Utilizing Internet for Fraud Examination and Investigation

Utilizing Internet for
Fraud Examination
and Investigation
Within Banking E-Channels
and Cyber Crime

Image: UltraHighDefinitionWallpepers

1ST SESSION:
REDEFINING FRAUD, EXAMINATION,
INVESTIGATION AND CYBER CRIME
April 2016 3

Let’s Start First with Fraud
DEFINITION
Oxford Dictionary
• Wrongful or criminal deception intended to result in financial or personal gain.
or
• A person or thing intended to deceive others, typically by unjustifiably
claiming or being credited with accomplishments or qualities.
Association of Certified Fraud Examiner (ACFE)
• Any crime for gain that uses deception as its principal modus operandi.
Black’s Law Dictionary
• A knowing misrepresentation of the truth or concealment of a material fact to
induce another to act to his or her detriment.
or
• Any intentional or deliberate act to deprive another of property or money by
guile, deception, or other unfair means.
April 2016 4

Fraud vs Lying
• Fraud usually involves lying for a specific gain that causes
someone loss while lying does not always include hurt.
• Example, if we take our car to an unscrupulous mechanic,
he may tell us he makes $1,000 a year. If this is a lie, it
does not hurt us.
• However, if our car does not need repairs but the
mechanic says our car needs $500 in body work, he/she
has committed fraud because truth is twisted and causes
financial loss for us.
April 2016 5

Types of Fraud
• Internal Fraud
When employee,
manager, or executive
commits fraud against his
or her employer.
• External Fraud
Vendors, customers,
suppliers, integrators,
consultants, and other
third parties (known or
unknown).
April 2016 6
Image courtesy of: City Caucus

Fraud’s Motives
• Donald Cressey’s hypothesis
April 2016 8
Courtesy of ACFE

Fraud Examination and Investigation
April 2016 9
Courtesy of ACFE

Fraud Examination and Investigation (cont’d)
April 2016 10
Courtesy of ACFE

Examination versus Audit
April 2016 11
Courtesy of ACFE

Examination versus Audit (cont’d)
April 2016 12
Courtesy of ACFE

Fraud Examination vs Forensic Accounting
• Different but related.
• FA is done by accountants using Accounting Skills in
anticipation of potential or actual civil or criminal litigation
and can include fraud, valuation, bankruptcy, and others.
• FE conducted by either accountants or non-accountants
and refer only to anti-fraud matters.
• Most FE involve forensic accounting but not all forensic
accounting is fraud examination.
• Simply because majority of examinations, investigations,
and reports regarding fraud are done with “an eye toward
litigation.”
• FE conduct their examination with assumption the case
may end in litigation.
April 2016 13

Redefining Cyber Crime
What Crime is?
“An event, which subjects the
doer to legal punishment or any
offence against morality, social
order or any unjust or shameful
act” ~ Oxford Dictionary
April 2016 14

What Crime is All About?
Doing Crime is Illegal?
Being a criminal = a bad person?
Crime = Illegal against Law + Bad Motive(s) + On
Purpose
Crime != Illegal against Law + Unintentional + Good
Motive (s)
Crime != Illegal against Law + Unintentional + Bad
Motive (s)
Crime != Illegal against Law + On Purpose + Good
Motive (s)
April 2016 15

What Crime is All About? (cont’d)
Therefore CRIMES are NOT to be
MEASURED by the ISSUE of
EVENTS, but by BAD INTENSION
of a PERSON or ENTITY.
April 2016 16

Then Cyber Crime is…
• An unlawful act wherein computer/machine is
either a tool or a target or both.
• Punishable by (Information Technology) Act.
• Happened in and or through cyber space.
• Former descriptions were "computer crime",
"computer-related crime" or "crime by computer“.
• Other forms include "digital", "electronic", "virtual"
, "IT", "high-tech" and technology-enabled" crime.
April 2016 17

Laws and Regulation on Indonesia
• Telecommunication Act No. 36/1999 focused
on Telecommunications Infrastructure briefly; Not
internet in particular.
• Information and Transaction Electronic Act
No. 11/2008 for legal enforcements against cyber
crime.
• Copyright Act No. 19/2002.
• Pornography Act No. 44/2008.
• Electronic System Provider and Electronic
Transaction Regulation No. 82/2012.
April 2016 18

Cyber Crime Categories
• Computing Devices as a Target
Using those devices to
attacks other devices
e.g. Hacking, virus/worms
attacks, DoS attack, etc.
• Computing Devices as a Weapon
Using those devices to
commit real-world crimes
e.g. cyber terrorism, credit
card fraud, etc.
April 2016
Image courtesy of chakreview.com
19

Cyber Crime Categories (cont’d)
From victim point of views:
1. Cyber crime on Persons
e.g. Harassment occurred in cyberspace,
or through the use of cyberspace (sexual,
racial, religious, or other) and cyber bullying.
2. Cyber crime on Groups/Organizations
Targeting particular or certain organizations
or groups whether profit or non-profit. Often
time those who reside as financial industry
players.
April 2016 20

Cyber Crime Categories (cont’d)
3. Cyber crime on Property
e.g. Computer vandalism (destruction of others'
property), transmission of harmful programs,
unauthorized intrusion through cyber
space, unauthorized possession of computer
information.
4. Cyber crime on Government
e.g. Cyber terrorism is one distinct kind of crime in
this category.
April 2016 21

In 2014 according to Federal Bureau
Investigation (FBI):
• Viruses
• Employee abuse of privileges
• Unauthorized access by
insiders
• Denial of Service (DoS, DDoS)
• System penetration from the
outside
• Theft of proprietary information
(User ID and password) and
devices
• Sabotage of data/networks
• Proving/scanning systems
• Financial fraud
Notable Cyber Crimes
April 2016
Image courtesy of indiatimes.com
22

 Manipulate data
integrity
 Sniffing
 Keylogger
 IP spoofing
Notable Cyber Crimes (cont’d)
April 2016
Image courtesy of @TrojanLax
23

April 2016
Source: IBM [1] UNODC Comprehensive Study on Cybercrime, 2013
24

April 2016
Source: IBM
[2] FBI: Crime in the United States 2013
[3] United California Bank Robbery
[4] Center for Strategic and International Studies
25

April 2016
Source: IBM [6] ESG: http://bit.ly/1xzTmUW
26

Cyber Crime-as-a-Service Marketplace
• Continues to mature over the past two years.
• Enables more fraudsters to cash in without needing
to understand the chain of fraud, how to phish or
spam, or IT infrastructure requirements.
• Becomes fiercely competitive.
• Cybercrime 'service providers' must work harder than
ever before to win and keep 'customers.’
• Generalized increase in quality of malware produced.
• Enables much larger pool of bad actors with no
technical knowledge to profit from.
April 2016 27

(cont’d)
• Many types of attack are simple and low
cost.
• Phishing attacks: 500,000 email addresses
cost $30.
• Hosting a phishing site can be more or less
free.
• Thousands of credit cards can be stolen in
return for around $100.
April 2016 28

(cont’d)
April 2016 29
Image courtesy of EMC

Mobile Encounters Larger Attack Surface
• In 2015 1.5 billion units are shipped.[1]
• Vast majority of mobile malware is still focused on Android
platform due to open platform and popularity with 79%, iOS of
15% and 5% the rests [2]
• Banking Trojans, used with SMS sniffers, are increasing
A user is persuaded through social engineering to
download mobile malware from their PC.
Scenario
During online banking session, a screen pop up
inviting user to download a mobile app (masquerading as
a security feature), which is actually SMS sniffer.
When the user's bank detects unusual activity, such
as high-value wire transfer, and sends an out-of-band
one-time password to user's mobile that must be
entered to authorize the transaction, the criminal can
intercept it and complete the transfer to their own account.
April 2016 30
[1] IDC Worldwide Smart Phone 2015-2019 Forecast and Analysis
[2] IDC Worldwide Quarterly Mobile Phone Tracker

Mobile-Only Attack Vectors
• Premium rate scams
Scenario
Scammers persuade user to send SMSs or make
calls to premium-rate numbers from their mobile,
with the scammers collecting the cash that results.
• Data stealers and spying apps
Scenario
These apps switch on a phone's camera or audio, so that a
criminal can watch the user's face to see whether he or she is
being convinced by a social engineering attempt; or record
what the user says during calls to their bank. They can also
steal address book data, lift photos from the phone and get the
device’s geo location.
April 2016 31

Mobile-Only Attack Vectors (cont’d)
• Initiated by rogue mobile apps rather than malware.
• Misuse trust to steal information and money by
persuading users to give them permissions during the
installation process.
• Many users simply click 'Next' without reading each
screen, and fail to notice.
• App has gained super-user privileges which provide full
access to the phone's features.
• May even make the app impossible to uninstall.
April 2016 32

Mobile-Only Attack Vectors (cont’d)
April 2016 33

Ransomware Continues
• In mobile devices, such as Police Locker
capitalizing typical user behavior during
installation.
• Gain privileges needed to lock the device.
• Give instruction to pay a ransom to unlock their
files (or to 'pay a fine' because the phone
supposedly contains 'illegal content').
• Ransoms generally have to be paid via an online
payment system, such as Bitcoin, or prepaid cash
cards (untraceable and non-reversible).
April 2016 34

April 2016 35

Cyber Criminals: Who They Are?
• Kids (age group below
17)
• Disgruntled employees
• Organized hacktivists
• Professional hackers
(corporate espionage)
either white or black hats
• Cyber Terrorist (political
motive)
April 2016
Image courtesy of Travaux
36

April 2016
Thank You!
Image: UltraHighDefinitionWallpepers
37
Thank You!
Image courtesy of waystobuildabusinessonline.com

Utilizing Internet for Fraud Examination and Investigation

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