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Use and Abuse of the Internet in Fraud and Money Laundering

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The Internet provides an ideal opportunity for defrauding those who are less technologically advanced or who are enthralled by the technology. Yet the frauds and other financial crime which are perpetrated on the Internet are, in principle, no different from those which have been committed over time. The advantages to the criminal of the Internet as against most other media are that there is an opportunity to make vast numbers of cold calls at a cost which borders on the free, the opportunity to create credibility by the use of legitimate imagery from reputable sources and to secure the proceeds of the crime not only anonymously but also in jurisdictions where the pursuit of the offender is difficult. There is also the fact that the prospective victims have been conditioned to believe that which appears on a computer screen: the suspension of incredulity and caution is deeply engendered. For that most pure of financial crimes, money laundering, there is the advantage of ease of communication, the simplicity of setting up schemes, with ready access to otherwise remote geographical and legislative locations. Yet there is another issue which does raise serious concerns, but which is not generally regarded as an offence: the provision of information and advice where there is an element of transfer pricing, with the consequent avoidance of taxes. The challenge is to bring about a system of regulation which enables free exchange of information whilst limiting the opportunity to trick people who are already conditioned to believe what they see on a computer monitor. The Internet does not create new frauds nor new money laundering schemes. It is merely a facilitator that has a high level of credibility. And it creates opportunity for the export at low prices of high value added services to the detriment of local economies, for the first time making onshore facilities fully available via offshore centres, with the consequence that it will become increasingly difficult tell the good from the bad.
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Document Type: Research Article

Publication date: 1999-08-01

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