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Chapter 3 - Future trends in serious and organised crime
Introduction
3.1
From the outset, it is difficult to predict accurately and in a detailed
way the future trends in serious and organised crime. However, the committee
has identified present and emerging activities of organised crime groups and has
used this evidence to make observations about how these relate to likely future
trends in the activities of organised crime.
High-tech
crime[1]
3.2
The inquiry found that high-tech crime is a major area of opportunity for
organised crime groups to pursue existing and new types of crime. The evidence
provided some idea of the potential scope of high-tech crime, which includes:
...electronic piracy; counterfeiting and forgery; credit card
fraud...child pornography; communications in the furtherance of criminal
conspiracies; electronic funds transfer fraud; money laundering; advance fee
frauds, like the Nigerian 419 offences; online dealing in illicit products of
all kinds, from Viagra to drugs and so on; intelligence and counterintelligence—[and]
there is a lot going on there in terms of industrial espionage, formal
intelligence and counterintelligence; and, I think, denial of service...[2]
3.3
The committee heard that there are two aspects of high-tech crime:
enabling and facilitating. Technology enabled crime is where technology creates
entirely novel opportunities for criminal gain; for example, phishing.[3]
Technology facilitated crime occurs where technology facilitates traditional or
known types of crime, such as using the internet to launder the proceeds of
real-world crimes.[4]
Incidence and growth of high-tech
crime[5]
3.4
New and improved technologies offer great potential for serious and
organised crime groups to undertake their existing activities and to enable new
means and methods of criminal gain.
...organised crime groups will continue to exploit society’s
increasing uptake of technology and the opportunities it provides to both
target victims and make their own operations more efficient and secure.[6]
3.5
The Australian Institute of Criminology (AIC) submission highlights
cost-benefit reasons for the growth in high-tech crime and argues that the
movement by traditional transnational organised crime groups into fully-fledged
high-tech crime will be determined as much by the diminished profitability, or
increased risk, of real world criminal activities as it will by the innate
attractiveness and relatively low risk of high-tech crimes.[7]
3.6
The committee notes that the benefits of technology are being delivered
in near-equal measures to the criminal world as to legitimate business
operations, and that developments in communications and information management,
which have greatly enhanced the efficiency of legitimate businesses, are also
being exploited by criminal organisations to enhance the efficiency and effectiveness
of their own operations.[8]
Advances in technology, readily available and often low cost, are increasing
the effectiveness of many criminal activities.[9]
3.7
However, despite evidence of organised crime's growing online presence,
organised crime groups have not as yet fully engaged with the online
environment and still use the internet primarily to facilitate or commit real-world
crimes.[10]
3.8
Nevertheless, once organised crime ultimately harnesses the online environment,
the impact on society will be significant.[11]
The committee heard that the this trend has already emerged with the activities
of 'super-empowered criminals'—groups that use the internet to advertise their
services to other criminal groups:
There have been examples of criminal elements (known
colloquially as ‘super-empowered criminals’) operating in the online
environment as obtainers and disseminators of identity and identity-related
information. Operation Firewall, for example, in 2004 in the US and Canada
culminated in the arrest of 28 people from six countries for offences including
the buying and selling of 1.7 million credit card numbers...[12]
Crime in virtual worlds
3.9
High-tech crime is likely to pose considerable challenges to LEAs because
the online environment blurs notions of identity and jurisdiction. A number of
examples indicate the potential for technology to undermine some of the
established foundations of Australia's criminal justice system.
3.10
One such example is the virtual world, such as Second Life or World
of Warcraft. Large values of real-world money are transacted in virtual
worlds. These developments make it difficult to identify offenders and capture
virtual-world criminal communications.[13]
Commissioner Mick Keelty, Australian Federal Police, commented that such
developments had already changed the nature of how [the AFP] approached
policing and how it would approach policing in the future.[14]
3.11
The jurisdictional issues raised by crime located in virtual worlds need
to be settled so that clear approaches can be applied to the investigation and
prosecution of online and high-tech crime:
...the internet poses a whole array of jurisdictional issues. One
of the key planks in treating that risk...is to have strong linkages with our
international counterparts and strong linkages with the attorneysÂgeneral
departments and the departments of justice in the various jurisdictions, so
that...we are able to nimbly, quickly and efficiently gather the data and the
evidence that is needed to track these global criminals as they move in
cyberspace.[15]
3.12
Detective Chief Superintendent Ross Barnett, Queensland Police Service,
also drew attention to anticipated jurisdictional difficulties:
High take-up rates of home internet usage make the Queensland
and Australian communities vulnerable to victimisation from groups who are
often overseas based, making identification, enforcement, asset forfeiture and
compensation action highly problematic.[16]
Denial-of-service attacks
3.13
Denial-of-service attacks involve the disruption of internet businesses
and their services by concerted online attacks. Such attacks commonly involve
botnets—remotely controlled individual computers—which are directed to the
targeted website.[17]
The sheer volume of traffic causes the target site to freeze, and in this way
the attack causes commercial damage or facilitates extortion or some other
offence. For example:
[One offender]...basically used thousands of computers as robots.
He used their computer power to focus an attack on a particular enterprise in
order to crash that enterprise, to bring that enterprise down so that they
could not trade electronically, and he did that by stealing, without people
knowing it, the computing power of thousands of individuals’ PCs.[18]
3.14
Denial-of-service attacks have immense potential to bring down banking,
finance and government systems. In a recent program on online crime on ABC
Radio's Background Briefing, the view was expressed that America's
internet security is extremely weak and could not withstand a concerted
denial-of-service attack. Elsewhere, the government computer network of Estonia
has been disabled using botnets; the attackers were thought to be an organised
crime group.[19]
3.15
In the same program, Mr David Vaile, from the Cyberspace Law Policy
Centre at the University of New South Wales, expressed concerns about the
vulnerability of government IT security generally, and how this could
ultimately undermine systems vital to the maintenance of national security:
I'm hearing more and more about specifically targeted...attackers
trying to breach the IT security of government agencies. But the other national
security issue is probably a wider one, and that's to do with critical
infrastructure. Both the Internet in general and the electronic payment systems
are at the hear [sic] of what you'd call critical financial infrastructure, and
to the extent that malware and other sorts of threats to that system, or even
just the confidence in that system, undermine the capacity of that
infrastructure to work, then it's a threat to national infrastructure.[20]
3.16
The Attorney-General's Department submission notes that the potential
for damage from such attacks develops in step with society's increasing
reliance on electronic infrastructure for dealing with information, transacting
business and communicating.[21]
The committee concurs with the Attorney-General's Department conclusion that
attacks on electronic infrastructure motivated by political, malicious or
criminal agents could have considerable and threatening consequences for
Australia in the future.[22]
3.17
The committee accepts that organised crime groups have rapidly pursued
high-tech opportunities for the support and furtherance of their criminal
activities, and concludes that there is a vast potential for such exploitation
of technology in the future. The characteristics of modern organised crime
groups appear well suited to exploiting a range of opportunities provided by
the internet.
3.18
The committee believes that technology enabled crime is a significant trend
and area of growth in the activities of organised crime groups in Australia. In
this, the committee agrees with the majority of witnesses, who saw high-tech
crime as a considerable present and future danger:
...looking ahead over the next two to three years, I do not see it
getting better in terms of the way organised crime is going to play with these
sorts of new technologies. I see it getting more dangerous.[23]
3.19
The committee therefore believes that it is essential for Australian
police forces to have the workforce, skills and legislative environment that
allow them to quickly identify, adapt and react to technology based crime. The committee
examines the need for appropriate numbers and training for LEAs to counter high-tech
serious and organised crime in depth in chapter 7. The committee commends the
AFP and other state and territory police services and agencies that are
directing resources at this growing and harmful area of crime.[24]
Money laundering
3.20
Money laundering is a longstanding activity of organised crime groups that
'provides a cloak of legitimacy to wealth derived from crime and provides a
funding base from which further criminal activity can be financed'.[25]
The AIC submission notes:
The economic driver of serious and organised crime...remains a
constant and this will continue to necessitate an understanding of money
laundering typologies, both current and prospective.[26]
3.21
A range of criminal activities are undertaken by organised crime groups
solely to facilitate money laundering. For example, while identity fraud and
credit card fraud may be used to steal funds from individuals, they may also be
utilised to legitimise illegally obtained funds. Of all organised crime
activities, money laundering is perhaps the most consistently evolving
activity.
3.22
The Australian Crime Commission (ACC) indicated that the estimated
amount of money laundered globally in one year ranges between $500 billion and
$1 trillion. The likely extent of money laundering in and through Australia has
been estimated to be at least $3.5 billion and represents, among other
consequences, a significant loss to taxation revenue. Furthermore, money
laundering places a sizeable financial burden on associated regulatory and law
enforcement response and control measures as well as on private sector
companies.[27]
3.23
Much of the evidence received indicates a significant and growing nexus
between money laundering and technology. For example, apart from money
laundering opportunities through online banking and identity fraud, a range of new
opportunities for organised crime groups to launder money are emerging:
One new prospective avenue for illicit transfer of money...is that
of new payment methods (NPMs) such as internet payment systems, mobile payments
and digital precious metals...Designed primarily to facilitate cross-border funds
transfer they contain a number of potential risk factors:
- the distribution channel is the internet
- there is no face to face contact with the ‘customer’ (a
process known as disintermediation)
- the NPM process operates through an open and accessible
network.[28]
3.24
The AUSTRAC submission notes that developments in technology offer
criminal groups anonymity, opacity and liquidity in their money laundering
activities.[29]
The committee considers that the migration towards electronic banking and funds
transfer will see the continued escalation of this area of organised crime; it
will provide an environment that will cloud financial trails and make the
recovery of proceeds of crime by authorities difficult and protracted.
Identity crime
3.25
Identity crime involves either the theft and fraudulent use of another's
personal information or the manufacturing and use of entirely fictitious
identities.[30]
Identity theft is described as 'one of the world's fastest growing crimes'.[31]
3.26
Commissioner Ken Moroney,[32]
NSW Police Force, highlighted the growth in identity crime and provided a
useful overview of the various types of identity crime:
Identity crime is an issue of concern...[and] would appear to us
to be becoming more prevalent. The use of stolen identity information to commit
offences appears to be on the rise. Technology has enhanced criminal capability
to produce false identities. We note the emergence of fraudulent identity
manufacturers to service a number of separate organised crime groups at the one
time. We also note the ease with which equipment capable of manufacturing
identification can be bought...[33]
3.27
The Queensland Crime and Misconduct Commission rates the threat of
identity crime as 'high' and as a priority for a whole-of-government response
across Australia.[34]
Incidents of identity theft and fraud are increasing, with the centralised
online processing of banks and credit providers being chief targets.[35]
3.28
The illegal exchange and retrieval of personal information is also occurring,[36]
with stolen identities being used as a means to commit further crimes.[37]
The South Australia Police submission notes that advances in technology have
enabled the production of better forgeries of identity documents.[38]
This was confirmed by the South Australian Director of Public Prosecutions, who
highlighted the use of forged identity documents to apply for personal loans:
...it has become a relatively easy matter for an offender to make
an application for a personal loan or credit card with a significant credit
facility either over the telephone, by facsimile or online...supported by forged
documents as to the applicant's employment and financial status.[39]
3.29
The value of identity information to organised crime groups will result
in the infiltration of legitimate businesses in order to access personal
identity data.[40]
The committee notes the involvement in this trend of transnational criminal
groups:
This sharing has extended internationally, with evidence that
international criminal syndicates have financed criminals to travel to
Australia to commit identity theft offences.[41]
3.30
The anonymity and flexibility of the online environment suggests that
identity crime is likely to continue to expand and to present ongoing costs and
challenges for LEAs:
There are any number of variations of...[identity crime] limited
only by the imagination of the offenders and the credulity of the potential
victims. In most cases the relative anonymity afforded by electronic banking
and communications is used to advantage by the offenders. This...can be difficult
to prove and is investigated and prosecuted at great expense to the community.[42]
3.31
The committee considers that the intersection of technology and identity
crime is a significant challenge for Australian authorities.[43]
Identity crime is likely to be a major area of future organised crime activity,
particularly as a facilitator of money laundering activities and the illegal
attainment of funds, goods and services.
Credit card fraud
3.32
The escalation in credit card fraud is connected to the growth of
opportunities for identity and fraud crime over the internet.[44]
In a report on its inquiry into cybercrime, this committee previously observed:
With the credit card purchasing power...[comes] the potential for
large scale fraud.[45]
3.33
The use of credit cards offers multiple ways to commit offences. For
example, certain groups are engaging in the online theft and sale of credit
card information to other criminal groups. Credit card fraud is often
associated with identity fraud, and involves the fraudulent purchase of goods
over the internet. In yet another example of organised crime's adaptable
opportunism, recent security enhancements incorporating security chips and PINs
in credit cards are being circumvented by online 'card not present'
transactions.[46]
Financial crime
Tax-related crime
3.34
The Australian Taxation Office (ATO) reported a shift from opportunistic
crime to organised crime, and an increasing degree of sophistication,
organisation and collusion in taxation crimes.[47]
Evidence suggests a relationship between taxation and other forms of
crime—notably, money laundering and identity theft.[48]
Tax crime usually involves the theft of another's identity to make a false
taxation refund claim. The committee heard from the ATO that organised crime
groups are systematically attacking the process:
We have seen...some fairly sophisticated attempts, where it almost
looks like they have been piloting our system and trying a few to see if they
get under the radar before going for one big attack. We have seen an instance
of an operation almost like a call centre to change details in the system.[49]
Superannuation-related crime
3.35
The introduction in Australia of compulsory superannuation has seen
massive wealth accumulate in superannuation funds. Considering the opportunism
of organised crime groups, the committee considers it highly likely that such
funds could be the target of serious and organised criminal activity.
Additionally, retirees who are the recipients of a substantial superannuation
payment may also be targeted by organised crime groups. The ACC submission notes:
Organised criminal groups will also continue to be attracted to
opportunities for substantial levels of fraud across the financial sector
(including superannuation, banks and securities) and in other related
industries such as telecommunications and insurance. Characteristics of these
sectors that are especially attractive to criminal groups include the
availability of ‘arm’s length’ transactions and the growth, size and complexity
of the markets, particularly those that facilitate cross-border trade.[50]
Illicit drugs
Amphetamines and other synthetic
drugs
3.36
Illicit drugs have long been a significant aspect of organised criminal
activity in Australia. In the 1970s, three royal commissions investigated
organised crime and the drugs trade, finding substantial connections between
the two.[51]
Mr Christopher Keen, Director, Intelligence, Queensland Crime and Misconduct
Commission, bluntly observed that illicit drugs are 'the major cash cow of
organised crime';[52]
and AOSD-related crime is the most significant organised crime activity in
Australia at present.[53]
Organised crime groups have gravitated toward the production of AOSD,[54]
with OMCGs, in particular, largely responsible for their production and
distribution.[55]
3.37
In the context of transnational crime, Australia is geographically
vulnerable to the illicit drug trade, as pursued by organised crime groups:
Political instability in the South Pacific region presents
opportunities for organised crime groups to base offshore operations focused on
the large-scale production and/or transhipment of illegal drugs and precursor
chemicals. Australia generally and Queensland specifically, due to its
geographic proximity, loom as likely markets for both, based on the expanding
demand for amphetamine type substances.[56]
3.38
The committee notes that the locating of illicit drug activities in
overseas jurisdictions has the potential to increase, following recent moves to
combat AOSD, such as the Project STOP program, which is a reporting initiative
designed to reduce access to precursor chemicals in Australia.[57]
It is likely that organised crime groups have already adjusted their production
processes in response to stricter regulatory and legislative schemes.[58]
3.39
Given the importance of the profit motive to organised crime groups,
these groups are not attached to a particular drug or method of production. These
groups are already altering their behaviours in response to anti-AOSD
initiatives:
...[organised crime groups] are very market driven, so where there
is an opportunity to make inroads into a market—we are talking crime markets
here, drug markets—we are seeing a move back into large-scale cannabis
production. We have had some detections recently indicating that. Where there
is money to be made, they have the distribution networks that they can utilise
and exploit to be able to meet market demand.[59]
3.40
The committee notes that the involvement of organised crime in the illicit
drug market is long established, and this is unlikely to change fundamentally in
the foreseeable future. Whether it is new or newly in-vogue drugs, such as
AOSD, the primacy of drugs as the economic engine of organised crime will undoubtedly
continue.
3.41
The committee draws attention to its recent inquiry into the
manufacture, importation and use of AOSD in Australia, in which it canvasses the
growing trend in the supply and use of AOSD.[60]
Paedophilia
Online paedophilia
3.42
New technology has allowed the online and offline activities of
paedophiles to converge. The online environment supports the easy exchange of
images and information related to the procuring and abuse of children, and
allows predators to groom children for future contact. The online environment
presents an area of escalating risk to children.[61]
3.43
Commissioner Keelty outlined the issues for policing arising from these
new forms of criminal congregation, communication and behaviour:
This convergence...is a new phenomenon and makes evidence
gathering quite difficult. It will be a problem for us into the future, as will
be the simple art of telephone interception and listening device activity. If
you think about it, a lot of that activity could actually happen in the virtual
world, where it will be difficult, if not almost impossible, to prove who
indeed has had the conversations or who indeed has been part of the conspiracy...[62]
3.44
The internet is a 'powerful distributive network' for pornography.[63]
The potential for this environment to provide paedophiles with the means of
organisation and communication, as well a new forum for exchanging information
on and targeting of victims is a development of great concern.
Family-based ritual child sexual
abuse
3.45
The committee received a submission from the Advocates for Survivors of
Child Abuse (ASCA), which raised allegations of organised family-based
paedophilia, involving the exchange of children for the purposes of ritual or
ongoing sexual abuse.
3.46
Mr Michael Salter, a member of the ASCA board, informed the committee
that these groups employ psychologically damaging methods to subordinate their
child victims and undermine their trust of law enforcement and health
professionals. Such acts were claimed to successfully prevent the reporting and
subsequent detection and prosecution of the offences alleged.[64]
3.47
The committee regards allegations of paedophilia with the utmost
seriousness, and has carefully considered the evidence of ASCA as provided in
their submission and at the Sydney hearing. The committee sought to establish
the extent to which family-based sexual abuse of children was organised by
criminal groups. At the Brisbane hearing, Ms Elizabeth Foulger, Manager,
Intelligence, Queensland Crime and Misconduct Commission, told the committee
that investigations of paedophile groups in Queensland had revealed a culture
of 'loose associations' among paedophiles, as opposed to highly developed or
sophisticated networks of offenders.[65]
3.48
Ultimately, the committee was unable to determine the extent of
organised intra-familial ritual sexual abuse of children on the evidence
received. The committee commends ASCA for its support of around 600-800 members,
and acknowledges that the service this organisation renders is done without any
government assistance. The committee believes that governments should give
consideration to ensuring that funding for organisations such as ASCA is
available.
Conclusion
3.49
The committee is concerned about the developing trends in serious and
organised crime. Regardless of the type of activity, the increasing use of
technology, transnational connections and fluidity of organised crime groups
will make law enforcement's task of policing organised crime's illicit
activities more difficult. The committee considers that trends in serious and
organised crime will require an increasingly coordinated approach involving
partnerships across agencies and jurisdictions as well as internationally. In
the following chapter, the committee highlights matters around which successful
strategies for countering serious and organised crime should be built.
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