SHAMUN Research Reports
Forum: ECOSOC
Question of: International cooperation in the prevention, investigation, prosecution and punishment of
economic fraud and identity-related crime.
Student Officer: Tina Huang
Description of the Issue
Both economic fraud and identity-related crime have been issues of importance especially considering their
substantial increases in volume, the rates of transnational occurrence and the range of offences.
In relation to the issue the two definitions that are essential for understanding are economic fraud and identity
related-crime. In order to properly make the means for prevention, investigation, prosecution and punishment of
such, it is imperative to understand such terms and what they involve.
Economic fraud and identity-related crime are interrelated crimes. Fraud can be classified into 3 groups:
political, economic, and social. Economic fraud includes wide ranges of crimes in both economical and social
areas including: corruption, embezzlement, white collared crimes, appropriation, tax fraud, money laundering,
and fraud through financial and non-financial documents.
Identity-related crimes usually refer to what is known as identity theft. The term identity theft refers to identity
impersonation or identity cloning. As one of the fastest growing crimes, identity theft comes in many forms:
financial theft, nonfinancial theft, account takeover theft, true party theft, reverse record identity theft, and
criminal identity theft. Victims of identity theft will suffer the painstaking and time-consuming process of
restoring their credit card, shutting down and opening accounts, filling out forms and attending court
proceedings. In certain cases, victims can even be arrested for crimes committed by an identity thief.
Financial identity theft is when the identity thief will use personal information to access bank accounts, obtain
credit cards or make purchases. Nonfinancial identity theft usually involves using personal information to
acquire telephone services, rent apartments, avoid prosecution, getting a job, or altering passports to gain entry
into a country.
These two categories can then be broken down further according to whether the thief uses old accounts or
creates new ones. True party frauds are when the thief pretends to be the identity of the victim through
utilization of personal information for their own use. Account takeover frauds are when the thief gains access to
the victim’s existing accounts to draw money or assets. Reverse record identity theft is a less commonly known
type of identity theft as this is when the thief uses the victim’s identity to prevent someone else from
discovering the thief’s criminal history. Criminal record identity theft is another relatively unknown type of
nonfinancial identity theft, where the identity thief commits a separate crime but under the victim’s identity in
order to avoid prosecution and a criminal record. Many victims may only become aware of what has happened
upon citation notice or an arrest warrant. In certain cases the victim may even be arrested for the crimes
committed by the identity thief.
Taking into concern about the short and long term impacts in addition to the serious threats posed by economic
fraud and identity-related crime as well as recognizing how often organized criminal or terrorist groups are
involved and of course the subsequent use of the substantial proceeds resulting from fraud to further finance
organized crime, corruption and terrorist activities. As of recent the exploitation of new information,
communications and commercial technologies by perpetrators has brought up threats to commerce and the
technology itself and its users.
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Identity-related abuses are used to evade detection and prosecution and to prevent the tracing of the crime. It is
crucial to understand the need to respect the human rights of persons related to their identity and the need to
protect identities and related documents or information from inappropriate disclosure or misuse. This also
brings up the possibility of identity related-crimes to further commission other illicit activities including
economic fraud, migration and international travel crimes, and terrorism. In order to protect and combat
identity-related crime, it is necessary to enhance the ability to establish, validate and verify the identity of
individuals. This also includes making provisions for victims recovering from identity theft and to help prevent
further misuse of their identities.
This brings into light the current issue at hand, the pressing need to have the appropriate domestic powers in
accordance with strategies and measures to detect and investigate, prosecute and punish economic fraud and
identity-related crime as well as means to prevent such crimes in the future. Regarding the prevention of such
crimes, it is imperative to promote international cooperation in order to combat such. We have to bear in mind
the role of commercial entities and other private sector interests in establishing and using identity for
commercial and other non-governmental purposes, emphasizing the need for effective collaboration and
partnership between Governments and private sectors in order to gather information, and develop and
implementing effective strategies and measures to prevent, investigate, prosecute and punish such crimes.
Definition of Key Terms
Economic Fraud –
An act of deception committed by an individual or a group of individuals for personal monetary gains that is
punishable by law. Economic fraud includes wide ranges of crimes in both economical and social areas
including: corruption, embezzlement, white collared crimes, appropriation, tax fraud, money laundering, and
fraud through financial and non-financial documents.
Corruption –
Corruption can take the form of political corruption (the dysfunction of a political system or institution in which
government officials, political officials or employees seek illegitimate personal gain through actions such as
bribery, extortion, etc.), corporate corruption, and bribery
Embezzlement –
The act of dishonestly appropriating or secreting assets by one or more individuals to whom such assets have
been entrusted and is usually performed in a manner that is premeditated, systematic and/or methodical, with
the explicit intent to conceal the activities from other individuals, usually because it is being done without their
knowledge or consent. Often it involves the trusted person embezzling only a small proportion or fraction of the
funds received, in an attempt to minimize the risk of detection.
White collared crimes –
A crime committed by “a person of respectability and high social status in the course of his occupation" (1939).
White-collar crime overlaps with corporate crime because the opportunity for fraud, bribery, insider trading,
embezzlement, computer crime, copyright infringement, money laundering, identity theft, and forgery are more
available to white-collar employees.
Appropriation –
The process by which previously un-owned natural resources, particularly land, become the property of a
person or group of persons. The term is widely used in economics in this sense. In certain cases, it proceeds
under very specifically defined forms, such as driving stakes or other such markers into the land claimed, which
form gave rise to the term “staking a claim.”
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Tax Fraud –
The act of not reporting revenue or illegally avoiding taxes. Tax evasion is the general term for efforts by
individuals, firms, trusts and other entities to evade taxes by illegal means. Tax evasion usually entails
taxpayers deliberately misrepresenting or concealing the true state of their affairs to the tax authorities to reduce
their tax liability, and includes, in particular, dishonest tax reporting (such as declaring less income, profits or
gains than actually earned; or overstating deductions).
Money laundering –
The process of creating the appearance that large amounts of money obtained from serious crimes, such as drug
trafficking, originated from a legitimate source
Identity-related Crime –
Usually refers to identity theft, used to evade detection and prosecution and to prevent the tracing of the crime.
Identity theft comes in many forms: financial theft, nonfinancial theft, account takeover theft, true party theft,
reverse record identity theft, and criminal identity theft.
Major Players and Their Positions
Recent data indicates that identity theft affects national economies around the world.
Unites States of America
In the United States the FTC reported a loss of approximately $50 billion dollars annually for consumers and
businesses. Survey results also showed that in the previous 12 months, 35 percent of U.S. companies surveyed
uncovered a significant economic crime. In the United States, a striking relationship between declining financial
performance and increasing incidences of reported fraud has become more evident. In particular, an
overwhelming majority (88 percent), of U.S. companies that reported economic crime were also those
companies that reported declines in financial performance. Additionally, the fraud incidence rate among
companies suffering a financial decline was 42 percent, which is higher than the overall U.S. fraud incidence
rate and is also significantly higher than the rate of fraud among U.S. companies with stable financial
performance (17 percent).
Russia
The survey found that 71% of Russian respondents had experienced some form of economic crime during the
last 12 months. This is a 12 percentage point increase compared to our last Economic Crime Survey in 2007
(59%). 43% of those said that the cost of fraud had increased since this time last year. The current economic
climate has affected individuals’ view on fraud risks, with 51% of respondents reporting that they believe their
organization currently faces a greater risk of economic crime. 86% cited heightened incentive or pressure to
commit fraud.
United Kingdom
The Home Office of the United Kingdom calculated the cost of identity theft to the British economy at $3.2
billion during the last three years. In the United Kingdom, identity fraud has affected over 100,000 people each
year and costs the economy over £1.3 billion annually. Citizens of the United Kingdom can request their credit
report from the UK’s three topmost credit agencies, Callcredit, Experian or Equifax. However, in the UK,
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victims of identity fraud are required to first contact and dispute the report through the lenders, and then write to
the credit agency if their efforts are unsuccessful. The most common form of identity theft information
gathering in the UK occurs through the use of spyware. It is estimated that spyware affects 91% of all
computers in the United Kingdom.
India
In India, 35% of respondents who reported being victims of economic crime believed that there has been an
increase in the level of economic crime compared to 12 months ago. Further, 26% of respondents from India
believe that the risk of fraud has increase. However, interestingly only 18% of India respondents reported being
victims of economic crime during the last 12 months.
Australia
Estimates from the Australian Centre for Policing Research place the cost of identity theft to individuals in
Australia at $3 billion each year. Statistics in Australia indicate that 25% of reported frauds involve assuming a
false identity. Recently, 13% of a study sample of birth certificates indicated the certificates to be false or
inaccurate. “Identity kits,” which are a set of documents used to establish a false identity, are easily accessible
and are very high-quality, making it difficult to determine their authenticity. Banks report that a loss of
approximately $25 million dollars has occurred s a result of identity fraud. In 2007 it was estimated that
approximately 2 million Australians have had their personal information stolen and used fraudulently. In 2007 a
poll conducted by Galaxy Research found that 87% of Australians were “concerned about identity theft” and
that many Australians were more concerned about identity theft than the “war on terrorism.”
Canada
One of the fastest growing crimes in Canada is identity fraud. It is estimated by the credit agencies of
TransUnion and Equifax that approximately 1800 Canadians file complaints every month regarding fraudulent
use of their identities to obtain credit or to commit other crimes. These numbers do not include the identity
fraud that has occurred regarding the Canadian equivalent of Social Security benefits (Social Insurance
Numbers); with reports by the government indicating that there are approximately 2.4 million more social
insurance numbers than there are actual Canadians. This abuse of the government benefits system questions the
security of the system itself as well as causes uncertainty regarding exactly how much money is being lost each
year to both the government and private sector due to identity theft. The most common occurrences of identity
fraud in Canada occurs as a result of lax security in the business sector, where it is a common practice to share a
customer’s personal information for other marketing purposes, making it easier to obtain the information and
use it for fraudulent purposes.
Previously Attempted Solutions and Outcomes
For more previously attempted solutions, refer to “Relevant Treaties and UN Resolutions” below.
Previous resolutions have made attempts to study fraud and identity-related crimes to insure adequate
investigative powers by reviewing and updating relevant laws, to develop and maintain law enforcement to deal
with new developments in exploitation of information, communications and commercial technologies including
websites and other online forums to facilitate trafficking in identity information or documents. They have also
brought up the possibility of establishing new offences and updating existing offences in response to the
constant evolution of economic fraud and identity-related crime and when possible to facilitate efficient and
effective international cooperation.
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With regards to the victims of economic fraud and identity-related crime, attempts have been made to adopt
useful practices for supporting and protecting such victims. Public and private sector entities have been
requested to enable cooperation for computer emergency response teams to provide emergency response
capability to both public and private organizations requiring technical support in the case of an electronic attack
or other network security incidents. A set of useful practices and guidelines to assist Member States in
establishing the impact of such crimes on victims has been implemented along with a set of material and best
practices on public and private partnerships to prevent economic fraud or identity related crime.
Despite such attempts to improve international cooperation in the prevention, investigation, prosecution and
punishment of economic fraud and identity-related crime, previous measures have not yielded satisfactory
results and thereby require further discussion and action to be taken.
Relevant Treaties and UN Resolutions
UN ECOSOC Resolution 2004/26, 47th Plenary Meeting July 21, 2004
http://www.unodc.org/documents/organized-crime/ECOSOC_res_2004_26.pdf
UN ECOSOC Resolution 2007/20, 45th Plenary Meeting July 26, 2007
http://ar.unrol.org/files/Resolution%202007-20.pdf
UN ECOSOC Resolution 2009/22, 44th Plenary Meeting July 30, 2009
http://docs.google.com/viewer?a=v&q=cache:jcTMZn3h3_0J:www.un.org/en/ecosoc/docs/2009/resolution%25
202009-
22.pdf+International+cooperation+in+the+prevention,+investigation,+prosecution+and+punishment+of+econo
mic+fraud+and+identity+related-crime.&hl=en&gl=hk&pid=bl&srcid=ADGEESgExj-
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PJsXB6qvExkZs6kLkFhjIlLYV&sig=AHIEtbRYMGzphn6sZCAQWvcM76o5jNrPsw&pli=1
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