Analysis: Following the telephone trail to detect fraudsters

The success of the operation was based entirely upon communication. Specifically, the sophisticated interception of the criminals’ communications and the robust protection of the communications related to this secretive operation, codenamed “Venetic.”

It has now been reported European police forces targeted a communications platform called EncroChat and the devices used by organized crime groups to access and use the platform. Law enforcement infiltrated the platform and cracked the code, essentially, by modifying mobile telephones and selling them to criminal groups, who believed they could communicate freely without fear of their communications being intercepted. Wrong.

The recent arrests reminded me of an article I once wrote, which posited that having knowledge of the whereabouts of 100 kilos of cocaine could actually be more valuable than the cocaine itself. I proposed you could sell the cocaine once, but you could sell the knowledge multiple times to multiple buyers. It’s a fact: Knowledge equals power and provides an advantage.

When parties are confident they are not being listened to and, more importantly, what they communicate is not being recorded, they talk more freely and often more directly, with code words removed and accuracy taking primacy over secrecy. This same concept applies to money launderers and their professional enablers: When they believe their communications are secure, they not only communicate more freely, they often do so far more arrogantly.

Nowadays the mobile telephone is central to almost all major criminal investigations, and law enforcement agencies around the world are becoming increasingly more adept with their use and application of data from mobile telephones. Many sophisticated organized criminals are aware of this, and consequently they relentlessly change their numbers and devices. Therefore, when a group of criminals offered a secure communications platform—one that not could not be intercepted—a number of established organized crime groups seized the offering and the handsets.

In the world of compliance, and in particular financial crime compliance and the discipline of “Know Your Customer” (KYC), there is an increasing need to know and undertake due diligence on the mobile telephone numbers of high-risk customers, as well as other communications they use with your firm/bank. Fraudsters and money launderers may purport to operate from multiple addresses, using a series of false names supported by fake identity documents, but they cannot carry more than 20 mobile telephones with them. Often, the common denominator linking a series of accounts and transactions is the mobile telephone and/or the telephone number.

By exploiting this data, firms and banks can better protect themselves against fraud and money laundering; and, please be assured, big firms capture and retain big telephone communication data.

So, just as our governments are now looking at smartphone applications to support the contact and trace process of coronavirus control, firms should apply similar thinking when the contamination of fraud or money laundering is discovered. Check for the mobile telephone numbers, then seek to establish how and when the number contacted the firm/bank and, in reverse, how/when the firm/bank contacted the number. In addition, establish the where and why; how long for; to whom; and by whom. Then isolate the contamination and ensure your systems for communication and KYC know not to do business with or become contaminated by the number or device again.

You see, while names and addresses are often made up, telephone numbers need to be accurate, because customers, fraudsters, and money launderers need to communicate and be communicated with. As was reinforced with the July 2 arrests and seizures, it is often communication that leaves fraudsters, money launderers, and other criminals weaker and more exposed.

This crucial weakness, when overseen accordingly, can be a company’s greatest strength.