By Samantha Sheen, AML Director Europe, ACAMS
25 April, 2017

Image: CISSP Cert Prep: 1 Security and Risk Management taken from Lynda.com


Practitioner’s Note
Reports produced by trusted bodies such as Europol on pan-national crime can be a valuable source of information about financial crime risks to which a business could be exposed. This information can be useful when identifying threats that should be assessed as part of an AML Business Risk Assessment.

The results of the SOCTA suggest that there are 5 key priorities to tackle the most threatening forms of serious and organised crime:

  • Cybercrime: Cyber-dependent crime is underpinned by a mature Crime-as-a-Service model, providing easy access to the tools and services required to carry out cyber-attacks. Cryptoware (ransomware using encryption) has become the leading malware in terms of threat and impact. It encrypts victims user generated files, denying them access unless the victim pays a fee to have their files decrypted.
  • Drug production, trafficking and distribution: Drug markets remain the largest criminal markets in the EU. More than one third of the criminal groups active in the EU are involved in the production, trafficking or distribution of various types of drugs.
  • Migrant smuggling: Migrant smuggling has emerged as a highly profitable and widespread criminal activity for organised crime groups (“OCG”) in the EU. The migrant smuggling business is now a large, profitable and sophisticated criminal market, comparable to the European drug markets.
  • Organised property crime: This encompasses a range of different criminal activities carried out predominantly by mobile OCGs operating across the EU. A steady increase in the number of reported burglaries over recent years is a particular concern in many Member States.
  • Trafficking in human beings (THB): OCGs involved in THB often exploit existing migratory routes to traffic victims within the EU. While the migration crisis has not yet had a widespread impact on THB for labour exploitation in the EU, some investigations show that traffickers are increasingly targeting irregular migrants and asylum seekers in the EU for exploitation.

The SOCTA also assesses other types of crime including weapons trafficking and corruption in sports, along with the links between serious and OCGs and terrorism and terrorist financing.

As a result of the SOCTA’s findings, Europol also recommends focusing on three “cross-cutting threats” that enable or enhance all types of serious and OCGs:

  • Document fraud. This has emerged as a key criminal activity linked to the migration crisis here in Europe.
  • Money laundering, [my emphasis] and
  • Online trade in illicit goods and services.

Europol concludes that disrupting these 3 threats will significantly reduce the ability of OCGs to grow their businesses and expand into new markets.

And finally, the SOCTA finds that technology, while touted as the means by which financial institutions can save time and money when used to facilitate more efficient regulatory compliance activities, is also increasingly the favoured by OCGs. The SOCTA records that for almost all types of organised crime, criminals are deploying and adapting technology with ever greater skill and to ever greater effect. The rate of technological innovation and the ability of OCGs to adapt these technologies have been increasing steadily over recent years. This, reports Europol, is perhaps the greatest challenge facing law enforcement authorities around the world, including in the EU.

I’ve attached a copy of a diagram from the SOCTA summarising its findings at the end of this article.

Concluding Thoughts

So how is the SOCTA relevant for financial institutions? Well, for me, the salient point appears to be that money laundering and criminal finances cut across all of the identified threats. And it is in effectively mitigating money laundering risks that there is, in turn, a corresponding impact upon the other threat areas identified. Identifying suspicious activity and reporting it is just one of the ways in which financial institutions can make a vital contribution towards mitigating these threats.

But the SOCTA is also a reminder that AML business risk assessments, especially when reviewed on a periodic basis, should take account not just of known risks, but also emerging risks, especially in relation to the use of technology, such as new online service and product offerings, and how they might be misused by OCGs for their own benefit. The SOCTA results make it clear that the effective mitigation of financial crime risks requires an iterative approach and one which recognises that the ways and means of misusing financial products for criminal purposes are constantly evolving.

You can find a copy of the SOCTA 2017 here: https://www.europol.europa.eu/socta/2017/