News and Analysis
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Gone in 15 seconds: why faster bank transfers make Australia and even bigger target for email fraud – 19 October 2017
Concerns have been raised over the potential increase in business email compromise (BEC) fraud attacks that could result from the Reserve Bank of Australia’s New Payments Platform (NPP), due to be implemented in January. The near real-time funds transfer will mean that funds could disappear from accounts before victims even realise they have been targeted.
Mining giant Rio Tinto and two of its former executives have been charged with fraud, after it was discovered they allegedly inflated the value of coal assets acquired in 2011. The CEO and CFO failed to follow accounting policies and comply with company policies, and have been charged with violating the anti-fraud, reporting, books and records and internal control provisions of the federal securities law.
A number of North American financial institutions are planning to invest in machine learning analytics to combat fraud. It is expected that the approach will generate intelligence that will both help to prevent attacks, as well as improve the customer experience.
Boris Trajkov, ‘Captain’ of childcare centre spent $300,000 of charity’s money on alcohol and lingerie – 17 October 2017
76 year old Boris Trajkov has been ordered by a court to repay more than $1 million dollars after spending funds from a charity he helped found on alcohol and lingerie. The organisation also operated a childcare centre, for which Trajkov received payments in cash, failing to bank majority of the funds and pay childcare staff.
A teenager from Townsville has reportedly stolen more than $10,000 after using her sick-grandfather’s debit card for more than 87 transactions. The fraudulent purchases began at the end of 2015, and continued until August this year.
Hacker codenamed ‘Alf’ from Home and Away stole secret data on Joint Strike fighter jets and Surveillance planes – 12 October 2017
An unidentified hacker has accessed sensitive information about Australia’s warplanes and navy ships. It is believed around 30-gigabytes of information has been stolen from a firm that subcontracts to the Defence Department.
A recent study has suggested that financial incentives for whistleblowing can delay reports of fraud, by hijacking the moral motivation to do the right thing. Furthermore, the study also found that such rewards can distort the reporting process.
The University of Melbourne has become the first Asia-pacific institution to issue recipient-owned academic credentials on a Blockchain. An open-source mobile app will allow students to store and access their credentials on the go.
Najam Shah will face 5 years jail time following a scheme that generated up to $170 million in stolen funds. Shah was behind a fraudulent home-loan scheme run from Melbourne’s Myra Home Loans, and has pleaded guilty to one count of conspiring to defraud financial institutions.
Areas in china with low education levels have seen a flourish of Pyramid schemes, resulting in vulnerable citizens being targeted and over charged for common consumable goods, such as cosmetics or health supplements. This is a critical social problem, that authorities are only just beginning to crack down on.
The elimination of the need for a third party such as banks in financial transactions – a feature of Blockchain, is likely to reduce the likelihood of financial fraud. This feature makes it difficult to hack and manipulate financial records.
A couple in the US have pleaded guilty to fraud after repeatedly falsely claiming items they had ordered from Amazon had been damaged in the post. The couple could face prison sentences of up to 20 years alongside a fine of up to $500,000 for the $1.2 million (USD) worth of stolen goods.
The ABC’s Four Corners has uncovered Adani Group’s Australian operations tax haven ties, discovering that many key assets are owned in the British Virgin Islands. The company’s filings with AISIC fail to mention a company registered in the Islands, giving the group opportunities to fraudulently minimise their tax payments..
The Securities and Exchange commission charged business man Maksim Zaslavskiy with fraudently running two initial coin offerings. It is alleged that he had been selling unregistered securities for coins and digital tokens that don’t exist.
Japanese Banks are thinking of making their own crypto currency called the J-Coin – 28 September 2017
Following the recent rise in popularity and value of crypto currencies such as Bit Coin, the Mizuho Financial Group in conjunction with a range of financial institutions are in the early stages of launching a Japanese crypto currency, that is expected to be launch in time for the 2020 Tokyo Olympics.
Cyber security specialist shortages could leave Australia vulnerable to attack, experts say – 27 September 2017
The Australian government has estimated a need for over 11,000 cyber security specialists over the next 10 years. Experts believe meeting this demand will involve collaboration between the government and private sector, as well as the integration of cyber security into the school curriculum.
The education department has issued a formal reprimand to Goulburn Ovens Institute of TAFE (GOTAFE), amid accusations of misusing taxpayer funds. The misconduct includes a range of dishonest enrolments, that did not meet course requirements to attract further funding.
Fuji Xerox has launched legal action against former executives following fraudulent accounting practices earlier this year, related to overstated revenue statements. It is believed the activity was linked to the company’s “sales at any cost” culture.
Former RSL NSW President Don Rowe admits to public inquiry he misused charity money – 20 September 2017
A former RSL president of NSW has admitted to using the charity’s funds for personal expenses, such as mobile phones, flights for his family and his own mortgage expenses. He confirmed that his 2014 resignation was indeed due to this misconduct, and not so-called ill health as he claimed at the time.
Following the closure of several Beijing-based cryptocurrency exchanges by Chinese authorities, Switzerland’s financial watchdog has opened investigations into a range of similar potential fraud cases. The FINMA shut down the Quid Pro Quo association, after finding they had accumulated at least 4 million Swiss francs from several hundred users of the E-coin.
Simon Elvery explains how messaging services such as Whatsapp and iMesssage use encryption to ensure messages are virtually impossible for anyone (including law enforcement agencies) to intercept.
Nant whisky founder’s wife to be interviewed by ASIC over failed investment schemes – 14 September 2017
Margarat Batt, wife of Nant whiskey founder Keith Batt and current company director is set to be interviewed by the ASIC, as part of an ongoing investigation into investment schemes conducted by Batt in both the whiskey business and angus cattle business. The schemes involve selling products to investors, with a promise to later repurchase with generous yearly return.
Questions have been raised over the circumstances in which Stuart Robert won his place in parliament in previous elections, amidst claims of misconduct regarding the transfer of shares and director position of his company, GMT. Between 2007 and 2010, the company had 356 government contracts, and it is possible that this may have breached section 44 of the constitution, which forbids MPs from profiting from the Commonwealth.
The Australian government is seeking greater intelligence power, though backdoor access to encrypted messaging services, claiming this will give them better capabilities when it comes to preventing terrorism. This has sparked discussions about the current level of access law enforcement agencies have into our data, and how it is used.
The AIPI National conference took place in Melbourne, on Thursday September 7. This year, the conference theme was technology enabled financial crime, which covered aspects such as prevention, detection, investigation, prosecution and reparation. A topic seemingly appropriate in light of the increasing threat technology continues to pose to Australian organisations.
To read more about what was presented, please click here:
Resumes of over 9,000 US military personnel have been exposed on an unsecure amazon platform. It is believed the lapse was mainly due to human error, and occurred during a document transfer using the S3 server between a security contractor and recruitment firm.
China has banned fund-raising activities in virtual currencies such as Bitcoin following several major hacks of digital currency exchanges. Several of China’s financial regulatory organisations have released a joint communication addressing the ban.
Three former Tesco executives will face trial at the end of the month after being accused of fraud and false accounting. All three men pleaded not guilty to the accusations at a hearing in August, following an overstatement of Tesco’s profit forecast in 2014. The trial is expected to last 10-12 weeks.
The rise in value of crypto-currencies such as Bitcoin has led to the introduction of a range of rival, imitator currencies across the globe, including in Australia. Companies are now offering ICO’s (initial coin offerings) – essentially the same as an IPO, but with digital tokens on offer, rather than small pieces of business ownership.
Victoria’s anti-corruption watchdog has claimed it does not have the power to investigate the now infamous ‘lobster dinner’ that Matthew Guy attended earlier this year. Although Guy referred himself to the IBAC, the information provided does not fall within the Commission’s jurisdiction, and therefore they would struggle to launch an investigation.
Federal Minister for Defence Industry Christopher Pyne officially launched Australia’s first defence industry cyber challenge on Wednesday August 30th. The competition seeks to address the current high demand for cyber security workers in Australia by up-skilling home-grown talent in the industry.
APRA Chairman Wayne Byres has announced a public inquiry into CBAs culture, governance and accountability frameworks. The probe follows the recent allegations that Commonwealth Bank had breached a number of anti-money laundering laws. The inquiry will be undertaken by an independent panel, and is expected to take about six months.
Indian opposition calls for investigation into Adani over financial fraud allegations – 26 August 2017
The Indian opposition has called for a probe into Adani after Indian customs intelligence documents alleging the group inflated invoices on a project in India were published.
Phillip Whiteman is current under investigation by the ATO, after undertaking an illegal practice known as “phoenixing”. He allegedly advised hundreds of clients on how to put their companies into liquidation, and then start them up again under a different name while cheating creditors.
LG Electronics has been the latest victim of an attack from rampant ransomware WannaCry. Although there were measures put into place to prevent further spread of the malware earlier this year, the ransomware continues to infect unpatched systems.
Adani mining giant faces financial fraud claims as it bids for Australian coal loan – 18 August 2017
The Adani corporation has been accused of allegedly inflating invoices for an electricity project in India to move large sums of money into offshore bank accounts. The company has denied the allegations, however a legal decision is expected to be reaching in the “near future”.
The Australian Payments network has identified a significant increase in credit card fraud, particularly in “card not present” fraud. The report also details the use of “ghost terminals”, fake terminals not connected to a payment network that are used to ‘skim’ card details.
The Australian federal government has announced the proposal of a new law, forcing global tech giants to assist police by unscrambling encrypted messages sent by suspected extremists and other criminals. The bill is expected to be introduced at Parliament by November this year.
Ransomware victims payout almost $32 Million over the last two years, a study has found – 13 August 2017
Researchers at Google, Chainalysis, The University of San Diego and New York University’s Tandon School of Engineering have recently revealed the monetary cost of ransomware attacks. The study identifies a strain named “Locky” as the most financially devastating, but also references more common strains such as Petya and WannaCry.
A demand for 100 Bitcoins (approx. AUD$439,995) has been published in the dark web following a ransomware attack that devastated over 16,000 computers in 64 countries. In return for the payment, the hackers promise a private security key that could decrypt files that have been locked by the Petya/Goldeneye malware.
Computer expert Brian Krebs claims cyber criminals behind a global ransomware attack earned only $26,000, despite being one of the largest attacks of the kind in history.
A cyber threat report conducted earlier this year has seen that whilst total malware attempts have declined, attacks using ransomware and a new form of cybercrime DDoS (Distributed Denial of Service) are on the rise.
Fairfax Media has revealed that millions of dollars have been rorted from the Australian Government’s Research and Development Tax incentive program, after several individuals abused the scheme, and made dishonest claims.
Justice minister Michael Keenan has reminded internet users to be vigilant, speaking at a Queensland conference following a string of ransomware incidents of late.
Former mortgage broker Michael Samra has been sentenced to eight years and nine months imprisonment for financial deception that occurred in 2009, totalling $1.902 million.
A recent quarterly report suggests that the trend toward ransomware attacks will continue throughout 2017, with hacks expected to target data destruction rather than pure financial gain.
An investigation into a dinner between Victorian opposition leader Matthew Guy and an alleged Mafia boss has been launched by Four Corners and Fairfax Meida after obtaining a series of phone records.
It is alleged that the men were plotting to funnel a large party donation into smaller amounts, so that the donation could not be traced back to the source.
Guy has since referred the matter himself to Victoria’s anti-corruption commission, IBAC, claiming no illegal actions have been taken.
Apple and Google pull hundreds of trading apps from stores over fears of financial scams – 4 August 2017
ASIC has cracked down on online fraud after it conducted a review of mobile app stores, focusing on binary options trading. Since being contacted by ASIC, Apple and Google have removed relevant apps from their respective stores.
Forget Commonwealth Bank’s $9.8b profit next week, Ian Narev will be explaining “cuckoo smurfing” – 4 August 2017
More details on the CBA money laundering scandal.
Austrac has alleged that The Commonwealth Bank has breached money laundering laws after failing to report a number of large cash transactions made through intelligent money machines.
This included six instances where the bank believed customers were possibly financing terrorism.
The AFP has received a trove of information about anonymous users following the closure of two of the biggest dark net marketplaces. Anonymous users use sites similar to the now closed AlphaBay and Hansa to sell online banking details and steal money from the accounts. Other uses include the buying and selling of illicit substances and drugs, an activity that is on the rise in the Australian marketplace.
The Financial Conduct Authority has proposed that banks in Britain will now have to publish data quarterly from next year onwards. The move seeks to show the quality of service and boost competition between Banks, and is based on measuring performance based on set criteria.
$5 million in bogus invoices: ICAC finds former Botany Bay CFO, 11 others, acted corruptly – 28 July 2017
Gary Goodman, former CFO of Botany Bay council and a host of other council members have been found to have acted corruptly by the ICAC, after a public inquiry last year.
The CFO raised over $5 million in fake invoices, and the state watchdog found this corruption extended almost two decades, concluding when Goodman was fired in 2015 following the ICAC investigation.
The equivalent of sixty-million pounds has been drained from the black-market trading place accounts in the last week, after hackers drained accounts whilst making them appear untouched.
Alastair MacGibbon, recently appointed head of the Australian Cyber Security Centre, will be the Key Note Speaker for the AIPI National conference to be held at University of Melbourne Law School on 7 September 2017.
The conference will feature presentations from leading practitioners from the Telstra, Australian Federal Police, Australian Taxation Office, Victoria Police, National Australia Bank, McGrathNicol, Equifax, ACORN, QLD police and more.
Topics covered will include bitcoin/cryptocurrency, ransomware, man-in-the-middle scams, identity fraud, advances in forensic IT, data analytics etc and their impact on the prevention, detection, investigation, prosecution and reparation from “Technology Enable Financial Crime”.
Special Advisor to the Prime Minister on Cyber Security, Alastair MacGibbon, was appointed by the Prime Minister to head the new Australian Cyber Security Centre on 18 July 2017.
Shane Heal, former Olympian basketballer has appeared in a Brisbane court charged with defrauding former Australian Boomers coach Brett Brown of $750,000. Heal was committed to stand trial and was released on bail.
The Federal Minister for Financial Services, Kelly O’Dwyer, spoke at a whistleblower summit hosted by the University of Melbourne Law School on Friday. Ms O’Dwyer told the summit that the Government intends to introduce whistleblower protection legislation including provisions for paying compensation to people who blow the whistle on corporate corruption or unethical behaviour. The initiative is similar to US legislation that sees between 10% and 30% of money collected in a case of corporate misconduct paid to the whistleblower.
Michael Cranston who resigned as Deputy Commissioner of Tax on 13 June 2017 after being caught up in allegations of a $144 million tax fraud involving his son and his daughter was caught on a telephone intercept advising his son on how to deal with an investigation into the allegations. The conversation with his son caught on audio recording was played to a criminal hearing in Sydney yesterday.
The ACT Chapter was relaunched this week. Chapter President Rochelle Sistrom welcomed ACT Members and guests to a breakfast meeting at ‘the Deck’ at Regatta Point, Parkes. The meeting heard a fascinating presentation by Alastair MacGibbon, Special Advisor to the Prime Minister on Cyber Security. Alastair told the meeting about the latest threats to corporate and government cyber security in this country and initiatives of the Federal Government to counter the threat. The relaunch of the ACT Chapter after a hiatus of six years is a significant step forward for the AIPI.
ACT Chapter President Rochelle Sistrom presenting an award to Alastair MacGibbon following is address on Cyber Security to the ACT Chapter.
Former Labor Minister Ian Macdonald has been sentenced to a minimum 10 years jail for misconduct in public office. He was found guilty of two counts of misconduct in public office after he granted a multimillion-dollar coal-mining license to Doyles Creek Mining in 2008.
The SFO has launched an investigation into the activities of UK oil services company Petrofac on the suspicion of “bribery, corruption and money laundering”. The investigation is linked to an ongoing probe into the activities of Monaco oil contractor Unaoil.
On 30 November 2016, the Senate referred an inquiry into whistleblower protections in the corporate, public and not-for-profit sectors to the Joint Parliamentary Committee on Corporations and Financial Services. The following is a link to the website (registration is required to get access):
The referral of this issue to the joint parliamentary committee is consistent the Australian Government’s National Action Plan 2016-2018 under the Open Government Partnership, an initiative of the United Nations aimed at promoting transparency, fighting corruption and using technology to strengthen governance practices around the world (November 2016).
You can find the Australian Governments National Action Plan at http://www.google.com.au/url?sa=t&rct=j&q=&esrc=s&source=web&cd=1&ved=0ahUKEwim9cCL8_DTAhWKk5QKHZ-aANoQFggiMAA&url=http%3A%2F%2Fogpau.pmc.gov.au%2Fsites%2Fdefault%2Ffiles%2Ffiles%2F2016%2F10%2FAustralias-first-Open-Government-National-Action-Plan-Draft-for-consultation-Accessible.pdf&usg=AFQjCNGkOWmxBvfAuE2MM2hvqroRji1e6w&sig2=In5n7ZTz6cCvC1DnjORx0w
A statement of the Australian Government’s commitment to better protection for whistleblowers is found at 1.1 in the plan (page 11):
“Australia will ensure appropriate protections are in place for people who report tax evasion or avoidance, corruption, waste, fraud and misconduct within the corporate sector.”
Written submissions to thee joint parliamentary committee closed on 11 February and the last public hearing was held on 28 April. The committee is due to report by 30 June. All of the written submissions and a transcript of evidence at the public hearings are on the website. There were many submissions made by a large number of individuals and organisations.
The AIPI is represented on a working party formed by Standards Australia to consider recommendations for an international whistleblower protection standard and also to consider an equivalent standard addressing whistleblower protection in this country.