Financial Crime: Prevention and Regulation in the Intangible Environment
| Pages | 253-263 |
| DOI | https://doi.org/10.1108/eb027191 |
| Published date | 01 January 1999 |
| Date | 01 January 1999 |
| Author | Peter Johnstone |
| Subject Matter | Accounting & finance |
Journal of Money Laundering Control —
Vol.
2 No. 3
Financial Crime: Prevention and Regulation in the
Intangible Environment
Peter Johnstone
INTRODUCTION
Each decade, the global financial services industry
spanning Western and Eastern economies, appears
to enter another period of transformation, not only
in terms of new financial products, but also mech-
anisms and methods of transaction. The techno-
logical issue that is currently sapping the energy of
ministers throughout the developed and develop-
ing world, as well as computer experts, is the mil-
lennium bug syndrome. It is encouraging that
policy makers and electronic experts are uniting in
their efforts to avert an 'electronic winter of dis-
content' in the year 2000. The expediency of the
spread of financial services throughout the global
electronic arena, facilitated by the removal of real
and visual borders, is set to reduce the current
technological problems to miniscule proportions.
Yet at present the response to the technological
issue of even greater importance, Cybercrime, has
resulted in discord, disagreement and apathy.
This article investigates the types of crime that
are likely to develop through greater use of elec-
tronic technology and it explains the familiar,
though frequently misunderstood, terminology
associated with electronic commerce. At present
many regulators and investigators, throughout the
world, are reluctant to meet the challenge pre-
sented by digital crime, this paper addresses the
'weak link' in effective prevention and detection
and suggests strategies for future education and
training.
ANONYMITY IN CYBERSPACE
Computer-related crime has already established
itself as a major crime phenomenon in a wide
range of traditional criminal spheres. There is a
range of distinctive features which surround com-
puter-based crime, particularly speed of
actus
reus
and anonymity. Typically property crimes have
required interface or the potential for personal
exchange between the victim and criminal actor. It
may be the intention of the
thief,
fraudster or
burglar not to come face to face with their victim,
however, the potential frequently exists and offen-
ces such as robbery and kidnapping, by definition,
cause the offender to have direct contact with the
victim of their enterprise. Having completed the
offence, a secondary issue is disposal of tangible
goods, the property from the burglary or the
volumes of cash from the bank robbery.
'We stand at the dawn of an age of global eco-
nomic integration. Unfortunately, we are in some
sense victims of our own progress.'1 For the new
age criminal this sentiment has already come to
fruition and the criminal value of cyberspace has
manifest itself in effectively negating many of the
problems that faced the traditional criminal. It is
now far easier for the offender to remain anony-
mous,2
as electronic money is neither voluminous
nor easily identifiable.
It has always been the case that professional
criminals will take up the opportunity to maximise
illegality by the use of new technology. Recent
history has demonstrated the ability of criminals to
modify quickly the use of consumables, for
example, the motor car was never designed to
facilitate 'getaways', 'terrorist bombs' or 'hit and
run' murders, but it has rapidly established itself
as
a valuable tool beyond the transportation of
people. The past 20 years have evidenced the
wholesale use of pagers, mobile phones and coun-
ter surveillance equipment to avoid electronic
eavesdropping by regulatory and enforcement
agencies. The digital evolution has advanced well
beyond the planning stage and it would seem
appropriate to take stock of the present situation
and evaluate the potential damage that will con-
tinue to be inflicted against legitimate businesses,
on a global basis, as organised criminals acquire
advanced technology skills.
The explosive growth of computer technology
and particularly use of the Internet3 has provided
the basis for the development of new criminal
actors. It is now 12 years since an academic in
California uncovered a 'hacker' who had infiltrated
the Berkeley Campus's system. This apparently
innocuous event resulted in a German national
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