The growth of theft and robbery in Venezuela

robo a mano armadaWithin the crime wave currently affecting Venezuela, theft and robbery, in their different modalities, have increased exponentially. Every day, at any time, criminals are going for people’s personal belongings all over the nation. This situation keeps residents in constant anxiety.

Emboldened criminals commit theft and robberies in the weirdest places (movie theaters, airports, hospitals, educative centers, stadiums and even at church during service) every day. Their target goods are quite diverse, going from cash money, motorcycles, cars and mobile phones to grocery bags (the general crisis and shortage of products makes this increasingly frequent), among many others.

Homicides, due to their gravity, cause great alarm in the society, but theft and robbery occur much more frequently. The Ministry of Internal Affairs and Justice stopped publishing specific data many years ago, but the latest Victimization and Citizen Safety Perception Survey carried out in 2009 by the National Institute of Statistics (INE) indicated that nearly 1,000,000 robberies and over 400,000 thefts occur in Venezuela each year. Robbery and theft together encompass 80% of the crimes committed in Venezuela.

The INE survey also indicated that Venezuelans aren’t used to report these crimes against property, so the black numbers are quite high. In the case of robbery, 68.72% didn’t go to the authorities to notify the crime. As to theft, the number reached 77.82%. Most respondents said they didn’t report the cases because the authorities “wouldn’t do anything with them”.

Source: El Universal

Money Laundering

legitimacion de capitalesMoney Laundering is the process of hiding or disguising the existence, illegal source, movement, destination or illegal use of goods or funds generated from illegal activities to make them appear as legitimate.

Overall, it involves the placement of funds in the financial system, the structuring of transactions to disguise the origin, ownership and location of the money, and the integration of said money into the society in the form of goods that appear to be lawful.

The Venezuelan Superintendence of Banks’ National Financial Intelligence Unit, attached to the Ministry of the People’s Power for Finance, is the main regulating agency in this matter, and the Organic Law against Organized Crime contemplates money laundering as a crime.

Characteristics of Money Laundering:

  • It’s a financial crime.
  • It’s based on permanent fictions.
  • It’s a set of complex and uncommon operations
  • It’s a transnational crime.
  • It takes advantage of the financial system’s vulnerabilities and technological advances.

Stages of Money Laundering

Placement: The first and most vulnerable stage of Money Laundering is the placement stage. The objective in this stage is to place the illegal funds in the financial system without alarming financial institutions or law enforcement agencies.

Concealment/Processing, Stratification or Transformation: The second stage in the Money-Laundering process is concealment or processing, which includes moving the money throughout the financial system, often in complex series of transactions in order to generate confusion and complicate the tracking.

Integration: The final objective of the Money-Laundering process is integration. Once the funds have been placed and concealed in the financial system, the integration step is used to make the money appear as legal by integrating it into the economic circuit through transactions of purchase and sale of assets and luxury items, among other things.

Money Laundering worldwide is an US$800 billion to US$2 trillion-a year industry, according to international figures released in the XIV Hemispheric Congress for the Prevention of Money Laundering and the Fight Against Terrorism Financing held in Panama on August 25, 2010.

A Venezuelan expert who attended the congress explained that in Latin America Money Launderers prefer banks while in Asia they use currency exchange centers, in Europe they make use of accountants and commercial spaces, and Africans use diamonds.

“We are loosing the battle against organized crime” in the region, warned the specialist, who expressed it should be a challenge to maintain preventive measures against money laundering.

He also said that, besides the traditional sources of money laundering such as drug trafficking and arms smuggling, there were other sources of illegal capital such as frauds, unlawful enrichment and corporate crimes.

Warning signs

Warning signs can be identified when we are acquainted with the different money-laundering methods. Money-laundering method refers to the whole operation carried out by criminals, from executing an illegal activity, to filtering money through a financial institution, to the end of the operation with the expected results, giving legal appearance to unlawfully obtained assets or funds.

There are a few general and particular warning signs in all financial institutions, depending on the risk and business they handle.

Warning signs related to the client’s profile

  • Operations that are incongruent with the client’s economic capacity.
  • Isolated or linked operations that fall out of the client’s predictable or pre-defined profile.
  • Unexpectedly, with no apparent foundations, someone appears as the owner of important businesses.
  • Clients offer to pay significant commissions with no legal or logical justifications.
  • Change of owners and the new-owner history is not consistent with the nature of the client’s business or the new owners refuse to provide personal or financial information.
  • Use of night deposits for large amounts of cash when the client’s activity doesn’t imply the reception of cash.
  • Clients with retail businesses who cash checks to third parties and do not deposit cash against the checks deposited or consigned. This could indicate the client has another source of income.
  • Accounts with a large volume of check deposits, money orders, transfers and other negotiable instruments, when the accountholder’s business does not justify such activity.
  • Accounts with large cash transactions for businesses that usually don’t handle large amounts of cash.
  • Several deposits the same day in different offices of the same bank, an unusual behavior for the specific client.
  • Electronic transfers with no apparent commercial reason or consistency with the client’s usual business transactions.
  • Reception of several small transfers or checks or money orders or postal money order sent to other cities when such an activity is not consistent with the client’s usual business transactions.
  • Clients whose financial statements indicate significantly different results compared to other companies in the same sector or similar businesses.

Warning sings related to the operations.

  • Accounts with physical mail addresses offshore for correspondence and bank statements, PO boxes or setup to pick up their bank statements in a bank office.
  • Loans backed up with securities (certificates of deposit and other securities).
  • Clients who constantly visit their safe deposit boxes just before making cash deposits for smaller amounts than those stipulated to generate warning reports.
  • Constant deposits of large amounts of cash wrapped in paper bands from other banks.
  • Cash deposits with dirty or moldy bills.
  • Sudden full payment of large loans (pre-payments) with no apparent justification of such payment or the origin of the funds.
  • Purchase of cashier checks, money orders, etc., with large amounts of cash.
  • Loan applications by off-shore companies or to ensure liability loans from off-shore banks.
  • Purchase of cashier checks, money orders or traveler checks in large amounts and for sums below the minimum required to generate warning reports.
  • Significant changes in money wire patterns between correspondent banks.
  • Significant transactions with large bills in activities that are not related with the bank’s location.
  • Increases in the amount of cash handled without the corresponding increment in the number of transactions reported.
  • Large increases in the use of small bills and the corresponding decrease in the use of large bills without generating transaction reports.
  • Fractioned operations to evade warning report norms and regulations.
  • Frequent operations on behalf of a third party with no apparent justification (I.e. Deposits for significant amounts of money made by attorneys in fact or third parties).
  • When a person who’s not a regular client deposits funds in different offices or correspondent offshore banks to be collected locally or to be sent to other countries.
  • Operations through companies domiciled in “tax havens” or in regions or countries rated as “non-cooperative”.
  • There is a significant change in the currency exchange transactions between correspondent banks or exaggeratedly large transactions between as small bank and a large bank.
  • Companies financed with loans granted by offshore institutions.
  • Debits on accounts to make transfers through financial institutions in high-risk countries.
  • Transfers offshore are made through instruments from multiple financial institutions.
  • Deposits and withdrawals from corporate or entrepreneurial accounts done mainly in cash instead of checks.
  • Cash purchases of large amounts in money orders, postal orders, achier checks or other negotiable instruments.
  • A single cash deposit with many bills of the same denomination.
  • Frequent change of small bills for large bills and vice versa.
  • Non-significant deposits with a large number of checks, while daily operation withdrawals are unusual.
  • Sudden and inconsistent changes in transactions or money–handling patterns.
  • Accounts showing several deposits below the limit amount.

Warning signs related to clients’ information

  • Request to being included in the list of exceptions from cash transaction warning reports for no justified reason.
  • Companies that refuse to provide complete information such as its main business activity, bank references, names of employees and directors, location, etc.
  • Refusing to provide information to qualify to receive loans or other financial benefits.
  • Hoping to open an account or request a financial service without references, an address, identification (passport, Id, etc.) or refusing to provide other kinds of information required by the institution to offer such services.
  • Clients with unusual or abnormal ID cards the institution can not verify.
  • Clients with disconnected telephones or whose phone numbers do not match the information initially provided.
  • Applications that do not include work reference letters.
  • Clients who do not include work reference letters of previous or current jobs but usually perform large operations.
  • Clients refusing to provide information about their business activity or refusing to provide financial statements.
  • Clients who usually ask the bank to increase their limits of exception from warning reports.
  • People who refuse to provide the necessary information for the mandatory registry of cash transactions or refuse to continue with the transaction once they have been informed that such registry needs to be filled-out.
  • People who put pressure on bank employees to avoid filling out forms that imply the registration of information or a transaction report.

Warning signs related to international operations

  • Frequent transfers from and to offshore institutions.
  • Deposits in several accounts, usually below the transfer warning report limits, to then be consolidated in a master account and be transferred offshore.
  • Instructions from a client to transfer funds offshore with the product of transfers received from other sources for similar amounts.
  • Deposits or withdrawals of large amounts of money by transfers made through countries of which economic activity does not justify the amounts or frequency of such transfers.
  • Transfers or deposits in offshore accounts without previous currency exchange operations.
  • Reception of transfers and immediate acquisition of monetary instruments on behalf of third parties.

Warning signs related to employees

  • Employees with lifestyles that do not match their salaries.
  • Employees who refuse to taking vacations.
  • Employees who refuse to accept changes or promotions that could prevent them from performing the same activities.
  • Employees who usually stay in the office longer than the closing time or visit the office outside business hours.
  • Employees involved in frequent and unjustified absences.
  • Employees who usually report cash register differences and give insufficient or inappropriate explanations.
  • Employees who keep co-workers from assisting specific clients.

The fight against money laundering involves all sectors of the economy. The financial sector has the biggest responsibility as it receives and channels a large part of the economy’s cash flow, which makes it easy for unlawfully obtained moneys to get confused with legal resources.

As this is a problem that affects all sectors of the economy, we must adopt especial measures to prevent money-laundering in order to support the actions of law enforcement agencies.

Sources: Nestor Hugo Duarte Carrillo – Money Laundering. Latin American Federation of Banks (FELABAN).

Venezuela among the world’s first 10 nations in kidnappings

secuestroAccording to a renowned Venezuelan criminal lawyer, Venezuela is among the world’s first 10 countries with most kidnappings. He said there are 6 to 8 kidnappings each day in national territory and only 30% are reported, so 70% belong to the so-called “black numbers”.

In his opinion, there is a “serious deficit” of human resources to fight crime which should be reinforced, and the lack of criminal investigators reaches 300%, 90% for public prosecutors and 70% for judges.

For the expert, impunity can be reduced and the State’s main plans should be aimed at criminal investigation and crime prevention, and dismantling gangs and criminal organizations. “We must suppress the idea that it’s easy to commit crimes in Venezuela,” adding that it all starts by recovering people’s intention to report to the authorities.

We must recover public spaces because “residents don’t even want to leave their homes anymore”, he said. He indicated that 70% of kidnapping cases occur while victims are driving their vehicles, so he suggested driving around the block once or twice before entering your home.

Organized crime kills more people in Venezuela than in Mexico

01_articulos_de_ley_contra_delincuencia_organizada_thumb[3]According to a renowned Venezuelan criminologist, the relation between corruption and violence generates impunity and promotes the presence of organized crime in the nation.

Among his publications is the demonstration of how a third of the homicides committed in Venezuela are somehow directly or indirectly related to organized crime. In 2012 the total number of crimes exceeded 21 thousand deaths.

“We work with official statistics of cases known by the Scientific, Penal and Criminal Investigations Corps (CICPC) as of 2010. That’s where we find overwhelming data, such as the fact that organized crime commits more murders in Venezuela than in Mexico”, he said.

He expressed that, according to statements issued by the Procurement Office of the Mexican State, murders attributed to organized crime represent 13% of all homicides. However, in Venezuela, organized crime is involved in 33% of all homicides.

However, the citizen safety specialist acknowledges that estimations are made with no official parameters showing the level of organized crime penetration in the nation, although this crime modality is studied in different international agencies.

Real cost of cyber attacks in 2013

hacker-hackeo-computadora-robo-informacionUsually, the most costly cyber crimes are caused by service denial attacks, malicious employees and network-based attacks. Together, these types of attacks represent over 55% of the annual cyber-crime costs per organization.

Cyber theft is still the costliest of these crimes, while business interruption is in second place. Account loss represents 43% of annual external costs, 41% more than in 2012. Business interruption or loss of productivity represents 36% of external costs, up from 18% in 2012.

Recovery and detection processes are the costliest internal activities. These represented 49% in 2012, mainly involving disbursements and labor costs.

The cost of cyber crimes varies depending on the size of the company, although small companies are the ones spending more significant amounts per capita.

Financial, service, defense, energy and utility companies record much higher costs due to cyber crimes than retail, hospitality and consumption companies.

Telephone extortion, how to prevent it and what to do in case of being a victim

extortionHere G4S Venezuela presents a few preventive measures you can take against this crime as well as some recommendations on how to react in case of being a victim.

Preventive measures against telephone extortion:

  1. Do not provide personal information to strangers regarding your family and neighbors’ schedules.
  2. Do not accept interviews with strangers and do not answer surveys or telemarketing promotions of any kind.
  3. Do not recommend relatives or friends to strangers.
  4. Keep a detailed registry, preferably in your phone, with caller Id.
  5. When making a purchase, do not provide your home number for the billing information.
  6. Setup a family strategy to come up with some kind of telephone identification, such as a keyword.
  7. Do not publish privileged information in websites such as Facebook, Twitter, Hi5, Tucarro.com, etc.
  8. Know and identify your employees and do not share privileged information with them.

Recommendations in case of being a victim of telephone extortion:

  1. Stay calm.
  2. Do not establish a conversation with the criminal, hang up the phone.
  3. They will call you again a few times from the same unknown number or from a different number, DO NOT PICK-UP THE PHONE.
  4. Contact your Security Advisors, they will help you.
  5. In 90% of the cases, criminals will give up and call a different victim (they have a victim data base; you’re just one of them)
  6. Request your phone operator to change your line immediately if the calls continue.
  7. It is always recommendable to report the case to the competent authorities.

Electronic Fraud: Debit or credit card cloning

bankomat-skimmingElectronic fraud is a growing crime in Venezuela. However, some measures applied by financial institutions have helped reduce card cloning significantly, but con artists now prefer to commit their crimes using the Internet.

In order to clone cards, criminals use a device called “skimmer,” which they manage to install on ATMs and POSs. The purpose of these devices is to copy the information on the debit or credit cards so that the criminals can then clone them.

How do they clone debit or credit cards on ATMs and commercial establishments?

  1. Criminals carry a skimmer on their pockets (used to read and store cards’ information).
  2. The device is installed on an ATM or, if the subject happens to work in a store, he/she waits for the client to pay and swipes the card through both the bank terminal and the skimmer (this takes only 4 seconds).
  3. Having stored the data, they then connect the skimmer to a computer and download the information.
  4. Finally, they swipe a card with a blank magnetic stripe through a credit card coder, in order to pass the information from the computer to the blank card.

Besides cloning the card, subjects can also fake the buyer’s Id with the help of a store clerk in order to commit successive frauds. Now, if the perpetrators only wanted to make online purchases without duplicating the physical card, they would only get to step three.

Our recommendation is to always keep your credit or debit card on sight and to use them in well-known, serious establishments.