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

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)