The advent of novel and advanced technologies in the modern times has been a facilitating factor to the current upsurge in fraud trends.
With this in mind, the chief stakeholders at the Federal Bureau of Investigation, Department of Justice as well as the Securities and Exchange Commission have established new strategies and tools for squashing these trends.
The new fraud deterrence strategies target several areas including the platforms through which the fraudsters seek a high level of obscurity in their dealings.
Authorities say that some of these platforms include the dark web and platforms to exchange cryptocurrencies.
The platforms mentioned above, particularly the dark web, are hugely utilized by the fraudsters due to the high level of anonymity that they offer.
As such, several fraudulent activities, such as money laundering and financial schemes among others, have often continued without the detection of the FBI, SEC, and DOJ.
It is this situation that prompted the three agencies to meet and scan for new strategies to duly deal with fraud.
The meeting took place at the recent 2018 ACFE Fraud Risk Management Summit in New York City.
The Strategies Discussed by the Agencies
One of the principal means discussed by the agencies regarding the ways to squash the current fraud trends is the use of data analytics tools.
The SEC’s National Exam Analytics Tool (NEAT) is one of the data analytics tools that as played a significant role so far regarding fraud detection.
This tool is capable of detecting trading patterns which are deemed to be suspicious in various markets.
One of the most recent cases in which the SEC successfully relied on data analytics tools to unearth fraud involved the case of a New Jersey broker who abused his privilege to access clients’ brokerage data to defraud them, obtaining illegal profits of more than $700,000 in the process.
Based on the tools investigators used to analyze the data, the SEC and DOJ were able to charge the culprit.
The DOJ has also embraced technology as one of the critical measures for combating fraud.
The agency’s Fraud Section has mainly specialized in utilizing various technological tools to detect and circumvent fraud in various areas.
The main tools that DOJ investigators rely on to combat fraud include the predictive analytics, data analytics, and trend evaluation tools.
Federal agencies have also relied on several statutes in recent times to combat the increasing level of fraudulent activities.
An instance of this is the use of the Elder Abuse Prevention and Prosecution Act by both the FBI and DOJ.
The statute gives the two government bodies the powers to actively tackle and prevent the cases related to elder fraud.
Through data analytics tools, the agencies have been able to unearth several major cases of fraud in the healthcare sector.
One of the cases is the takedown of the largest healthcare fraud scheme in recent history.
Last month, it led to the payment of a $262 million fraud settlement by one of the subsidiaries of Community Health Systems, a major hospital chain in the U.S.
Key Areas Targeted by These Strategies
Given the complexity of the current fraud trends, agencies have been forced to rethink of ways to combat them.
This includes the specific areas to target. The dark web is one of the places wherein the stakeholders in these agencies have placed much focus on.
Speaking at the ACFE Fraud Risk Management Summit last month, Department of Justice Fraud Section Acting Chief Sandra Moser maintained that currently, fraudsters are taking advantage of various platforms including the dark web.
This makes the dark web one of the areas that these agencies routinely monitor. This is particularly true when it comes to the transactions conducted through this platform through the use of cryptocurrencies.
Regarding specific fraudulent activities, the SEC notes that a key area of focus at the moment is on transactions involving retail investors.
The SEC started placing significant emphasis on this area in 2017.
Some of the main activities dealt with include the sale of unsuitable goods, accounting fraud and the utilization of improper trading practices.
The SEC relies on its data analytics tools to detect and combat the violations that are likely to affect the retail investors.
The agency also formulated a Retail Strategy Task Force last year, which also uses data analytics tools to combat the violation schemes that might be experienced by the retail investors.
These include the Ponzi schemes as well as “pump and dump” fraud, among others.
The agencies have also directed the use of the new strategies towards combating cyber-enabled fraud.
Through data analytics, trend evaluation and predictive analytics tools, the FBI, SEC and DOJ can reportedly detect cybercrime in the dark web and other hidden channels of communication.
Some of these include the sale of inside information and market manipulation by way of hacking.
The FBI notes that its fraud deterrence strategies focus on eliminating elder financial abuse or fraud.
The agency, through its Crime Section, has also focused its new fraud prevention tools towards circumventing the flow of illicit prescription drugs and opioid abuse and fraud in the U.S. medical system.
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