An Emerging Global Security Threat: Internet and Telecommunication Fraud Crime and Taiwan’s Response

The U.S. Department of Justice’s recent announcement of its indictment of 36 individuals for their alleged roles in the Infraud Organization (an internet-based global cybercriminal organization responsible for more than $530 million in losses from cybercrimes) indicates that internet and telecommunication fraud is huge business. This is only the tip of the iceberg. Globalization of trade and advancement in internet and telecom technology have created unprecedented opportunities for customers and businesses across the world, but also posed new problems. According to a survey from the Communications Fraud Control Association (CFCA), the estimate of global fraud loss in 2015 is $38.1 billion. Given that internet and telecom fraud crime is borderless and often involves multiple jurisdictions across the globe, there is clear evidence that the crime groups are taking advantage of modern technology to conduct their illicit businesses worldwide. In East and Southeast Asia, internet and telecom fraud continues to be rampant as well. This type of crime emerged and has been evolving in East Asia since 2000. Prior to 2004, the majority of fraud committed involved direct human contact. Fraud was prevalent within Taiwan between 2004 and 2008. Following the implementation of rigorous anti-fraud operations by the Taiwan authorities, criminal organizations shifted their operations to China. In 2009, Taiwan and China signed the Cross-Strait Joint Crime-Fighting and Judicial Mutual Assistance Agreement, strengthening cooperation in the fight against fraud. By 2011, criminal organizations had begun to shift operations to Southeast Asia due to the geographic convenience associated with operating from the region, as well as the absence of comprehensive anti-fraud management systems. In 2014, fraud organizations shifted toward Kenya, Egypt, and other far-flung countries in a bid to evade investigation. Since 2016, fraud rings even relocated operations to Europe and Central American countries, taking advantage of the loophole of anti-human trafficking measures to set up sites of operation in these locales. According to past findings by Taiwan authorities, there are a number of features of internet and telecom fraud crime that can be identified. The first is the utilization of Internet and ICT (Information and Communication Technology). Fraud organizations have evolved in such a way that they now commit high-tech crimes involving ICT, and the Internet’s capacity for interflow and exchange has unburdened their criminal behavior of temporal, spatial, and regional restrictions. In particular, the integration of ICT systems allows fraudsters to reroute communications from one system to another across the Internet, and to conceal account identities and IP addresses. The second feature is the control over long distances. Fraud organizations employ remote controls to commit transnational crimes. Nowadays, the control techniques have extended to the use of illegal sites of operation or remote controls, such as Internet telephony, Type II telecoms, or various other forms of ICT, in directing money mules to withdraw illegally acquired funds from Taiwanese ATMs. Thirdly, corporate-style management. Fraud organizations are continuously recruiting new members. They have also adopted performance management, bonus and dividends systems, thus systematizing, organizing, and incorporating corporate patterns of behavior into their criminal undertakings. Finally, the high replicability. Analysis has shown that their senior members are easily able to reproduce fraudulent activities and transplant their experience to other fraud organizations with a high degree of replicability. Downstream members of these organizations, when apprehended by the police, are also easily replaced by new members. This lends a high degree of regenerative capacity to these criminal organizations. Internet and telecom fraud crime is not just a simple crime type with straight-forward solutions. It requires a joint effort both among different governmental branches at home, as well as with counterparts in other countries. Since 2004, the Taiwan government has integrated various resources and established interagency platform meetings with the cooperation of the competent authorities of policing, law, telecommunications, financial services, the Internet, and the industry itself. Various recent strategies and measures are worthy of highlighting: First, strengthening inter-agency coordination. To remove obstructions in the handling of such cases, cooperation and communication takes place between the different agencies, including the Ministry of Foreign Affairs (MOFA), the Executive Yuan’s Mainland Affairs Council (MAC), the Ministry of Justice (MOJ), the Taiwan High Prosecutors Office (THPO), the Ministry of Justice’s Investigation Bureau (MJIB), the Ministry of the Interior’s Criminal Investigation Bureau (CIB), the National Immigration Agency (NIA), etc. Second, establishing telecom fraud databases. A database of suspects with relevant criminal backgrounds has been created, allowing Taiwan authorities to conduct big data analysis of such information as the length of time between arrivals and departures, destinations, and passenger manifests, to determine if suspects may be reengaging in criminal activity. Taiwan’s overseas missions then work with local police to conduct on-site visits, facilitating the investigation of the sites of operation and premises set up by suspected criminal organizations. Third, setting up an anti-fraud command center. To enhance the fight against telecom fraud crime, the CIB established the Anti-Fraud Command Center on August 24, 2016. The Center integrates information and employs big data analysis from the information collected on high-risk suspects engaging in transnational fraud. Using big data analytics to track the movements of transnational telecom fraud organizations allows the Center to monitor core members of targeted organizations. Last but not least, international cooperation with foreign counterparts. Taiwan’s Ministry of Foreign Affairs and law enforcement agencies have directed their offices abroad to work with foreign counterparts. Since there are an increasing number of countries that have been affected, more international cooperation is needed. Many connections and joint efforts have been done following the spreading out of the fraud organizations to different regions of the world. The abovementioned measures and efforts have yielded some concrete results. According to recent statistics provided by the Ministry of the Interior, the Taiwan police authorities have cracked down 106 internet and telecom fraud call centers and arrested 6,389 fraud group members between the year of 2016 and 2017. The total seizure of criminal assets from those cases alone is over $10 million. The prosecution rate has also sharply increased from 5% to 54.9%. Moreover, the Taiwan government has worked closely with its foreign counterparts and has successfully repatriated 484 telecom fraud suspects back to Taiwan for trial during the same period. The statistics demonstrate that the Taiwan government’s active response, in close cooperation with all countries related, has thwarted the rampant activities of internet and telecom fraud crime. Transnational internet and telecommunication fraud cannot be solved by any single country alone. Facing the issues of globalization, governments and police forces around the world should work hand-in-hand and share experiences and best practices to combat crime through joint efforts. About the author: Leo S.F. Lin is Taiwan Police Liaison Officer (Attaché, Lt. Col.) at the Taipei Economic and Cultural Representative Office in the U.S.