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CISC National Monitored Issues

Technology and Crime

National Overview

Technology facilitates individual criminals or organized crime groups in their involvement in both traditional and new crimes. As a result, the scope and potential impact of their criminal activities are increased. Technology facilitates criminals in targeting thousands of victims in multiple jurisdictions per crime, such as payment card fraud (debit/credit cards) or identity theft, before a victim or law enforcement is aware the crimes have taken place. Financial institutions and businesses are either reluctant to report such crimes and consider the losses the cost of doing business, or legitimately classify the crimes as credit losses, thus subsuming the frauds within those figures. Consequently, it is difficult to obtain accurate and consistent statistics concerning the extent of technologically-assisted crime and the degree of loss.

Identity theft is one of the fastest growing crimes in North America. Identity theft, involving the unauthorized collection and fraudulent use of another individual’s personal information, has become a serious concern to Canadians. Criminals are increasingly using technology to steal identities as well as illicitly obtain funds. Personal information is increasingly available through the Internet and is easier to access. Identity theft is also a medium through which other serious crimes are facilitated. Criminals will not only use stolen personal information to drain individuals’ bank accounts, but also to obtain or create fraudulent documentation to assume false identities to obtain loans or evade law enforcement. Phonebusters, a fraud reporting agency administered by the Ontario Provincial Police in cooperation with the RCMP, indicates that losses attributed to identity theft accounted for approximately $21 million in 2003, almost double the estimated losses of 2002. Identity theft not only results in financial losses, but also leads to damage to credit records. In addition, even if financial institutions do not hold the victim liable for the fraudulent debts, many victims are inconvenienced by the lengthy attempts to recover their personal financial information and address these debts.

According to Phonebusters, payment card fraud is a major component of identity theft, comprising 42 per cent of reported incidents. Canadians use debit cards in large numbers, with over 2.5 billion debit transactions in 2003. The high rate of payment card (debit/credit) use increases criminal opportunities for organized crime. For example, in some cases the placement of white-label ATMs by organized crime groups in public areas, such as bars and convenience stores, presents a high potential for fraud as these machines can be illegally modified to copy payment card information as the card is swiped.

The Internet is also often used as a tool to facilitate crime. On-line banks and casinos can enable criminals to launder their illicit proceeds via on-line bank accounts. On-line businesses can also be used to conceal and/or launder proceeds while making criminal detection and investigations more complex, as multiple jurisdictions and countries are involved.

Criminals posing as legitimate persons or representatives of an institution can send unsolicited e-mails and ask unsuspecting victims to provide personal financial information, such as credit card numbers. This activity, commonly referred to as “phishing,” can result in substantial financial losses and stress to victims. The fraud is often perpetuated using offshore servers outside Canadian jurisdictions, thus making criminal investigations more complex, costly and time consuming.

Emerging technology offers increased opportunities to enhance the organizational capacity, level of sophistication and sphere of operations of criminal organizations. Voice-over-Internet Protocol (VoIP), enabling telephone conversations over the Internet, will become increasingly available. This service offers a high level of anonymity due to its advanced encryption. Secure wireless technologies, such as personal digital assistants (PDAs) and “mike” telephones, are increasingly used because of these encryption capacities. Other varieties of these devices, decoded only by a similar handset or a computer running its software, will attract organized criminals seeking secure conversations. Chat rooms, e-mail and cellular text messages can also be used to remotely arrange meetings and illicit drug deliveries. In addition, the modifications and adaptation of common and innocuous electronic devices, such as video game consoles and hotel cardkeys, also enable criminals to store encrypted data such as child pornography, stolen credit card and money laundering information.

To remain up-to-date with current technology and expertise, law enforcement in Canada is taking measures to increase resources and training within the various technological crime units across the country. Integrated technological crime units have been created among a number of major law enforcement agencies. Law enforcement continues to develop key partnerships with government and private sectors to establish best practices and strategies in order to reduce the risk to the public by the criminal use of technology.