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Trends in Security Information
The HSD Trendmonitor is designed to provide access to relevant content on various subjects in the safety and security domain, to identify relevant developments and to connect knowledge and organisations. The safety and security domain encompasses a vast number of subjects. Four relevant taxonomies (type of threat or opportunity, victim, source of threat and domain of application) have been constructed in order to visualize all of these subjects. The taxonomies and related category descriptions have been carefully composed according to other taxonomies, European and international standards and our own expertise.
In order to identify safety and security related trends, relevant reports and HSD news articles are continuously scanned, analysed and classified by hand according to the four taxonomies. This results in a wide array of observations, which we call ‘Trend Snippets’. Multiple Trend Snippets combined can provide insights into safety and security trends. The size of the circles shows the relative weight of the topic, the filters can be used to further select the most relevant content for you. If you have an addition, question or remark, drop us a line at info@securitydelta.nl.
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COVID-19 has had a significant impact on the serious and organised crime landscape in the EU
landscape in the EU. Criminals were quick to adapt illegal products, modi operandi and
narratives in order to exploit the fear and anxieties of Europeans and to capitalise on the scarcity of some vital goods during the pandemic. While some criminal activities will or have returned to their pre-pandemic state, others will be fundamentally changed by the
COVID-19 pandemic. The immediate impact of the COVID-19 crisis has been most visible in the counterfeiting and distribution of substandard goods, cybercrime, organised property crime, and various types of fraud schemes.
The COVID-19 pandemic has presented unique opportunities for fraudsters seeking to profit from the insecurity, restrictions and booming demand for certain products as a result of this crisis. Examples include investment fraud, CEO fraud, non-delivery fraud, romance fraud, fake invoice fraud, social benefit fraud, bank fraud, and subsidy fraud.
The long-term consequences of the pandemic may manifest particularly severely in the area of financial crime. Businesses operating in sectors suffering particularly negative
economic pressures, such as the hospitality, catering and tourism sectors, are becoming
more vulnerable to criminal infiltration.
The COVID-19 pandemic has had a significant impact on the serious and organised crime
landscape in the EU. Criminals were quick to adapt illegal products, modi operandi and
narratives in order to exploit the fear and anxieties of Europeans and to capitalise on the scarcity of some vital goods during the pandemic. While some criminal activities will or have returned to their pre-pandemic state, others will be fundamentally changed by the
COVID-19 pandemic.
Fraud offences are committed with the intention to defraud using false and deceitful pretexts resulting in the voluntary but unlawful transfer of values, goods or an undue advantage to the fraudsters. Fraud schemes targeting private citizens, small and medium enterprises, global corporations and critical infrastructure are present in all Member States(33). Fraud is believed to be under-reported as victimised individuals or companies seek to protect their brand name and putation rather than approach law enforcement. In addition, the under-reporting of fraud cases can also be attributed to the fact that insurance companies often do not compensate victims’ financial losses incurred due to fraud. The COVID-19 pandemic has presented unique opportunities for fraudsters seeking to profit from the insecurity, restrictions and booming demand for certain products as a result of this crisis(34). The majority of investment, payment order and advance fee frauds are orchestrated using call centres operated by low-ranking members of criminal networks. Boiler room schemes involve criminals cold calling their victims. These schemes use call centres established in jurisdictions away from the locations of their victims, with the call centre fraudsters usually speaking their victims’ native language fluently. Fraudsters use social engineering techniques to manipulate human behaviour and exploit weaknesses to gain information or compliance. Their deception often relies on creating scenarios and stories that target victims’ vulnerabilities. 34 Levi and Smith 2020, Australian Institute of Criminology Research Report – Fraud and its relationship to pandemics and economic crises: From Spanish flu to COVID-19. The list of fraud schemes presented here is nonexhaustive. Fraud schemes are constantly evolving and the tools and techniques used to perpetuate them can overlap between different types of frauds, often making it difficult to identify and distinguish between different types of fraud. INVESTMENT FRAUD Investment fraud schemes result in substantial financial damage to private individuals and companies. Investment fraudsters have been increasingly targeting the cryptocurrency investment market by operating fake websites offering bogus investment opportunities. Fraudsters commonly seek out victims on social media platforms.
Online advertisements invite victims to open online trading portfolios and lure them in with initial benefits. However, the fraudsters extract and disappear with the funds shortly after. Non-existing virtual currencies are also advertised as an investment opportunity. This type of fraud in particular appears to have become more common across the EU over the last four years. CHIEF EXECUTIVE OFFICER FRAUD AND BUSINESS EMAIL COMPROMISE FRAUD Chief Executive Officer (CEO) fraud is one of the most common types of payment order fraud. As part of this fraud, employees receive a payment order by email or a telephone call from a fraudster impersonating a company executive, often the CEO. The payment is instructed to be made out to bank accounts under the control of the fraudsters. NON-DELIVERY FRAUD Non-delivery fraud is a variant of payment order and advance fee fraud. Non-delivery fraudsters use fake web shops to advertise and sell non-existent goods. During the first months of the COVID-19 pandemic, fraudsters exploited the high demand for and low supply of personal protective equipment and self‑testing kits. The number of websites and social media accounts fraudulently advertising these products increased significantly. The profits from these scams were significant and many of the victims were corporate and public entities, such as hospitals and clinics placing orders for supplies worth several millions of euros. ROMANCE FRAUD As part of romance fraud schemes, fraudsters contact potential victims with the objective of taking financial advantage of those genuinely looking for romantic partners. Fraudsters work to gradually establish trust with the victim and soon start eliciting personal details such as bank accounts, credit card numbers or ask for money. FAKE INVOICE FRAUD Fake invoice fraud, known as payment order fraud or ghost invoice fraud, is a form of acquisition fraud that involves requests for payments based on fictitious invoices issued to potential victims by fraudsters. This type of fraud relies on advertisements on sale webpages and the use of false, inflated or duplicate invoices. Criminals often impersonate legitimate suppliers and make a formal request to change the bank account to which genuine payments to that supplier are made. Fake invoices are sent via post and courier services or through emails. SOCIAL BENEFIT FRAUD Social benefit fraud causes significant financial loss to the budgets of Member States and potentially deprives those genuinely in the need of aid from state support. Social benefit fraud can entail fraud against medical insurance, employment benefits, unemployment allowances, or allowances for low-income workers and refugees. As part of social dumping fraud in the construction and transportation sectors, criminal networks create fake companies and claim benefits for non-existing employees. In another form of this fraud, employees continue to work while receiving unemployment benefits and receiving wages under the table from the employer. BANK FRAUD The most common form of bank fraud is loan and mortgage fraud. Fraudsters use companies to acquire mortgage loans using manipulated real estate transactions. Criminals recruit homeless and poor people as strawpersons to apply for loans from banks. In other instances, loans are requested based on forged passports. Another type of bank fraud sees accounts taken over to execute fraudulent transactions. Mortgage fraud is usually linked to document fraud. SUBSIDY FRAUD The number of cases involving subsidy fraud cases has steadily increased over the years. As part of subsidy fraud, criminals submit fraudulent applications for EU grants or tenders. Typically, these applications are based on false declarations, progress reports and invoices used to justify public expenditure or the fraudulent award of public tenders and/or subsidies.
THE LONG-TERM IMPACT OF THE COVID-19 PANDEMIC
The COVID-19 pandemic has been a crisis of an unprecedented nature. The pandemic has proven to be more than a global public health crisis and has resulted in considerable changes in the serious and organised crime landscape in the EU and beyond. Criminals have quickly capitalised on these changes by shifting their market focus and adapting their illicit activities to the crisis context. The immediate impact of the COVID-19 crisis has been most visible in the counterfeiting and distribution of substandard goods, cybercrime, organised property crime, and various types of fraud schemes. The mid- to long-term consequences of the pandemic will result in further vulnerabilities. A prolonged pandemic will put a heavy strain on European and global economies, with indications that some countries are already entering an economic downturn. Learning from previous crises, it can be anticipated that a volatile economic situation with growing poverty and social inequality will serve as a breeding ground for organised and serious crime. Criminals will intensify their activities to fully exploit emerging vulnerabilities, in order to compensate for lost profit during the lockdown period. Criminals will continue to rely on the use of new technologies and further expand their technical capabilities. Criminal groups have quickly adapted to profit from the new business opportunities the pandemic economy has presented, taking advantage of the increased and widespread demand for certain products. The supply of counterfeit and substandard medical equipment as well as sanitary and pharmaceutical products increased significantly both on the surface and dark web(56). The pandemic has clearly highlighted the dynamic nature of cybercrime. Since the outbreak of the pandemic, an increased number of COVID-19-related domains have been created to support different cybercrime activities. The number of cyber-enabled and pandemic-related scams, COVID-19-themed malware, ransomware and phishing attacks notably increased during the pandemic targeting individuals, businesses and the health sector alike (57). With the roll out of COVID-19 vaccination campaigns, it is expected that the number of vaccinespecific cybercrime activities will surge, including cyberattacks on pharmaceutical research. The impact of the COVID-19 crisis on the drug markets has been relatively limited. Aside from initial and localised disruptions in the supply and distribution of drugs during the first lockdown, the trafficking of drugs has continued(58). Despite fluctuations in the price and supply of drugs on the European market early in the pandemic, the drug market has largely returned to prepandemic levels. The long-term consequences of the pandemic may manifest particularly severely in the area of financial crime(59). Businesses operating in sectors suffering particularly negative economic pressures, such as the hospitality, catering and tourism sectors, are becoming more vulnerable to criminal infiltration(60). Money laundering poses a high risk in times of financial crises. Criminals may increasingly attempt to launder money through dormant companies, buy out financially affected cash-intensive businesses, or invest in property in the construction sector(61). As a result of heightened pressures exerted on banks during an economic crisis, due diligence procedures may be weakened elevating the risk of loan fraud. Money launderers may also increasingly misuse online financial services and virtual assets to conceal their illicit proceeds. Tradebased money-laundering activities are also expected to intensify. The COVID-19 pandemic has led to a considerable increase in the output of sanitary and medical waste, posing a significant risk to the environment and public health alike(62). A reduction in the number of inspections and controls of waste shipments by supervisory authorities enabled some criminals to traffic and illegally dispose of waste. Widespread economic hardship may open up additional opportunities for illicit waste traffickers. A general decline in corporate revenues may entice companies to take advantage of such illicit services in order to reduce waste disposal costs.