The Fraud Blog with Tracy Kitten

Ghadafi's Death and Finance

Everything Touches Banking, Even the Takedown of a Global Figure

An ousted ruler caught in the midst of a civil war, his death seems something more germane to politicians, governments and international enforcement agencies. Even former deputy assistant secretary of policy for the Department of Homeland Security, Paul Rosenzweig, said the impact of Gadhafi's death would be relatively contained, and would have little or no impact on national cybersecurity concerns.

"I think Gadhafi is kind of just a status quo event in cyberland," Rosenzweig said.

There is seldom an incident such as this where the repercussions don't cross global borders. 

But from a financial perspective, Gadhafi had big implications, especially for U.S. banking institutions, because his death raised immediate and serious worries about money laundering and terrorist financing.

The movement of funds linked to Gadhafi and his associates is likely to pick up, as those left behind work to liquidate assets and take what they can before the holdings are seized.

"The question always is, 'Where is his stash and who has access to it?" says Kevin Sullivan, an AML expert and former money-laundering investigator for the New York State Police. "Since everything in and out of Libya is currently under scrutiny, I'd be looking at previous associates and increased volume and traffic."

Gadhafi's conspirators will soon make their moves, cash-in and do what they can to benefit from Gaddafi's death.

"Gadhafi is notorious for being involved with U.S. banks that have neglected to follow the rules for KYC [know your customer] in order to regulate transactions with PEPs," says Paul Buelens, head of product management and compliance for EastNets. "There is seldom an incident such as this where the repercussions don't cross global borders. It will be important for financial institutions to follow compliance procedures such as KYC in order to mitigate their risks."

Gadhafi's death is just another example of how diverse events affect the global financial infrastructure. From economic fluctuations and the global mortgage crisis to international cybergangs and the emergence of the iPad and iTouch, everything affects finance.

Think about this month's ID theft bust in Queens [See Biggest ID Theft Bust in History]. "Operation Swiper" represented the biggest ID theft takedown in U.S. history. So far, 86 individuals have been arrested and 111 have been indicted.

At the center of that ID theft scheme are banks, as the card issuers. The crux of the scheme: defrauding thousands of consumers, banks and card brands, including American Express, Visa, MasterCard and Discover Card, between May 2010 and September 2011, through compromising linked to skimming attacks waged against point of sale devices and ATMs.

In fact, all ID theft cases link back to some sort of financial fraud. Otherwise, fraudsters would have no incentive to steal identities to begin with. There has to be a monetary payoff, right? And that's why so many tethers connect our global banking system to seemingly unrelated events.

A more connected world means more international, cross-border payments. And the emergence of new payments methods, whether through prepaid cards or PayPal, is opening more avenues for fraudsters.

The financial industry is taking strides to get ahead of these concerns, but it always seems the fraudsters are at least two steps ahead. This is why cooperation with and through law enforcement agencies and governments is so critical. It truly requires global effort and global collaboration.



About the Author

Tracy Kitten

Tracy Kitten

Director of Global Events Content and Executive Editor, BankInfoSecurity & CUInfoSecurity

A veteran journalist with more than 20 years' experience, Kitten has covered the financial sector for the last 13 years. Before joining Information Security Media Group in 2010, where she now serves as director of global events content and executive editor of BankInfoSecurity and CUInfoSecurity, she covered the financial self-service industry as the senior editor of ATMmarketplace, part of Networld Media. Kitten has been a regular speaker at domestic and international conferences, and was the keynote at ATMIA's U.S. and Canadian conferences in 2009. She has been quoted by CNN.com, ABC News, Bankrate.com and MSN Money.




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