Controlling White Collar Crime: A Workshop Promoting Polish-Ukrainian Cross-Border Cooperation

          Controlling White Collar Crime:  A Workshop Promoting Polish-Ukrainian Cross-Border Cooperation was the first step in a program that addressed the fact that white collar crime often takes place across borders. 

Organizers and supporters

Ukraine

Poland

United States

Ministry of the Interior

Ministry of Justice

Federal Bureau of Investigation

Procurator General

Ministry of Finance

Illinois Attorney General

Security Service

State Security Agency

Law Firm of Altheimer & Gray

University of the Ministry of Internal Affairs

Police Bureau of Criminal Services

 

Ukrainian Consulate, Chicago

Polish Consulate, Chicago

 

The November 2002 Planning Workshop in Chicago  

          This Workshop is the result of a planning workshop held in Chicago on November 8 and 9, 2001.  Polish representatives attended from the Ministry of Justice, Police Bureau of Criminal Services, Ministry of Finance, State Security Agency, and the Chicago Polish Consulate.  American participants came from the Illinois Attorney General’s office, the United States Postal Service, State Farm Insurance, the law firm of Katten, Muchin & Zavis, and CitiGroup.  Representatives of the Chicago Ukrainian Consulate also attended. 

The Problems the Workshop Addresses

          The workshop addresses three problems. 

          First, effective detection of white collar crime uses sophisticated statistical analysis of computer databases.  Polish and Ukrainian law enforcement officials lack knowledge of and expertise in these techniques.

          Second, white collar crimes often masquerade as legitimate, sophisticated business transactions, and, as a result, adequately controlling white collar crime requires that law enforcement officials understand the business and economic setting in which such crimes occur.   Without such an understanding, law enforcement may fail to identify white collar crimes and may misidentify legitimate business transactions as crimes and inappropriately prosecute them.  This is a worldwide problem; the sophistication of business activities–legal and illegal–tends to outrun the law, which constantly plays catch-up.  Polish and Ukrainian law enforcement officials, like their counterparts worldwide, need an adequate understanding of the business and economic environment that white collar criminals exploit. 

          Third, white collar crime is a cross-border problem.  Adequate control requires cross-border cooperation.  The cross-border problem provides the fundamental rationale for the Workshop. 

          The first two problems–lack of sophisticated detection techniques, and the lack of economic and business understanding–could of course be addressed in a purely nationally-focused Workshop.  But to do so would be to bury one’s head in the sand.  A purely national approach to the problem of white collar crime simply ignores the fact that such crime crosses borders with ease.

The Solution the Workshop Provides

          Controlling White Collar Crime addresses these three problems through workshops that bring Polish, Ukrainian, and American experts together.  The Americans have the expertise in the practical and technical approaches to white collar crime.  Polish and Ukrainian experts understand Poland and Ukraine’s needs and can determine whether and how various approaches would work in their respective countries.  In addition, Ukrainian experts will benefit from the Polish participation.  Poland is generally perceived as having traveled further than Ukraine down the road of democratization and privatization.  Ukraine can speed its travel down this road by benefiting from the Polish experience. 

          The format of the workshop is designed to promote frank discussion leading to practical solutions. All presenters will distribute presentation materials in advance of the conference so that the audience may profit as much as possible from the formal presentation and the subsequent question-and-answer period. 

          The workshops are not theoretical lectures but practical training sessions.  To promote practical training, each presentation is followed by breakout sessions.  Four breakout sessions are planned after each presentation.  Each session will include no more than 25 people.  Each session will be led by a Polish or Ukrainian expert in the area covered by the formal presentation.

Five Major Issues

          The conference will focus on five major issues. 

          First: Smuggling and Illegal Immigration

          Smuggling and illegal immigration contribute to tax evasion, money laundering, and credit card fraud.  Money from illegal smuggling activities–including the drug trade--must be laundered and money from such activities is, of course, virtually never included in a tax return.  In addition, illegal aliens must support their activities somehow, and credit card fraud is a common source of funds.

          Second: Credit Card Fraud and Computer Crimes

          Credit card fraud, and other forms of identity theft, are serious problems in Poland and Ukraine as they are worldwide.  This type of fraud attracts an ever increasing number of perpetrators as it is much more difficult to detect than more traditional forms of theft and fraud and the punishments are typically much less severe.  Credit card fraud is frequently practiced by organized crime and by terrorists organizations.  Terrorist organizations use it as a source of funds. 

          Over the last several years, techniques of credit card fraud have increased considerably in sophistication and effectiveness.  The expertise of the perpetrators currently often outstrips the knowledge and detection ability of law enforcement.  It is essential that law enforcement personnel be trained in the detection and prosecution of credit card fraud.

          Credit card fraud is a form of computer crime.  A “computer crime” is any crime facilitated through the use of a computer.  Computer technology is used in “skimming.”  Skimming uses a special credit card reader to copy all the information on the magnetic strip on the credit card.  This information is then used to create a clone of the card.  Computer technology is also used to hack into databases that contain credit card numbers and other financial information.  Hackers can accomplish this from the safety of their home country.

          Third: Money Laundering and Securities Fraud

          Money laundering is a critical issue.  As the Financial Action Task Force on Money Laundering notes: 

Money laundering is a threat to the good functioning of a financial system; however, it can also be the Achilles heel of criminal activity. In law enforcement investigations into organised criminal activity, it is often the connections made through financial transaction records that allow hidden assets to be located and that establish the identity of the criminals and the criminal organisation responsible.  When criminal funds are derived from robbery, extortion, embezzlement or fraud, a money laundering investigation is frequently the only way to locate the stolen funds and restore them to the victims.  Most importantly, however, targeting the money laundering aspect of criminal activity and depriving the criminal of his ill-gotten gains means hitting him where he is vulnerable. Without a usable profit, the criminal activity will not continue.1

The problem is not simply one of detection and enforcement.  It is also a problem of definition.  One effective way to launder money is through sophisticated financial instruments that conceal it source.  It is essential that law enforcement officials be able to distinguish legitimate from illegal use of complicated financial instruments.

          Similar issues arise with securities transactions.  Law enforcement officials need to know where to draw the line between legal and illegal activities. 

          Fourth: Tax Planning and Tax Evasion

          Tax evasion is a serious problem in both Poland and Ukraine.  As with money laundering and securities fraud, the problem is in part definitional: where does legitimate tax planning stop and illegal tax evasion begin? 

          Fifth: Public Corruption

          It is often overlooked that non-legal norms play a critical role in regulating commercial activity.  Business professionals, police, prosecutors, and judges must participate in a “web of trust."  Business must expect and trust that laws will be enforced; police must respond to this trust with adequate investigation and enforcement and, to remain adequately motivated, they must trust the judicial system to pursue properly, zealously, and without political favoritism, the results of police investigation.   Corrupt public officials undermine the web of trust.