fuel.

Europol is also involved in combating fraud based on social engineering techniques prioritising CEO fraud cases. By doing the social engineering techniques which is a psychological manipulation of people into actions or divulging confidential information, the fraudsters are attacking company employees. The social engineering can be legal (just calls or open sources and social networks) or illegal (hacking of computers). The better the social engineering is done the more successful will be the attack on the company to transfer money to accounts belonging to the OCG.

Other kinds of economic crime include advance-fee fraud, a mass-marketing scam in which criminals convince victims, often over email, that they will receive some form of benefit in the future in return for a provisional payment. Also mass mailing fraud, romance scams, boiler room frauds, Ponzi schemes, 419 fraud, fake invoice fraud, Micro Soft scams, investment frauds or acquisition fraud are including economic crimes. With acquisition fraud for example victims are paying to account numbers of an OCG instead of to the real business partners and this because of impersonation or other social engineering techniques.

The aim of the global business of money-laundering is to allow criminals to retain the proceeds of crime.

In addition, there is a growing awareness that certain acts within the financial sector that were once considered to be merely poor business practice may in fact have been criminal. Widespread reckless investment, misrepresentation of financial statements and conspiring to manipulate inter-bank interest rates fall within the definition of serious and organised crime.

The huge losses associated with high-level financial fraud undermine social-security systems and destabilise economic systems, thus clearly indicating a failure of self-regulation.