The National Economic Crime Centre’s boss on tackling cyberfraud

When eccen­tric busi­ness­man John McAfee, cre­ator of the epony­mous anti-virus soft­ware, was charged with con­spir­a­cy to com­mit fraud and mon­ey laun­der­ing ear­li­er this month, cryp­tocur­ren­cies were his alleged tool of choice.

McAfee is accused of inflat­ing the price of cryp­tocur­ren­cies to his large Twit­ter audi­ence, sell­ing them and illic­it­ly cream­ing off a £1.45-million prof­it, pros­e­cu­tors claim.

Cryp­tocur­ren­cy fraud and its use for mon­ey laun­der­ing are just two of the many threats tack­led by the UK’s Nation­al Eco­nom­ic Crime Cen­tre (NECC), a unit of the Nation­al Crime Agency ded­i­cat­ed to iden­ti­fy­ing, thwart­ing and aid­ing in the pros­e­cu­tion of mon­ey crime.

Though NECC direc­tor gen­er­al Graeme Big­gar has no issue with dig­i­tal cur­ren­cy as such, he acknowl­edges its allure to crim­i­nal gangs. “Cryp­tocur­ren­cy itself is not evil. There is noth­ing wrong with it as a form of cur­ren­cy. It will be used in crime in the same way cash and mon­ey flow­ing through banks is. The vast major­i­ty of the use of cryp­tocur­ren­cy is legit­i­mate.”

How­ev­er, when used with nefar­i­ous intent, cryp­tocur­ren­cy can become tox­ic. Big­gar explains that it’s a way of extract­ing mon­ey from vic­tims that is quick and feels anony­mous and untrace­able. In the vast major­i­ty of ran­somware and cyber­at­tacks where there is pay­ment involved, cryp­tocur­ren­cy will be the desired form of pay­ment. Dig­i­tal cur­ren­cy is used by crim­i­nals to laun­der their mon­ey and to facil­i­tate fraud.

“It’s clear­ly a very volatile mar­ket. We’ve seen what’s hap­pened to the price of bit­coin over the year. Just as with any oth­er volatile new mar­ket, peo­ple try to defraud oth­ers by get­ting them to invest in it when there’s noth­ing there. We’ve seen a real spike in attempts to do that. Lots of phish­ing emails going out try­ing to encour­age peo­ple to invest in cryp­tocur­ren­cy when it is just a fraud. That’s not cryptocurrency’s fault, it’s just a hook that’s being used,” says Big­gar.

The NECC pro­duces a week­ly assess­ment for the gov­ern­ment and law-enforce­ment com­mu­ni­ty and has set up a “fusion cell”, com­bin­ing the resources of 30 pub­lic and pri­vate sec­tor bod­ies, includ­ing banks, accoun­tants and tel­cos, which meets week­ly to share intel­li­gence.

Undermining confidence

Accord­ing to the Office for Nation­al Sta­tis­tics, 4.4 mil­lion peo­ple in the UK said they had been the vic­tim of fraud in 2020, los­ing £2.3 bil­lion. That makes it the sin­gle most-report­ed crime in the coun­try. Reas­sur­ing­ly, per­haps, the vast major­i­ty of these are sim­ple frauds involv­ing small amounts of mon­ey.

“That’s a num­ber that mat­ters in two ways,” stress­es Big­gar. “One, it rep­re­sents an awful lot of peo­ple who are poten­tial­ly los­ing their life sav­ings, but also it starts to have a macro-eco­nom­ic impact. A lot of this is hap­pen­ing online and it feels like it can begin to have an impact on people’s con­fi­dence in the dig­i­tal econ­o­my, which is clear­ly an enor­mous part of the way the world works now, a big­ger part as a result of COVID. It’s real­ly impor­tant we can main­tain con­fi­dence in it now.”

Accord­ing to Fraud — The Facts 2020 com­piled by UK Finance, the bank­ing and finance indus­try body, a huge growth in ersatz online adverts and social media fraud includes romance scams, invest­ment and pur­chase fraud, where goods are adver­tised on auc­tion sites at “too good to be true” rates to entice peo­ple to buy. 

Fraud­sters have also increas­ing­ly been tar­get­ing younger peo­ple online through so-called mon­ey mule adverts offer­ing stu­dents and young peo­ple, in par­tic­u­lar, mon­ey to have funds trans­ferred through their bank account and back out again, which is effec­tive­ly mon­ey laun­der­ing. 

The Ded­i­cat­ed Card and Pay­ment Crime Unit, a spe­cial­ist police unit fund­ed by the finan­cial ser­vices indus­try, has helped close more than 1,600 social media accounts linked to fraud­u­lent activ­i­ty. Some 500 of these were used to recruit young peo­ple as mon­ey mules, while almost 250 were involved in trad­ing stolen card details online.

Lockdown loot

The coro­n­avirus pan­dem­ic and the phys­i­cal restric­tions imposed to cur­tail the virus’s spread have, para­dox­i­cal­ly, catal­ysed a surge in online crime. “What we saw was the online, dig­i­tal-type crimes like cyber­crime, online fraud, which is the biggest sin­gle crime in the UK, and child sex­u­al exploita­tion were less affect­ed by lock­down,” says Big­gar. “In some ways they were enhanced by it because more peo­ple were online and at home.”

Phys­i­cal­ly mov­ing large sums of cash around was also made hard­er dur­ing COVID, with trav­el restric­tions act­ing as anoth­er incen­tive for crim­i­nals to move into cryp­tocur­ren­cies. “Crim­i­nals had a cash-flow cri­sis,” says Big­gar. 

“They couldn’t move their cash eas­i­ly because no one was on the roads, no one was mov­ing around, busi­ness­es were not oper­at­ing so they weren’t deposit­ing cash at banks the same way they would nor­mal­ly do; some­one com­ing into a bank deposit­ing large amounts of cash would stand out even more.”

As a result, vil­lains had to stock­pile the cash pro­ceeds of their crimes. Last year, that lock­down loot got small­er when entire organ­ised crime groups were dis­man­tled dur­ing Oper­a­tion Venet­ic, which saw £54 mil­lion, 77 firearms and two tonnes of drugs seized, plus 746 peo­ple arrest­ed.

Venet­ic led to the dis­man­tling of EncroChat, a bespoke encrypt­ed glob­al com­mu­ni­ca­tion ser­vice used by 10,000 crim­i­nals in the UK for co-ordi­nat­ing and plan­ning the dis­tri­b­u­tion of illic­it com­modi­ties, mon­ey laun­der­ing and plot­ting to kill rival crim­i­nals. 

The NECC has also been busy inves­ti­gat­ing frauds com­mit­ted against the pan­dem­ic-induced gov­ern­ment bail-out schemes, such as the Coro­n­avirus Busi­ness Inter­rup­tion Loan Scheme, Bounce Back Loan Scheme and employ­ee fur­lough. His­tor­i­cal­ly, the NECC was not set up to exam­ine fraud against the pub­lic sec­tor, but has been pulled in this direc­tion because of the schemes’ crit­i­cal role in bol­ster­ing the nation­al econ­o­my.  

“There has absolute­ly, def­i­nite­ly been sophis­ti­cat­ed, organ­ised efforts to access those schemes from peo­ple with very obvi­ous­ly crim­i­nal intent. We’ve seen this through­out and we’ve been work­ing real­ly close­ly with the banks and with gov­ern­ment to try to iden­ti­fy what is hap­pen­ing to then revise the process­es banks are using to approve the loans, such as increas­ing checks,” says Big­gar.

Professional help

The NEEC works close­ly with the legal, accoun­tan­cy and con­veyanc­ing sec­tors to raise aware­ness of their vul­ner­a­bil­i­ty to become unwit­ting­ly involved in mon­ey crimes as “pro­fes­sion­al enablers”. These include the Flag-it-up cam­paign to iden­ti­fy mon­ey laun­der­ing via poten­tial breach­es and the use of sus­pi­cious activ­i­ty reports.

Also, in 2018, the Office for Pro­fes­sion­al Body Anti-Mon­ey Laun­der­ing Super­vi­sion was launched to strength­en the UK’s anti-mon­ey laun­der­ing mea­sures. Housed with­in the Finan­cial Con­duct Author­i­ty, it works with groups such as the Solic­i­tors Reg­u­la­tion Author­i­ty to pre­vent lawyers from being invei­gled into crime, such as mon­ey laun­der­ing.

“There are real­ly strong cau­cus­es with­in those pro­fes­sions dri­ving to up their col­lec­tive game. They’re mas­sive­ly broad pro­fes­sions with thou­sands of prac­ti­tion­ers in many firms, so it’s quite a chal­lenge,” Big­gar con­cedes.

His mes­sage to com­pa­nies that think they may be vul­ner­a­ble to crim­i­nal attacks is sim­ple and straight­for­ward. First­ly, get your cyber­se­cu­ri­ty sort­ed. Sec­ond­ly, abide by the mon­ey laun­der­ing reg­u­la­tions, as well as know your cus­tomer, know your busi­ness, and have the right poli­cies and train­ing in place, being sure to report sus­pi­cious activ­i­ty through sus­pi­cious activ­i­ty reports. And third­ly, ensure you have a rig­or­ous counter-fraud strat­e­gy.