Financial services in trouble: the electronic dimension

Publication Date08 May 2009
AuthorMichel Picard
SubjectAccounting & finance
Financial services in trouble:
the electronic dimension
Michel Picard
Risk Management Division, GW Consulting and Investigation,
Montreal, Canada
Purpose – The initial role of computers and information technology (IT) systems consisted of
improving business daily’s operation. However, this quest of efficiency serves more obscure goals as
fraudsters exploit the electronic dimension for personal profits with a maximum devastating impact on
businesses and their client. The purpose of this paper is to suggest an analysis of the role of the electronic
dimension in financial market crimes. It proposes reconsidering its importance based on its role rather
than on its complexity and, consequently, better understanding the basic elements of a fraud.
Design/methodology/approach – The paper takes the form of a case analysis and field work.
Findings – The complexity of an IT system facilitates the commitment of a fraud and, at the same
time, complicates its investigation. However, an IT system does not initiate a fraud. It is an accessory,
a tool at the service of a criminal mind which is where the scheme originates.
Research limitations/implications Information regarding the two case studies comes only from
public sources (mainly written media and books) and is not confirmed by any confidential data
available to the author.
Originality/value – Many computer crime experts (re: Cybercriminality Conference inCanada, April
2008, and in Luxembourg, June 2008) agree upon accessorial aspect of IT systems. For investigation
purposes, it switches the focus from the computer element back to the main event: the environment in
which the fraud occurs.
Keywords Fraud, Crimes,Computer crime
Paper type Research paper
Computer crime is an overwhelming problem (Davis and Hutchison, 1997) that brought
an array of new crime nomenclature and, consequently, a series of new challenges in
the fight against this new threat. But is the innovative aspect of computer crimes really
related to the fact that these crimes did not exist before or is it because it provides more
efficient ways to execute already existing fraudulent activities? I do not unde restimate
the power of electronic tools but how does phishing differ from false marketing
correspondence? How does hacking differ from sneaking in one’s notebook? Social
engineering never changed from the time when a criminal managed his way to obtain
the combination of a safe to the time when a hacker manages to obtain the password of
a computer. Tools change and evolve but the act remains the same.
The banking industry makes no exception in the use of more effective tools to
conduct efficient business. It would even be unthinkable to do business without
computers. But, the electronic tools (hardware and software) carry, at the same time, a
bright and a dark side. Rapidity increases clients’ services and, also, chances to loose
track of transferred money. Efficiency improves procedures and, also, covers false
operations. More complicated the technology; more developed the required expertise to
manage it. This opens the doors to new threats which impacted not only the bank ing
industry, but also the financial market in general.
The current issue and full text archive of this journal is available at
Journal of Financial Crime
Vol. 16 No. 2, 2009
pp. 180-192
qEmerald Group Publishing Limited
DOI 10.1108/13590790910951858

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