What You Can Do to Stop Economic Crime | Hanjo Seibert | TED

Summary

The video script discusses the reality of economic crime, drawing parallels with thrilling movie plots featuring villains engaging in illegal activities funded by vast sums of laundered money. The speaker, an expert in combating economic crime, reveals that these scenarios are not just fictional, as they advise banks on preventing money flow to criminals. The script covers various forms of economic crime, including drug trafficking, human trafficking, fraud, and terrorism, all of which require money laundering to legitimize illicit profits. The United Nations estimates that up to two trillion US dollars are laundered annually, exceeding the combined revenues of major tech and finance companies. The speaker shares real-life scenarios encountered in their work, such as the infiltration of sports clubs and the sale of counterfeit luxury goods, which can fund criminal operations. They also highlight the importance of understanding supply chains to prevent dual-use products from being misused. The message is a call to action for individuals, consumers, and companies to be vigilant and demand transparency, collectively playing the role of a 'superhero' to combat economic crime and disrupt the underground economy.

Takeaways

• 💼 Economic crime is a serious global issue involving a wide range of illegal activities, including drug trafficking, human trafficking, fraud, and terrorism.
• 💰 Money laundering is a complex process criminals use to disconnect the origin of their illegally obtained profits, with the amount laundered annually estimated to be up to two trillion US dollars.
• 🌍 The scale of money laundering is astronomical, equivalent to 57% of the way to the moon if represented in stacked one-dollar notes, surpassing the combined annual revenues of major tech and financial companies.
• 🕵️‍♂️ Real-life scenarios of economic crime include the exchange of suitcases full of cash for illegal weapons and the use of hackers to transfer vast sums of money across the globe.
• 🏟️ Sports clubs can be used for money laundering if criminals have ownership stakes, making it crucial for banks financing them to ensure they are not supporting illicit activities.
• 💳 Reducing cash transactions and increasing transparency through the use of debit or credit cards and requesting official receipts can hinder criminals from laundering money through everyday purchases.
• 🛍️ The sale of counterfeit luxury goods, often with extremely high profit margins, can finance criminal organizations and even terrorism, highlighting the need for vigilance in where and how we purchase goods.
• 🔍 Companies should understand their supply chain thoroughly and monitor key business transactions to prevent their products from being misused, especially in cases of dual-use goods that have both civilian and military applications.
• 🏢 The corporate world is not immune to money laundering, and it is the responsibility of employees, managers, and customers to demand transparency and challenge the status quo to combat economic crime.
• 🚨 Banks and financial institutions play a critical role in monitoring transactions to spot irregularities, such as the sale of counterfeit products, which can indicate criminal activity.
• 🌐 As consumers, investors, and individuals, we all have the power to make a difference by being aware, demanding transparency, and refusing to be part of the underground economy that supports criminals.

Q & A

What is the common element in the scenarios described for economic crimes in movies?

The common element is the need for an immense amount of money, which is typically obtained through illegal means such as the sale of weapons or through hacking and transferring funds from various accounts worldwide.

What is the reality of economic crime according to the speaker's experience?

Economic crime is real and involves activities such as money laundering, which is used to disconnect the proceeds of crime from their illegal source. The speaker works to help banks and companies prevent criminals from accessing funds.

What are the various types of economic crimes mentioned in the script?

The script mentions a wide range of economic crimes including drug trafficking, human trafficking, sexual exploitation, fraud, cyber crimes, tax evasion, offshore tax havens, piracy, and corruption.

How much money is estimated to be laundered globally each year according to the United Nations?

The United Nations estimates that up to two trillion US dollars are laundered each year globally.

What is the significance of using a debit or credit card instead of cash at a sports event?

Using a debit or credit card instead of cash creates a traceable transaction, which increases transparency and makes it harder for criminals to launder money through unexpected ticket sales or other cash-intensive activities.

Why is it important to request an official receipt for every purchase, even if you don't keep it?

Requesting an official receipt ensures that the sale is officially recorded, which contributes to transparency and makes it more difficult for criminal activities to go unnoticed.

What is the connection between counterfeit luxury goods and criminal organizations?

Counterfeit luxury goods often have extremely high profit margins, and when the beneficiary is a criminal organization or terrorist group, the proceeds can finance illegal activities, including acts of terrorism.

How can consumers make it harder for criminals to sell fake products?

Consumers can be more vigilant about where they buy luxury goods, ensuring they use legitimate websites and safe payment methods, be skeptical of deals that seem too good to be true, and look for an instant return policy as a sign of legitimacy.

What is an example of a seemingly harmless product that can have a dual-use in criminal activities?

Household appliances like washing machines and refrigerators contain microchips and control electronics that can be used to manufacture or repair weapons, indicating a potential for dual-use in criminal activities.

What steps can companies take to prevent their products from being used in criminal activities?

Companies should understand their supply chain, know their suppliers and customers, and introduce data-driven monitoring on key business metrics to identify anomalies such as unexpected sales spikes in certain regions.

What is the role of individuals in combating economic crime?

Individuals, as consumers, investors, and law-abiding citizens, have the power to challenge the status quo by demanding transparency, making informed choices, and collectively raising their voice against economic crimes.

What message does the speaker hope to convey to the audience?

The speaker hopes to raise awareness about the reality and impact of economic crime and to inspire individuals to take action, collectively acting as a 'superhero' to fight against the underground economy and its criminal actors.

Outlines

00:00

💰 Economic Crime and Money Laundering in Movies and Reality

The paragraph discusses the common plot in action movies where villains engage in illegal activities funded by vast amounts of money. It contrasts this with the reality of economic crime, which is a serious issue involving money laundering, where criminals attempt to legitimize their illicit funds. The speaker, with over a decade of experience in combating economic crime, highlights the real-life presence of criminals using cash and hackers to finance their operations. The paragraph emphasizes the complexity of money laundering and its prevalence, with the UN estimating up to two trillion US dollars laundered annually. It calls for understanding and action against this widespread issue, suggesting that everyone has a role to play in combating it.

05:04

🛍️ Tackling Money Laundering through Consumer Awareness

This paragraph delves into practical ways individuals can help combat money laundering in everyday scenarios. It starts by addressing the issue of cash transactions at sports events, suggesting that using debit or credit cards and requesting official receipts can increase transparency and hinder criminals from laundering money through sports clubs. The paragraph also touches on the sale of counterfeit luxury goods online, which can be a source of funding for criminal organizations. It advises consumers to be cautious about where they purchase goods, to be skeptical of deals that seem too good to be true, and to look for secure payment methods and return policies. The text further explores how money laundering can occur in the corporate world, using the example of household appliances containing microchips that could potentially be used for military purposes. It concludes by urging companies to understand their supply chains and monitor business transactions to prevent their products from being misused by criminals. The speaker calls for collective action from consumers, investors, and individuals to challenge the status quo and demand transparency, thereby playing a part in curbing economic crime.

Keywords

💡Economic Crime

Economic crime refers to illegal activities that are motivated by financial gain. It encompasses a wide range of offenses, from fraud and corruption to money laundering and cybercrime. In the video, the speaker discusses their work in combating economic crime, which includes advising banks and companies on how to prevent criminals from using their services to launder money or finance illegal operations. The theme of economic crime is central to the video, as it highlights the real-world implications of what might otherwise be seen as fictional scenarios in movies.

💡Money Laundering

Money laundering is the process by which criminals attempt to legitimize the proceeds of their illegal activities by making them appear as though they originated from a legitimate source. It involves complex transactions to hide the connection between the money and the underlying crime. The video emphasizes the scale of money laundering, with the United Nations estimating that up to two trillion US dollars may be laundered annually. The speaker uses the term to illustrate the magnitude of the issue and the need for vigilance in preventing it.

💡Illicit Transactions

Illicit transactions are exchanges that involve illegal goods or services, such as the purchase of illegal weapons or the transfer of funds for criminal activities. The video script describes two scenarios where such transactions occur: a desert road exchange involving suitcases full of cash and an abandoned warehouse where a hacker transfers funds. These examples are used to depict the real-world mechanisms through which criminals conduct their operations.

💡Underground Economies

Underground economies refer to the part of an economy that operates outside of the official, regulated economy. This includes activities such as drug trafficking, human trafficking, and other forms of illegal trade. The speaker mentions the underground economies created by gangsters and how they finance their operations, which ties into the broader theme of economic crime and its impact on society.

💡Supply Chain

A supply chain is the network of organizations, people, activities, information, and resources involved in manufacturing and delivering a product or service. In the context of the video, the speaker discusses the importance of understanding one's supply chain to prevent products from being used for illicit purposes. For example, household appliances containing microchips that can also be used in the manufacture of weapons. The video uses the supply chain as an example of how seemingly harmless products can be involved in economic crime.

💡Dual-Use Goods

Dual-use goods are products that have both civilian and military applications. The video mentions this concept in relation to household appliances that contain microchips and other electronics, which can potentially be used to manufacture or repair weapons. The speaker advises companies to be aware of where their dual-use products are being sold and used to prevent them from falling into the wrong hands and being used for criminal activities.

💡Counterfeit Products

Counterfeit products are goods that are made to closely resemble the appearance of genuine products but are actually unauthorized replicas. The video discusses the sale of such products, particularly in the fashion industry, and how they can be used to finance criminal activities, including terrorism. The speaker provides advice on how consumers can avoid inadvertently supporting the sale of counterfeit goods.

💡Luxury Goods

Luxury goods are products that are considered to be of high quality and are often associated with a higher price due to their brand or exclusivity. The video script touches on the sale of luxury goods, particularly the allure of significant discounts, which can sometimes be a red flag for counterfeit items. The speaker warns that such items are often sold by criminals to launder money and advises consumers to be cautious when purchasing luxury goods to avoid inadvertently supporting criminal activities.

💡Sports Clubs

Sports clubs are organizations dedicated to the pursuit of sports and athletics. The video mentions that criminals have been known to own stakes in sports clubs, which they use as a cover to launder money through inflated ticket sales and other revenue streams. The speaker suggests that paying with a debit or credit card and requesting official receipts can help reduce the ability of criminals to launder money through sports clubs.

💡Data-Driven Monitoring

Data-driven monitoring involves the use of data analysis to monitor and detect unusual or suspicious activities. In the context of the video, the speaker recommends that companies implement such monitoring to better understand their business transactions and to identify any irregularities that could indicate criminal activity. This approach is part of a broader strategy to prevent economic crime by increasing transparency and accountability.

💡Consumer Awareness

Consumer awareness refers to the knowledge and understanding that consumers have about the products they purchase and the impact of their consumption choices. The video emphasizes the role of consumers in combating economic crime by making informed decisions, such as paying with traceable methods and seeking official receipts. The speaker argues that by being more aware and demanding transparency, consumers can play a part in reducing the prevalence of economic crime.

Highlights

Criminal activities like buying illegal weapons, taking out national energy grids, or hijacking satellites require substantial funding.

Money for such illegal activities is often exchanged in secret, either through physical cash exchanges or via online transfers.

The reality of economic crime includes the use of suitcases full of cash and hackers for illicit financial transactions.

The speaker has been advising banks and companies for over a decade on how to cut off financial resources to criminals.

Economic crime is a broad field encompassing drug trafficking, human trafficking, fraud, cybercrimes, tax evasion, and more.

Money laundering is a complex process used by criminals to disconnect the source of their funds from the criminal activities.

The United Nations estimates that up to two trillion US dollars are laundered each year globally.

Money laundering operations are larger than the combined annual revenues of major tech and finance companies.

The speaker shares scenarios from their work to illustrate how criminal activity might be hidden in plain sight.

Criminals have been known to own stakes in sports clubs to launder money through inflated ticket sales.

Using debit or credit cards instead of cash for purchases can help reduce opportunities for money laundering.

Requesting official receipts for card purchases increases transparency and deters criminal activities.

The fashion industry is flooded with counterfeit products, some of which are linked to criminal organizations and terrorism.

The sale of counterfeit goods can have profit margins as high as 2,000 percent, funding criminal operations.

The Charlie Hebdo attack in Paris was partially financed through the sale of counterfeit products.

Banks are required to monitor client transactions to spot irregularities, including the sale of counterfeit goods.

Consumers should be cautious about where they buy luxury goods to avoid inadvertently supporting criminal activities.

Household appliances contain microchips and electronics that can be used in the manufacturing or repair of weapons.

Unusual import trends, such as a significant increase in the import of electric breast pumps in Kazakhstan, can indicate illicit activities.

Companies should understand their supply chain to prevent their products from being used in criminal activities.

Individuals have the power to challenge and change the status quo by demanding transparency and taking action against economic crime.

The collective effort of consumers, investors, and citizens is crucial in combating the underground economy ruled by criminals.

Transcripts

Imagine any movie like "James Bond,"

"Mission Impossible" or "Jack Ryan."

Every [one] of these movies has this one moment:

the villain is planning to buy illegal weapons,

take out a national energy grid

or hijack a satellite.

And that undertaking requires an insane amount of money.

That always happens in either of two ways.

Scenario one:

three black SUVs driving up a dusty desert road.

Three other SUVs already waiting at the exchange spot,

where suitcases full of cash are being exchanged for weapons

between criminals.

Or scenario number two:

abandoned old warehouse.

A hacker in a hoodie asking the villain where to transfer the money,

and within seconds, hundreds of millions are being transferred

from accounts all over the world.

This is a very exciting movie plot.

Good versus evil.

Loads of money, exotic locations

and a superhero who saves the world in the last second.

And now imagine this was the real life.

We all know that the one superhero does not exist.

But through my work in combating economic crime,

I can assure you that the suitcases with cash and the hackers,

they are reality.

And they are on the loose every single day.

For over a decade, I'm advising banks and companies

in how to turn off the money tap for criminals.

I get to see the underground economies created by gangsters

and how they finance their operations.

But that doesn't make me the next James Bond.

Even if you may have hoped, yeah.

Sorry.

Unfortunately, to master this challenge,

we all need to understand what economic crime is.

And economic crime is a wide field.

It includes money proceeds from drug trafficking.

Human trafficking and sexual exploitation.

Fraud and cyber crimes.

Tax evasion and all those offshore tax havens.

Piracy, corruption, terrorism.

And what all these scenarios have in common

is that they need their profits laundered.

And money laundering is complex.

Criminals want to make it complex to hide the connection between the money

and the underlying crime.

And that disconnection between money

and its dirty source,

that's called money laundering.

And money laundering is big.

According to the United Nations,

the amount of money laundered every year

can be as high as two trillion US dollars.

In stacked one-dollar notes,

this is 57 percent of the way to the moon.

Or in other words, that's more money than Apple,

Amazon, Google, Microsoft,

Facebook, Tesla and JPMorgan generate in revenues together

every year.

So ...

What can we do?

Let me take you on a journey of scenarios

that I've come across in my work.

Through those scenarios, you can learn to identify places

where criminal activity might be hiding.

Let's consider you're at a sports event, say, a soccer match.

You pay the entry tickets and food in cash.

Did you know that in the past,

authorities have found that criminals have had ownership stakes

in some sports clubs?

Remember our criminal from before, who just sold illegal weapons

and now sits on suitcases full of cash?

If he or she owned a sports club,

it would be easy for him or her to bring in the money

and record unexpected ticket sales

and invent any reason for it.

Let's say, the good weather today.

And I get to see similar examples when working for banks,

who often finance sports clubs

but need to make sure to not support criminals.

And fraud in sports has been investigated by Europol.

However, criminal activity in sports has not gone away.

So what can you do to make it harder for criminals to abuse sports clubs?

As a concrete action,

pay with a debit or credit card to reduce cash ratios.

Cash doesn't leave a trace.

A credit card does, and hence creates transparency.

And if you really want to step it up,

you request an official receipt

for every purchase which you now made by card.

Yes, even the single hot dog.

The funny thing is, you don't even need to keep the receipt.

Its only purpose is to ensure that the sale is officially recorded.

And by the way, the same can happen in your favorite restaurant,

just around the corner,

or any other cash-intensive business.

Let's move to luxury products.

Those are often sold at a good discount, especially online.

And come on, hey, we're all excited about good bargains, aren't we?

It's commonly known that the fashion industry is flooded with fake products,

but did you know that counterfeits often have profit margins

of up to 2,000 percent?

And this even gets worse

if the beneficiary of those 2,000 percent

is a criminal organization or even a terrorist.

In 2015, the Charlie Hebdo headquarters here in Paris was attacked,

leaving 12 people dead and 11 injured.

The attack was partially financed through the sale of fake products,

and I get to see similar examples when working for banks

who are required to monitor their clients' transactions

and spot irregularities, like the sale of fake products.

So what can you do to make it harder for criminals to sell fake products?

First,

be conscious on where you buy your luxury goods and clothes.

Online, look for legit websites, like “https,”

and safe payment methods like credit cards with additional security questions.

Offline, go to official retail stores.

Second, if discounts sound too good to be true, well,

they probably are too good to be true.

And third, if there isn't an instant return policy,

it's a red flag.

And by the way, the same can happen in fast fashion

or even with counterfeit medicine.

And all those examples are just out of our ordinary life.

Money laundering can happen in the corporate world as well, at scale.

So money laundering can happen in any industry.

But let's consider seamlessly harmless household appliances

like washing machines or refrigerators.

Did you know that those household appliances contain microchips

and other control electronics,

which are being used to manufacture or repair weapons?

For example, Kazakhstan.

Kazakhstan's import of electric breast pumps,

which include microchips,

went up by 600 percent in the second half of 2022,

while Kazakhstan's birth rate went down by five percent in the same period.

And that's the kind of thing that might indicate

that something fishy is going on.

And I'm supporting clients in understanding

where their products are being sold and used,

especially so-called dual-use goods,

which are products that can be used for private but also for military purposes

like, say, medical probes, batteries, lasers,

nuclear materials, avionics,

navigation and many, many more.

So...

What can any company do

to make it harder for criminals to abuse their products?

Understand your supply chain.

Who are your suppliers, and suppliers of suppliers?

And who are your customers, and customers of customers?

Also, introduce data-driven monitoring on key business debts

and understand why, for example, sales in certain regions are skyrocketing.

For over a decade, I've been seeing companies take less action than needed

to combat economic crime.

And we have discussed how terrible the consequences of not acting can be.

And we know that "the company" does not exist.

It's us as employees, as managers, as customers,

and we have the power to challenge and change the status quo,

which means to stop saying, "I don't care,"

or, “What difference do I make?”

No, we need to scratch beneath the surface,

like we did in the examples before,

and hence demand transparency.

We live in difficult times.

The question we need to ask ourselves is,

in what kind of world do we want to live?

And how much room is there for this underground economy

which is ruled by criminals, gangsters, terrorists?

So it's on us as consumers, as investors, as individuals,

as law-abiding citizens

to raise our voice individually and collectively,

to jointly become that superhero

who ensures that the suitcases are empty

and the criminal bank accounts show red zeros.

This message will hopefully not self-destruct in three, two, one.

Thank you.

(Applause)