Counterfeiters Will Become ‘Virtual Criminal Underground:’ Europol

The European Police Organization (Europol) has published a first-of-its-kind report on the not-so-distant future of the criminal landscape. Counterfeiting of goods and supply chain threats are identified as one of the top four dynamic and growing trends in crime; all others are “stable” or “in decline.” It predicts widespread attacks on and hijacking of logistics systems. It is nothing less than startling.

Think about this scenario (based on, but not found in the report): raw materials for counterfeit cell phone parts – but not the phones themselves – are shipped from somewhere in Asia using legitimate logistics systems to a “smart seaport,” like that which already exists at Ningbo, China. From there, the raw materials travel on unmanned maritime vessels, arriving at staging areas in the U.S. The goods are made available on a Dark Web e-commerce site, marketing to counterfeiting entrepreneurs who will create the fake cell phones using 3-D printing. The result: production centers are cheek-to-jowl close to their intended markets, largely evading border security.

Hiding in plain sight

Notice that the counterfeiters themselves are barely visible in this scenario. Human beings need not be physically present along most of the supply chain. In other cases, land, sea and air drones could be used in place of commercial shipments. Digital currency like BitCoin might be used to obscure the money trail.  

All this and more is embodied in the following striking prediction in the report: “groups and networks will be accompanied by the expansion of a virtual criminal underground made up of individual criminal entrepreneurs, which come together on a project-basis and lend their knowledge, experience and expertise as part of a crime-as-a-service business model.”

At the heart of this model is the web, acting as a communications hub, banker, B2C marketplace, and B2B market, and in other significant ways. (As an example of its B2B function, a web market may exist for stolen or copied 3-D printing designs.)

In some ways, this should be an unsurprising and familiar model. That's because it mirrors the way cybercrime networks already function. It applies, you could say, expertise in pirating of software and data to the pirating of things. Talk about transferable skills.

In recent years, we have also seen such loosely-coupled, internet-enabled networks operate with astonishing efficiency in arenas as diverse as political movements to countless tech start-ups, the latter pulling in expertise as needed, and facilitated by co-working spaces or online project marketplaces like UpWork.

Hacking logistics

Europol's future includes another key element: exploitation by counterfeiters of digital data and control systems for logistics.

I think it is inevitable, given the complexity of global supply chains, that our transportation and logistics infrastructure must move to leverage online technology, such as cloud-based tracking, remote management and analytics. But in doing so, the infrastructure also becomes vulnerable to intrusion.  Using hackers for hire — yet another instance of criminal entrepreneurism — counterfeiters may be able to analyze, predict or even electronically hijack supply flows.

Indeed, transport and logistics resources are widely hijacked already today, albeit (so far as we know) without the digital sophistication. A separate Europol report reveals that parts of Madrid and its suburbs, the Naples and Florence regions, and Paris environs have been infiltrated by Chinese organised crime groups. Legitimate warehouse, manufacturing and transport facilities are used to make and move counterfeits. Logic tells us that online systems could easily be next as they come into production.

We can't know of course whether these trends will play out as imagined by Europol. We can't say for sure whether its conclusions can be extrapolated to the rest of the world. What is clear is that better intelligence on the movement of illicit goods, and its impacts on our logistics systems, is needed both for the present, as well as for the big changes which are afoot. It is hard enough now. We need to know where this is going.

Rob Wainwright, Europol director, calls this report a “first of its kind.”  It shouldn't be the last.

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