Organized Crime and the Internet

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Organized Crime and the Internet

• Andrew Skaggs
• Mike Strobel
• Chinh Tran
• Matt Weber

CS4235 Spring 06 Internet Security 2 Research
Project
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Outline

• Defining Organized Crime
• Types of Crime
• Effects
• Laws and Enforcement

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Defining Organized Crime

• Hollywood The Sopranos
• Phil Williams A continuation of business by
  criminal means.
• FBI any group having some manner of a
  formalized structure and whose primary objective
  is to obtain money through illegal activities.1

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Real Crime Syndicates

• Russians
• Run Botnets
• Associated with many worms
• Americans
• Spammers or other users of botnets
• Often lower on the hierarchy
• Nigerians
• 419 scams

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Types of Crime

• Extortion (DDoS or break-in based)
• Fraud
• Identity Theft (phishing/pharming)
• Scams (Nigerian 419)
• Spam
• Money Laundering
• Narcotics
• Encryption

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Extortion

• Either intrusion or DDoS based
• Frequent with gambling sites abroad
• Has grown in size, major companies such as
  Bloomberg threatened

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Theft

• Identity Theft
• Steal Credit Cards
• Create new accounts
• Electronic transactions
• Operation Firewall
• Secret Service conducted 2 year investigation of
  identity theft ring
• 28 arrests, 8 states, 6 countries

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Scams

• Email frequently used as to find victims
• Nigerian 419 scam one of most common
• Started in early 1980s via regular mail fax
• Government involvement
• 419 is section of Nigerian law

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Spam

• Debate on exactly what should be considered legal
• US CAN-SPAM Act 2003
• Often sent through botnets to avoid detection
• ISPs usually shut down accounts of known spammers

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Money Laundering

• Traditional criminal technique to hide money
  trail
• Taking advantage of the Internet
• Fake auctions
• Over and under invoicing through web-based
  companies
• Online gambling

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Narcotics

• Web Pharmicies dont require prescriptions or
  sell fake drugs
• Operation Cyber chase
• 20 members of an Internet drug ring
• Joint effort between 23 local and national law
  enforcement agencies across the world
• Over 6 million seized

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Encrypted Communications

• Criminals can encrypt communications to prevent
  lawful interception
• Encrypted records can be kept without fear of
  being used as evidence
• As early as 1998 FBI Director Louis Freeh told
  Congress Widespread use of robust
  non-recoverable encryption is beginning to
  devastate our ability to fight crime and
  terrorism.2

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Effects

• Direct Impact
• Over 100 billion worldwide3
• 90 organized
• In Perspective
• FY2005 Microsoft Revenues 40 billion
• Wholesale worldwide drug trade4 94 billion
• FY2005 DoD Budget 400 billion

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Effects (cont.)

• Decrease in online consumers confidence leads to
  the loss of the revenue of online retail
  companies
• TRUSTe survey shows 50 increase in concern from
  2003-2004
• The costs of security increase business expenses
  for everyone
• Must buy hardware, software to defend threats

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Laws and Enforcement

• Tracking Down Organized Crime
• Cybercrime Reporting Problems
• Jurisdiction Conflicts
• International Cooperation
• US Efforts
• Future Efforts

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Tracking Down Organized Groups

• Historically difficult to track and prosecute
• Operate like a business
• Base their operations out of weak states
• Countries where law enforcement is unqualified or
  underfunded
• Hire professional consultants
• Financial experts to help with money laundering
• Hackers and security experts to manage internet
  operations
• Internet crime is inherently difficult to track
• The combination of these two factors has created
  a nightmare for law enforcement agencies.

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Reporting Problems

• High-tech crime is often not identified.
• Electronic theft may simply be reported as
  theft by its historic definition.
• The high-tech component may be omitted entirely.
• Lack of proper reporting is largely responsible
  for the sudden perceived growth in cybercrime.
• As a result, statistics have been skewed for
  years.
• The problem was growing steadily, but it never
  received enough attention because nobody knew how
  to report it properly.

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Jurisdictional Conflicts

• Unlike the real world, the virtual world is not
  constrained by transnational borders.
• Organized crime groups can conduct all matters of
  business from the relative safety of weak states.
• Jurisdiction becomes a huge problem.
• Governments must coordinate their investigations.
• This is often slow and tedious, if not
  impossible.
• Laws are often incompatible.
• Some nations lack the capacity or the desire to
  effectively combat cybercrime within their
  borders.

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International Cooperation

• To effectively combat organized cybercrime,
  governments must cooperate.
• Council of Europe Convention on Cybercrime
  convened in 2001
• Harmonized national laws.
• Improved investigation capabilities.
• Boosted international cooperation.
• Endorsed by EU, US, Canada, Japan, South Africa.
• A step in the right direction by creating a legal
  framework
• However, many countries lacked the resources to
  enforce these laws or conduct effective
  investigations

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US Efforts

• FBI lead agency due to cross-border nature of
  most crimes
• In 2000, the FBI established the Internet Fraud
  Complaint Center.
• Tracks complaints and mediates questions of
  jurisdiction between law enforcement agencies.
• Success limited by the relatively large
  proportion of unreported cybercrime.

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Future Efforts

• Law enforcement must restructure and increase
  knowledge of computing
• Must work with Academic Sector to increase
  knowledge of crimes and education of crimes
• Recently industry has pushed government to fight
  cybercrime
• In 2005, 15 CTOs asked President Bush to create a
  national commission on cybercrime.
• 2 weeks later, BSA met with top law enforcement
  officials to improve coordination between high
  tech industry and law enforcement.
• This cooperation has helped law enforcers develop
  a greater technical proficiency and provided them
  with the resources necessary to more effectively
  target internet crime.

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Conclusions

• Organized Crime is not just the Sopranos
• Organized groups commit extortion, theft, scams,
  spam, and sell drugs on the Internet
• Cybercrime nearing size of drug trade
• Law enforcement is struggling

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References

• 1 http//www.fbi.gov/hq/cid/orgcrime/glossary.ht
  m
• 2 http//www.techlawjournal.com/encrypt/80423.ht
  m
• 3 http//www.foxnews.com/story/0,2933,177016,00.
  html
• 4 http//www.unodc.org/unodc/world_drug_report.h
  tml