Nigerian email scams ( ‘419 frauds’) fund Boko Haram

by 1389 on June 6, 2014

in 1389 (blog admin), Boko Haram, crime, Nigeria, spam

The Terror Finance Blog has the story:

(h/t: Money Jihad)

[…]
But perhaps more important than the overall weakness of the anti-money laundering/counter-terror financing regime is the fact that it is almost entirely bypassed by the most common form of cyber fraud, generically known as ‘Nigerian fraud’ or ‘419 fraud,’ after the section in the Nigerian criminal code that refers to it. As is well known, most e-mail account users around the world receive occasional (or in my case, almost daily) messages claiming to be from some bank manager, or government official, or orphaned child of some national leader, offering a large cut in exchange for help in laundering a multi-million dollar sum that has been misplaced in corporate accounts, or allocated by the UN, or left for charitable purposes. And once the gullible victim starts corresponding with the fraudster, he or she discovers that there are all sorts of expenses that need to be covered before the big money can be released, almost invariably by making payment through one of the major remittance companies such as MoneyGram. The more imaginative frauds tend to use romance as the hook: a good friend of mine lost many tens of thousands of dollars to someone who started an on-line relationship with her through a dating site and then claimed to need money urgently because he had been imprisoned on false charges in Ghana.

Nigerian frauds are of course not confined to Nigeria. But sources with whom I have spoken say that there is already clear evidence that Boko Haram is now one of the key organised groups behind these frauds, and that a good part of the money that is sent by the fraudsters’ victims to Nigeria is actually being used to buy weapons and other supplies for its terror attacks, whether in Nigeria itself or in neighbouring countries.

For the time being there do not appear to be reliable figures for the extent of Boko Haram’s involvement in the many thousands of successful 419 frauds, any more than there are reliable figures for the overall extent of these frauds globally: most of the victims are too embarrassed to complain to the police. Similarly, the overall volume of transactions carried out by Western Union, MoneyGram, other smaller remittance companies and now also mobile-phone payments companies is a totally unreliable indicator of how much may end up being taken by Boko Haram, or indeed similar terror groups in countries such as Somalia and the Philippines.

What is clear, however, is that the current KYC regulations that apply to people sending money through the various payments companies are basically irrelevant to this problem of fraud financing terrorism: the victims have no idea where their money is ending up. The same applies to all the many instances of money being stolen from financial institutions and their customers through the better-publicised forms of cyber theft, those that typically use malware infiltrated into customers’ computers and mobile phones. The only real solution is to turn the KYC rules on their head and to insist that those receiving remittances, and counterparties to transfers originating from banks and credit card accounts, be identified by means of secure and authenticated electronic ID (since paper-based or even plastic ID documents are so easy to forge and steal).

Is this likely to happen any time soon? Unfortunately not: although the Financial Action Task Force has recognised the risks behind new payment methods such as internet and mobile payments, as well as Internet-related fraud, this recognition has yet to turn into actual regulatory requirements on the one hand, and secure, scalable technological solutions on the other; and there doesn’t seem to be much of a sense of urgency. To be fair, cyber crime is by no means the only means of financing terrorist organisations such as Boko Haram; but how many more innocent victims will continue to be murdered, maimed and kidnapped because practical solutions are not yet available?

Read it all.

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