Friday's Final Word | week 1
Happy New Year everyone! The first Friday of 2024 is here, which means we are back with our list of stories from the past week. Just enjoy the read and have a great day!
?? AI chatbots recruiting terrorists
?? Most famous crypto fraud schemes so far
?? Web3 security in 2023 - Billions in losses
???♂? Financial crime compliance trends in 2024
?? Special Report - Modern slavery and lost savings
??? America’s new whistleblower program
UK needs to update its terrorism AI laws to cope with crafty chatbots?
Generative AI can do many sophisticated things, among them, unfortunately, terrorist recruiting. One of the main issues with this capability is the lack of crime that is committed, as under today’s UK law, it is the chatbot doing the recruiting, not a human being who could be prosecuted. The Institute for Strategic Dialogue (ISD) finds this very concerning, highlighting how with such loopholes, the use of generative AI will become increasingly tempting for extremists. Consequently, UK legislation must keep up with the pace of a constantly shifting technological landscape, with special focus on AI chatbot creators and those websites hosting such services, because without a clear chain of responsibility, crime can be committed carefree.
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Most infamous crypto fraud schemes of all time – from FTX to the early days
The FTX downfall might be the latest one, but it’s definitely not the only one. Ever since the very beginning, the crypto sphere has been plagued with corruption cases and Ponzi schemes. If you have missed some of these, this Fox Business article gives the perfect summary, briefly introducing such scams as the Centra Tech story with its fake executives and fake licenses to the BitConnect Ponzi scheme where investors financed each other’s returns until no one remained to pay. What is fascinating is the eerie similarity between all these cases – a get-rich-quickly revolution that was promised, and the quick disappearance of accumulated investor money.
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Billions in losses – How 2023 fared when it comes to Web3 security
One of the main selling points of Web3 is transparency. As a result of this, yearly statistics can be analyzed quickly, meaning that the ins and outs of 2023 can already be seen. And when it comes to Web3 security, the numbers are staggering with over $2 billion in losses. In its new annual report, crypto security firm Beosin details the case, showing how criminals used different techniques to scam the unwary out of their money. Some of the methods include hacking, rug pulls, and phishing. However, while the $2 billion in losses is still a hefty amount, it represents a 54% decrease from the previous year. Despite this, celebrating is still too early, as offline crypto crime has increased significantly, reaching a total of $65.68 billion in 2023.?
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Financial crime compliance: Trends to watch in 2024
If predictions are to be trusted, then cybercrime might soar to cost the world around $9.5 trillion this coming year. This highlights the need to fight financial criminals accordingly as the industry is a forever changing sphere with a heavy cost on the world economy. However, with technological innovations, among them generative AI and real time monitoring, tackling financial crime and maintaining compliance is a real possibility. But complications remain with sanctions updated rather regularly in the wake of the Russia-Ukraine conflict, and the continued presence of shell companies where the owners are shrouded in secrecy. To learn more about the main trends in the coming year, check out Euronews’ article on the topic.
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Pig Butchering – A scam where everyone is a victim
“This is the professionalization of fraud services,” describes FBI special agent James Barnacle the case of ‘pig butchering’, a unique crime where pretty much all participants are actually victims. On the one side are the Americans investing money in fraudulent crypto projects or fake relationships, while on the receiving end is a well-organized world of modern-day slavery. These scams are all facilitated in heavily guarded telecom facilities where East-Asian kidnapping victims are forced to fool Westerners into paying. The Chinese organized crime syndicates running the show have found fertile ground for such activity in the war-torn Myanmar where government scrutiny is a rare thing. While we have already touched upon this topic in earlier weeks, reporting on the Chinese crackdown and some victim stories, this CNN article is the culmination of 6 months of researching, making it the perfect in-depth report to learn everything about the case. From text messages of fake romances to interviews with the scammers and local agencies, CNN’s special report is a real gem of investigate journalism.??
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America’s new whistleblower program promises to reform global anti-corruption efforts
Money laundering is at the core of international crime, and effectively incentivizing whistleblowers to come forward should therefore be at the center of any global anti-corruption effort. The Anti-Money Laundering Whistleblower Act should manage to do exactly that, upgrading America’s former whistleblower program with mandatory whistleblower awards. As a result, qualified whistleblowers who successfully report on money laundering and other sanction violations will now be entitled to monetary awards of 10% to 30% percent of the collected funds. Such incentives should fill the loopholes of previous programs where foreign nationals were often unwilling to come forward given the lack of rewards. However, for this to come to fruition, both the Treasury Department and the Financial Crimes Enforcement Network will have to implement the program in full accordance with White House strategy, because otherwise the danger remains that past shortcomings stay.
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