On May 4, the Obama administration announced a plan to crack down on offshore tax havens, which it said are costing the United States tens of billions of dollars each year. The President’s proposals were primarily aimed at finding ways to increase revenue from wealthy companies and investors who use loopholes in the law and offshore subsidiaries to reduce their US taxes. But the administration is largely missing a far more devastating problem related to offshore finance: money gained from criminal and other illicit sources. With the use of tax havens and other elements of an increasingly complex ‘shadow’ financial network, vast sums of illegal money are being shifted throughout the global economy virtually undetected.
Phi Beta Iota: The illicit global economy is at least two trillion dollars a year against a seven trillion dollar a year legitimate economy, and the latter is both full of legal crime and legal tax avoidance, as well as focused on the one billion rich rathyer than the five billion poor. One of the many dirty not-so-little secrets about Wall Street is that it relies heavily on laundered drug money for its liquidity; another is that the banking community has been all too happy to manage the funds of dictators and war lords and others. Below are just three of the many books we recommend in this area.
U.S. Needs Hit Squads, ‘Manhunting Agency’: Spec Ops Report
Noah Shachtman November 3, 2009
CIA director Leon Panetta got into hot water with Congress, after he revealed an agency program to hunt down and kill terrorists. A recent report from the U.S. military’s Joint Special Operations University argues that the CIA didn’t go far enough (.pdf). Instead, it suggests the American government should set up something like a “National Manhunting Agency” to go after jihadists, drug dealers, pirates and other enemies of the state. . . . . . . .
Such a group wouldn’t just go after terrorists. “Human networks are behind narcotics trafficking, arms proliferation, piracy, hiding war criminals from authorities, human trafficking, or other smuggling activities,” Crawford writes. “Human networks also lie at the core of national governments, offering an increased potential to nonlethally influence state actors with precision. A robust manhunting capability would allow the United States to interdict these human networks.”
Washington Post Staff Writer
Tuesday, August 25, 2009
Organized cyber-gangs in Eastern Europe are increasingly preying on small and mid-size companies in the United States, setting off a multimillion-dollar online crime wave that has begun to worry the nation’s largest financial institutions.
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In many cases, the advisory warned, the scammers infiltrate companies in a similar fashion: They send a targeted e-mail to the company’s controller or treasurer, a message that contains either a virus-laden attachment or a link that — when opened — surreptitiously installs malicious software designed to steal passwords. Armed with those credentials, the crooks then initiate a series of wire transfers, usually in increments of less than $10,000 to avoid banks’ anti-money-laundering reporting requirements.
Phi Beta Iota: PNC bank is uinsg tokens generating random numbers that must be entered as part of the log-in, this appears to defeat this particular kind of attack. The larger lesson is to not have financial transfer capability on any computer linked to the Internet or receiving email–isolate the money box.
Click on the story title to read the story. The entire story is built arouind an Air Force contracting announcement, and everything there-in is taken at face value including the absurd claim electronic processing of Dari information not only allows it to accept locally generated Afghan intelligence but to also return finished intelligence reports in Dari to the Afghan counternarcotics police.
Reports are glossing over the fact that this pertains to notes from large cities, not all across America, but it is none-the-less an interesting signal of “contamination.” Noam Chomsky would say this is another indicator that the USA is moving toward “failed state” status.
We draw two different conclusions: 1) that Canada is as much if not more of a threat to the USA because of its extraordinarily ineffective policing of its borders and its illegal alien and underground criminal populations, both Arab and Asian; and 2) the cross-contamination of bills is probably as much an indicator of increasing sophistication of money-laundering by gangs, to include increasing use of halawa and other “off-banking” means of international transfer.
DR. ROY GODSON was elected president of the National Strategy Information Center in 1993. He is also professor of government at Georgetown University His focus on the nexus between organized criminal gangs and corrupt governments will remain a critical factor in devising sustainable global strategies for creating a prosperous world at peace. He is also gifted at communicating the variations of intellectual understanding of strategy–his co-editd book, Security Studies in the 21st Century, remains seminal. Below is his contribution OSS ’01.