From Baghdad to Jerusalem, this was a week in which efforts towards peace and reconstruction in the Middle East have been seriously undermined. These events are summarized in the News Highlights as well as other events around the world, including the recovery of 14 European tourists kidnapped by the Salafist Group for Preaching and Combat (GSPC) and a new interim leader in Liberia. The Feature Article highlights some of the serious frauds reported in the "United Kingdom Threat Assessment of Serious and Organised Crime 2003".

CONTENTS:

NEWS HIGHLIGHTS OF THE WEEK:

1. World
2. Africa
3. Americas
4. Asia Pacific
5. Europe
6. Middle East
7. South Asia
8. Cyberterrorism and Information Warfare
9. Finance
10 Human Rights
11. Law and Legal Issues
12. Transportation
13. Weapons of Mass Destruction
14. Recently Published

FEATURE ARTICLE:
United Kingdom Threat Assessment of Serious and Organised Crime 2003

NEWS HIGHLIGHTS OF THE WEEK

1. World

Brazil, China and India have joined 12 other developing countries to demand radical reforms to the agricultural subsidies of developed countries. This is likely to lead to a showdown between rich and poor in next months World Trade Organization meeting.

The Guardian has published a collection of reports on the most crucial of all natural resources: "1.1bn people live without clean water while 2.4bn have no proper sanitation. The UN promised to tackle the problem, but every 15 seconds a child dies from a water-related disease". This informative collection is available at http://www.guardian.co.uk/water/wateraid/0,13816,1019021,00.html

As China, Japan, Russia, North and South Korea, and the US prepare for talks next week, tensions are high. Increased interdictions of North Korean ships and planned military maneuvers are designed to increase pressure on North Korea to discontinue its nuclear programs, but these aggressive measures seem equally likely to increase paranoia and fear on the North Koreans. Weapons sales are one of North Korea's few remaining sources of revenue.

The bombing of UN headquarters in Iraq clearly exposed the limits of US authority and drove US officials back to the UN Security Council and traditional allies to ask urgently for additional resources. The US-led occupation has been unwilling to cede any authority, but without a broader international collaboration, that includes sharing of information and authority, many of those countries most capable of offering support (India, Russia, Germany, France, etc.) are unwilling to do so. Insecurity and the terrorist-style targeting of "soft targets" has also led to a reduction or withdrawal of staff from many humanitarian organizations, including the Red Cross, as well as the World Bank and International Monetary Fund that have been operating in Iraq. Japan is likely to delay its controversial troop deployment until security improves. The UN has pledged to continue its efforts, and is evaluating how best to proceed.

Similar issues of international involvement and concerted efforts are raised by the assassinations and suicide bombing in Israel and the occupied territories this week that have torn a gaping and possibly irreparable hole in the Middle East roadmap for peace.

2. Africa

Fourteen European tourists kidnapped by militants of the Salafist Group for Preaching and Combat (GSPC) have been released after over five months captivity in the Sahara desert. They were freed in Mali and returned to Germany. There are reports of a ransom, denied by the German government, but it seems likely that Mali paid a ransom in exchange for German development aid.

In Angola, additional resources are needed to provide security and basic services for more than three million internally displaced persons and refugees. Assistance is also necessary for reintegration of former UNITA rebel soldiers.

Fighting continued in Burundi while peace talks were under way. The first direct talks between the president and rebel leader took place, centering on discussions of a power-sharing transitional government.

Burundi and Tanzania have agreed to reopen more border crossings to help facilitate return of refugees to Burundi.
The Comoros archipelago has agreed to a draft agreement allowing devolved authority to the islands and allocation of resources, taxes, and security.

Democratic Republic of Congo has continued its discussion of the transitional government and movement towards national elections. The interim parliament has been inaugurated. Five militia groups in Ituri province have affirmed their support for a peace agreement and agreed to the deployment of a national force.

Ivory Coast and Nigeria have signed an agreement for oil supplies that will help put an end to stolen crude from the Niger Delta.

Liberia's peace accord was signed by the two main rebel groups and the government. It includes appointment of businessman and church leader Gyude Bryant as the head of the transitional government. More fighting at the weekend illustrates the challenges of bringing security and allowing distribution of urgently needed humanitarian aid. Disease, hunger and lawlessness are still rampant. There has as yet been limited international support. The evaluation team sent by the US had recommended a stabilization force of 2300 marines but the Pentagon rejected the suggestion. African troops with limited numbers and resources are providing such peacekeeping support as they can.

Libya has begun to transfer $2.7 billion compensation for the 1988 Lockerbie bombing. They are discussing an agreement with France for similar compensation for the 1989 UTA bombing. The UN Security Council has deferred discussing whether to lift sanctions against Libya until this issue is settled.

Nigerian ethnic rivalries between Ijaw and Itsekiri militias in the oil-rich Niger delta claimed more than a hundred lives last week. A heavy army presence has contained further violence.

Rwanda is prepared for its first multiparty elections since the 1994 genocide that claimed a million lives. Ethnicity remains an issue in the presidential election campaign.

Somalia peace talks reconvened after a 5-day break. Meanwhile, the UN Security Council was given an update on the status of the arms ban and finds that a steady stream of weapons and ammunition continues to flow.

Sudan commemorated the fifth anniversary of the US missile attack against the Al-Shifa Pharmaceutical Factory in Khartoum on August 20.

Uganda's President Yoweri Museveni has challenged the rebel Lord's Resistance Army (LRA)) to kidnap him instead of targeting children. The LRA killed 13 abducted children. They also staged an ambush in which five were killed and ten abducted. In the last two weeks, approximately 90 rebels, 11 soldiers, and 20 civilians have been killed in northern Uganda, but the LRA offensive shows little sign of abating.

Zimbabwe's government has doubled its budget in order to pay state employees at pace with inflation. This action will have a further inflationary effect. The government has also announced it will take control of food aid distribution, but major donor organizations will not agree to this and will discontinue distribution if there is political interference.

3. Americas

Argentina's senate has joined the Congress to vote to annul the amnesty laws protecting members of the former military government from human rights prosecutions. President Nestor Kirchner will now sign the law and open the way for human rights trials and completion of international extradition requests.

Canadian authorities detained 19 Pakistanis on immigration charges after an investigation that tied them to national security threats against airlines and nuclear materials. So far, none of the men have been charged and the detentions have been called an overreaction. An intelligence study by Royal Canadian Mounted Police says that large-scale smuggling between the US and Canada has resumed despite stricter controls.

In Colombia, US drug-interception flights will resume after a 2-year suspension. Rebels of the Revolutionary Armed Forces of Colombia (FARC) fund many operations through the drug trade. For an excellent introduction to FARC see the BBC's "Instant Guide" this week at http://www.bbc.co.uk/worldservice/programmes/instant_guides.shtml (available online through next Saturday.)

Former president of Ecuador Gustavo Boboa has gone into exile in thee Dominican Republic.

In the US, large crowds commemorated the 40th anniversary of Martin Luther King's path-breaking "I Have a Dream" speech. This anniversary comes at a time when civil rights in the US have been threatened by security measures. Attorney General John Ashcroft has launched a publicity campaign to gain support for renewing and strengthening the USA Patriot Act. http://www.lifeandliberty.gov For another perspective, and details of a suit against a provision that allows government seizure of personal records without disclosure, see http://www.aclu.org

Three children detained at Guantanamo Bay are likely to be released soon.

In Los Angeles, California, an arson attack against Sports Utility Vehicles destroyed a dealership and dozens of vehicles. The Earth Liberation Front claimed responsibility.

In Florida, a 2-year program of surveillance cameras on the streets has been discontinued after it failed to identify a single criminal.

Venezuelan opponents of President Hugo Chavez have delivered a petition to election officials with 3.2 million signatures calling for his removal, in the first step to a recall referendum.

4. Asia Pacific

Indonesia and the Philippines have asked the US for access to terrorist suspect Hambali who is now being held by US authorities in an undisclosed location. Australia is also expected to request access. The southeast Asian countries helped in his capture, but the US has been unwilling to share intelligence or try him for his involvement in regional attacks. Hambali's wife, Noralwizah Lee Abdullah, of Malaysia, has been turned over to police in Kuala Lumpur where she is being held and interrogated under the Internal Security Act.

China summoned the Japanese ambassador to express its anger over the abandoned World War II mustard gas that has killed one and injured more than 30. The barrels containing the chemicals have now been neutralized.

Indonesian police have arrested nine and named 16 suspects in connection with the Marriott Hotel bombing two weeks ago. They warn that despite recent arrests, Jemaah Islamiah still retains the ability to undertake attacks.

The Philippines has marked the 20th anniversary of the assassination of Benigno Aquino as he returned from exile.

5. Europe

Czechoslovakia marked the 35th anniversary of the Soviet invasion on August 20.

French negotiators left Libya without an agreement on compensation for UTA flight 772 that was blown up over the Sahara in 1989 and was linked with the 1988 Lockerbie bombing in the UN sanctions against Libya. A French court had found six Libyans guilty in absentia and sentenced them to life in prison.

In Georgia, 17 Abkhazia refugee women occupied an administrative office in Tbilisi for several hours. They poured gasoline over themselves and threatened to set fire until promised help with housing.

German authorities have arrested a man who threatened to poison the water supply with cyanide on September 11.
Italian authorities have blamed the raging fires along the Sardinian coast on eco-terrorists who are using arson and bomb threats to drive out tourism, the island's economic foundation.

Heavy fighting in Chechnya has killed eight Russian soldiers and 12 separatist rebels.

Serbian authorities have charged 44 people in connection with the assassination of Prime Minister Zoran Djindjjic.

The British inquiry into the death of Iraqi weapons inspector David Kelly is underway. In an unprecedented move, hundreds of documents have been released to the public, 30-years earlier than normal. To see this evidence, visit the Hutton inquiry web site at http://www.the-hutton-inquiry.org.uk/

Paul Harris and Thomas Reilly report, "More than 60 hoax bombs have been sent to family court offices around Britain as part of a militant campaign by suspected extremists demanding better rights for fathers". In "Spate of hoax bombs hits family courts", The Observer, August 24
http://observer.guardian.co.uk/print/0,3858,47,00.html

In Northern Ireland, Freddie Scappaticci, named as double agent "Stakeknife" has lost his legal efforts to force a government denial that he was a British spy. The judge said that the government could not comment on intelligence or name agents.

Two dissident republicans of the Real IRA shot dead Danny McGurk in front of his family in west Belfast. McGurk was not attached to any organization.

6. Middle East

Iran is negotiating possible concessions to encourage technical information sharing before signing the additional protocol to the Nuclear Non-Proliferation Treaty. South of Tehran, eight people were killed and 150 injured during riots over changes to local administrative boundaries in tribal areas.

In Iraq, the UN headquarters in Baghdad was partially destroyed by a suicide truck bombing that killed at least 24 people and injured more than a hundred. The investigation is under way, but responsibility for the attack is as yet unknown. Suspicion has fallen upon loyalists of the old regime and foreign Islamic fighters. Ansar al Islam, a militant group that has operated from Kurdish areas, has denied involvement.

Meanwhile, ethnic violence between Kurds and Turkmens in the north has killed eleven. An attempted assassination of leading Shia cleric the Grand Ayatollah Seyed Mohammed Said al-Hakim killed three and injured nine, including light injuries to the Ayatollah. Attacks against occupying forces also continue, averaging more than 12 per day.

Ali Hassan al Majid, "Chemical Ali" has been captured by US forces in Iraq. He is wanted for war crimes, notably his role in the gas attack against Kurds in 1987. Human rights groups around the world praised his capture and emphasized the need for him to face his crimes and be brought to justice in Iraq.

A week of bloodshed in Israel and the occupied territories has left the roadmap peace plan on the verge of collapse. On the 19th, a suicide bomber on a bus in Jerusalem killed 20 including six children and injured more than 100. In retaliation, Israel launched a missile strike to kill Ismail Abu Shanab, a leading Hamas politician, and his two bodyguards. The Palestinian "ceasefire" was declared over and tens of thousands of Palestinians turned out for Shanab's funeral in Gaza. Israel has sent troops back in, launched raids and military strikes, re-imposed roadblocks, and promised further attacks against Hamas. On Sunday, Israeli helicopter gunships killed four Palestinians. This situation has deepened divisions within the Palestinian Authority over tactics and leadership.

7. South Asia

Afghanistan's increasing lack of security continues to threaten humanitarian aid and recovery efforts as well as interdiction of the narcotics trade. In the south, there is clear evidence of a strong Taliban revival. Nearly a hundred civilians have been killed in the last week, primarily in the south and the mountainous border with Pakistan. Pakistan has promised stronger border security. The US has shifted special agents from the search for bin Laden to deployment in Iraq.

In northeast India near the Bhutan border, a clash between the Indian army and rebels of the United Liberation Front of Assam killed eight rebels.

Archaeologists investigating the Ayodhya site in Gujarat have completed their report, that will be reviewed on Monday.

Nepal's three days of peace talks ended without agreement, increasing the possibility of renewed conflict.

Pakistan has established a new anti-terrorism force that is being trained and will begin operating in September. For the "Inside story of the hunt for Bin Laden" see Rory McCarthy's report in The Guardian, August 23 http://www.guardian.co.uk/print/0,3858,47,00.html

Sri Lanka has imposed curfews in Muslim areas in the east after two men were kidnapped by suspected Tamil Tiger rebels. There have been reports that Tiger suicide squads were planning to assassinate President Chandrika Kumaratunga. Meanwhile, a Tiger delegation has headed for peace talks in France.

8. Cyberterrorism and Information Warfare

Sobig.F has become the fastest spreading computer virus seen to date. This most sophisticated of the five prior variants of Sobig has now surpassed LoveBug, Klez and Kournikova with an infection ratio of 1 in every 17 emails. It contains a deactivation date of September 10. Although containing zombie code, it is not highly destructive. However due to its rapid spread, it has slowed down traffic and resulted in closure of some government and corporate offices and disrupted air and rail traffic. Sobig.F infects Microsoft Windows machines. For an interesting description of the investigation into this and similar attacks, see Paul Harris's "War of the worms" in the Observer, August 24 http://observer.guardian.co.uk/print/0,3858,47,00.html

Microsoft has announced two new critical flaws in the Explorer browser. For an excellent commentary on Windows security, see Rob Pegoraro's article "Microsoft Windows: Insecure by design" in the Washington Post, August 24 http://www.washingtonpost.com/ac2/wp-dyn/A34978-2003Aug23.html
(Note: TerrorismCentral relies on Unix- and Macintosh-based systems. The only Windows machine in use has no internet connection.)

Citibank customers have become targets of a new "Phisher" scheme in which clients receive an email purportedly from the bank and directs them to a false but convincing web site, asking for social security numbers and other personal data. The US Navy has cancelled 13,000 potentially affected credit cards.

There is new information on cyber threats to the power grid. See:
Kevin Poulsen "Slammer worm crashed Ohio nuke plant net" http://www.theregister.co.uk/content/56/32425.html
and
NSTAC "Electric Power Risk Assessment" http://www.ncs.gov/n5_hp/Reports/electric.html

9. Finance

The US Treasury has designated the following Hamas-related charities and individuals as Specially Designated Global Terrorists, thus freezing their US assets and prohibiting US trade:
Sheik Ahmed Yassin, leader of Hamas in Gaza
Imad Khalil Al-Alami, member of Hamas political Bureau in Damascus, Syria
Usama Hamdan, senior Hamas leader in Lebanon
Khalid Mishaal, head of Hamas Political Bureau and Executive Committee in Damascus
Musa Abu Marzouk, Deputy Chief of Political Bureau in Syria
Abdel Aziz Rantisi, Hamas leader in Gaza reporting to Yassin
Commite de Bienfaisance et de Secours aux Palestiniens (CBSP) of France
The Association de Secours Palestinien (ASP) of Switzerland
The Palestinian Relief and Development Fund (Interpal), in the UK
The Palestinian Association in Austria (PVOE)
The Sanabil Association for Relief and Development, in Lebanon.
This action is designed to apply pressure to the EU to take similar steps. So far, the EU has banned only the military wing of Hamas and continues to allow political and social support.

Chechen Shamil Basayev, a/k/a Abdullakh Shamil Abu-Idris, has been added to the consolidated list of those subject to UN sanctions against al Qaeda. He is also on the US list of Specially Designated Global Terrorists. Another Chechen, Zelimkhan Ahmedovich Abdul Muslimovich has also been added to the US list.

After being named on a "dirty list" of companies doing business with the military junta in Burma, advertising group WPP is closing its Burmese office.

An affidavit filed by David Kane, US Bureau of Immigration and Customs Enforcement, alleges that Islamic charities in Virginia funneled money through Saudi Arabia to funnel militant Islamic groups including al Qaeda. See report by Douglas Farah, "U.S. Links Islamic Charities, Terrorist Funding" in the Washington Post, August 20 http://www.washingtonpost.com/ac2/wp-dyn/A17354-2003Aug19.html

See today's Feature Article " United Kingdom Threat Assessment of Serious and Organised Crime 2003", below.

Note: Finance now incorporates narcoterrorism

10. Human Rights

The world is mourning the death of Sergio Vieira de Mello, killed in the bombing of UN headquarters in Iraq. Mr. Vieira de Mello was on a leave of absence as the UN High Commissioner for Human Rights to undertake a 4-month assignment as the UN's special envoy to Iraq. He was chosen for this difficult position after a history of great success in UN operations in some of the world's most dangerous hot spots, including Bosnia, Cambodia, East Timor and Mozambique.

Six Falon Gong members have filed charges of torture, crimes against humanity and genocide in Belgium court, against China. The plaintiffs are citizens or long-term residents of Belgium.

11. Law and Legal Issues

Enaam Arnaout, leader of the Benevolence International Foundation, has been sentenced to over eleven years in prison for fraud. He was not found guilty of supporting terrorism.

The trial of 22 Boeremag members accused in South Africa of treason has been delayed again as three have asked for separate trials.

Kathy Boudin, convicted member of Weather Underground, has been granted parole after 22 years in prison for a robbery in which three people were killed.

Hemant Lakhani, arrested last week in connection with the missile sting operation, has been given a week delay before a court appearance to give him time to prepare bail.

Mohamed El Omari, Yassine Lahnach, Rachid Jalil and Hassan Tawsi have been convicted in Moroccan Court for their involvement in the May suicide bombings that killed 32. They have been sentenced to death. 83 other defendants were convicted of membership in Salafia Hihadiah other related charges, and sentenced to terms from 10 months to life in prison.

Mohamad Iqbal Abdul Rahman, detained in Malaysia as a suspected leader of Jemaah Islamiah, will be released and deported to his native Indonesia.

Hade Soleimanpour, former Iranian ambassador to Argentina, has been arrested in the UK on an extradition order. He is charged in connection with a 1994 car bomb attack against a Jewish community center in Buenos Aires. The extradition is under review. Approximately twelve additional Iranians are wanted by Argentina in connection with this attack. The Iranian government denounced the arrest and claimed it was part of a Zionist plot.

Mohammad Yousef has confessed to police in Indian-administered Kashmir that he threw the two grenades near a Hindu shrine that killed seven. He claimed the attack had been ordered by the militant Hizbul Mujahideen group.

12. Transportation

Questions over airline defenses against portable missiles continue. See Jonathan Duffy's "Could your airline fend off a missile?" BBC News, August 19, http://news.bbc.co.uk/hi/uk_news/magazine/3159895.stm and Renae Merle's "U.S. Weighing Missile Defenses for Airliners" in the Washington Post, August 22. http://www.washingtonpost.com/ac2/wp-dyn/A28962-2003Aug21.html

China plans to deploy police on civilian flights to protect airplanes from possible attacks.

13. Weapons of Mass Destruction

A Meeting of Experts began at UN headquarters in Geneva. For two weeks, 150 parties to the biological arms ban will discuss national measures to implement the prohibitions and how to secure and oversee pathogens and toxins.

Researchers at Oregon Health and Sciences University analyzed blood samples from people vaccinated against smallpox up to 75-years ago and found that substantial immunity was retained.

A leading arms trafficker is featured in "Arms and the Man" by Peter Landesman, The New York Times Magazine, August 17, 2003.

14. Recently Published

Lisa Gardner, "The Killing Hour" Bantam (fiction, eco-terrorism)

Zachary Karabell, "Parting the Desert: The Creation of the Suez Canal" Alfred A Knopf

Tom LaTourette, D. J. Peterson, James T. Bartis, Brian A. Jackson and Ari Houser. "Protecting Emergency Responders, Volume 2: Community Views of Safety and Health Risks and personal Protection Needs" Rand http://www.rand.org/publications/MR/MR1646

William Rivers Pitt "The Greatest Sedition in Silence: Four Years in America" Pluto

Barry Rubin and Judith Colp Rubin, "Yasir Arafat: A Political Biography" Oxford

Allister Sparks, "Beyond the Miracle" Profile Books (about South Africa)

Jessica Stern, "Terror in the Name of God" Why Religious Militants Kill" Ecco

Peter Stothard, "Thirty Days: Tony Blair and the Test of History" Harper Collins

World Markets Research Centre, "The WMRC Global Terrorism index 2003/4" http://www.worldmarketsanalysis.com

FEATURE ARTICLE: United Kingdom Threat Assessment of Serious and Organised Crime 2003

Links between organized crime and terrorism are well documented. This report by the National Criminal Intelligence Service describes and analyzes organized crime and their activities, including drug trafficking, immigration crime, fraud, money laundering, firearms, hi tech crime, and sex offenses. The complete is report at http://www.ncis.co.uk/press/2003/200803.asp

Extracts from Section 5: Fraud:
Excise fraud

Tobacco
5.7 HM Customs and Excise assesses that the high profits and relatively low risks and penalties, compared with other forms of serious and organised crime, has encouraged some criminals to move away from drugs trafficking and switch to tobacco smuggling, and others to diversify into tobacco and other forms of excise evasion. For a significant number, tobacco smuggling is a core activity. Serious and organised criminal groups have also become more sophisticated over the past decade, often operating in large gangs, and some have used violence, including the use of firearms, to protect their interests.

Alcohol
5.10 Many serious and organised criminals engaged in large-scale alcohol diversion fraud are also involved in tobacco smuggling. The easy interchange between cigarettes and alcohol not only highlights criminal opportunism, but also the potential flexibility and responsiveness of serious and organised criminals when faced with targeted enforcement measures. Where successes have been recorded against diversion frauds from Belgium, France and the Netherlands, for example, the organised criminals have had the flexibility to source supplies from elsewhere.

Fuel
5.12 Oils fraud is a profitable criminal enterprise in Northern Ireland, with the proceeds often used to fund other forms of serious crime. In particular, serious and organised criminals in Northern Ireland are active in smuggling and laundering both UK red diesel and the equivalent 'green diesel' from the Irish Republic. Some criminal groups are capable of generating tens of thousands of pounds in a day from their activities, and possibly millions of pounds over the course of a year. Since April 2000, HM Customs and Excise has increased the number of staff engaged in tackling this form of fraud in Northern Ireland. As a result, seizures of fuel in Northern Ireland have more than doubled, vehicle seizures have more than trebled, and 17 laundering plants have been dismantled. In 2001-2002, 1.85 million litres of illicit fuel were seized, eight laundering plants were broken up, and seven of the major gangs behind oils fraud were dismantled. This success is reflected in the fuel retail market in Northern Ireland with an increase in legitimate fuel deliveries for the first time in five years. The volume of petrol delivered was up by six percent, and diesel by eight percent.

VAT fraud
5.17 Serious and organised criminals feature most prominently in the area of thief fraud. Thief fraud involves setting up bogus company registrations in order to steal VAT. There are three main types of thief fraud: missing trader intra-community fraud; repayment fraud and third country export diversion fraud. The last of these involves the diversion of goods from export to home use without charging VAT. Basic consumer and luxury goods have been used in such frauds. Repayment fraud can occur with goods or services. It involves the recovery of VAT on wholly fictitious or exaggerated transactions by a bogus business. More sophisticated criminals engage in 'multi-cell repayment fraud', disguising their activities and increasing their profits by setting up numerous bogus registrations, each of which reclaims small amounts of VAT. Advanced technology has enabled criminals to create increasingly authentic-looking counterfeit sales invoices to support these frauds.

Benefit fraud
5.22 There is continuing organised use of false and stolen identities to defraud the UK benefit system, although the scale of this activity remains unclear. Stolen identities are used for benefit claims in the UK, and in some cases to facilitate concurrent benefit claims across a number of EU states. Identities may be obtained by corrupt individuals, both in the public and private sectors, who have access to personal details. Alternatively, criminals are known to gather information from public records, which may then be used to purchase birth certificates of deceased infants as the basis for creating false identities.

Private sector fraud
5.28 Various types of fraud occur within the private sector. The amounts in question can be considerable. Many of the perpetrators of these frauds are not typical serious and organised criminals, although some of the latter are also extensively involved. Frauds include high-level manipulation of share prices and high-yield investment confidence tricks, such as pyramid schemes, faked instruments of payment, timeshare scams and long firm frauds. The latter involves setting up a company, trading legitimately to build up a credit history with a firm, and then placing a large order before disappearing without paying.

419 fraud
5.29 West African 419 fraudsters target individuals and organisations offering significant money-making opportunities. Millions of unsolicited letters and emails are sent out annually, enticing victims to offer their bank accounts as the destination for large sums of money (often openly stated as being illicitly gained) in return for a percentage of the funds. Those who respond positively are requested to provide advances in order to overcome various bureaucratic hurdles and free up the promised returns on investment. Victims are often requested to travel to other countries to collect the money, where they unknowingly face further risk from fraud, possible intimidation and even kidnap.

5.31 419 fraudsters are taking advantage of the latest technology. Letters are still used, the trend being towards the use of post-paid impressions from countries other than Nigeria. However, the internet provides a degree of anonymity and the facility to send blanket emails to multiple potential victims. Predictably, the number of reported email approaches has risen considerably. Emails and fax documents are sent from web-based accounts, which are only used for a short period of time before being abandoned.

5.32 Over the last year, fraudsters have created false internet banking sites to dupe victims. The idea is to persuade the victim to part with more cash by convincing them that the deal is genuine and that they retain some control over their money. Potential victims are provided with the web address, an account number and a PIN number with which they can access their 'account'. When they do so they find details purporting to show that a large amount of money has been transferred into it. The identities of genuine companies and financial institutions are sometimes 'hijacked' to help deceive the victims.

Investment fraud
5.36 Investment fraud embraces a number of methods used by serious and organised criminals to defraud investors, typically involving non-existent companies or fictitious commodities. The value of these frauds can be very large. A well-planned investment fraud might generate around GPB500,000, while one bogus investment company, the organisers of which are now serving prison sentences, defrauded its customers of GBP3 million between 1995 and 1997.

Boiler room frauds
5.38 A boiler room fraud involves an organisation based overseas giving the misleading impression that it operates in the UK and attempting to get investors to buy shares that are often worthless. The sales techniques used are often very aggressive. Having bought the shares, the investor tends to find that the share certificates are hard to obtain and the proceeds from any sale of the shares are not immediately forthcoming. The number of unauthorised firms involved in boiler room fraud is increasing. In 2002, the Financial Services Authority (FSA) listed only 11 unauthorised investment firms. By June 2003, the FSA list consisted of 43 firms.

5.39 Customers face considerable risks when dealing with financial services companies that appear to be based in the UK but are actually based abroad and are unauthorised. In these circumstances, customers do not have access to complaints and compensation schemes if there is a problem or if the company collapses. In recent years, there has been a surge in the number of enquiries and complaints that the FSA has received about unauthorised overseas companies targeting UK-based investors. As well as unauthorised trading, the FSA has noted that in some jurisdictions, such as Central and Eastern Europe, small or medium sized financial companies have been taken over and used solely as fronts for criminal businesses.

Long firm fraud and fraudulent trading
5.40 Long firm fraud involves fraudsters creating, or more commonly taking over, a business and placing orders with suppliers to build up a line of credit. Subsequent orders are gradually increased in size. The fraudsters then place a very large order for goods, which are sold immediately, and they then vanish without paying the supplier for the goods. A well-planned operation can generate up to GBP100,000, and many serious and organised criminals use this type of fraud to raise capital for other serious criminal activities. Seasonal shops are popular with long-firm fraudsters, since they have a high turnover of goods in a short period. Shops specialising in cheap decorations and cards that appear in many high streets towards Christmas and close down immediately afterwards are good example.

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