Insurance fraud is one piece of the international criminal jigsaw

Mar 12, 2020

Opportunists are not driven by the same motivations as criminals. The former are, more often than not, acting either in desperation or in reaction to a seemingly attractive chance to carry out what they might see as a victimless crime.

Those who inflate an insurance claim for extra cash do not see themselves as having much in common with people traffickers or murderers. But this link is exactly what the industry needs to demonstrate to build necessary stigma around insurance fraud.

There is little data to unequivocally show that organised fraud in the insurance industry is linked to broader criminal networks, but the anecdotal evidence is plentiful.

In 2017, Mohammed Sangak was jailed by a British court for 10 years. He had run a crash-for-cash scam that netted hundreds of thousands of pounds. However, the boundaries of Sangak’s criminal enterprise stretched far beyond insurance fraud. He was also convicted of plotting to smuggle illegal immigrants into the UK.

In America in 2016, Philadelphia auto-body shop owner Ronald Galati was sentenced to up 29 years in prison for defrauding insurance companies (with 40 other co-conspirators) of nearly $2 million through motor fraud.

Again, insurance fraud was not the sole criminal enterprise. When convicted, Galati was already in jail for several murder-for-hire plots.

Organised criminals are targeting insurance companies
Although these are just two examples, they show that organised criminals are targeting insurance companies as just one element of their wide-ranging illicit activities. Insurance fraud is not their sole purpose.

When we look at criminal activity from a global perspective, we start to see how local organised crime fits into a much broader landscape. The global trade system is incredibly complex, with trillions of dollars going through ports every year. This has happened less by design than by evolution – and the global crime system has evolved in line with it.

A massive chunk of global trade is criminal, with one trillion dollars of proceeds passing through the system every year. Criminal gangs trade online globally in much the same way that small companies do.

The connections between the small and the big criminal players are hugely intricate, with criminals of all types trading with each other, just as businesses do. While local criminals are unlikely to be troubled by being bracketed together with global criminal gangs (a connection they may, indeed, savour), opportunistic fraudsters will likely baulk at such an association.

If insurers continue to work in establishing and exposing the links between insurance fraud and far more serious crimes, they can build much-needed stigma around insurance fraud, reducing its incidence as well as helping to build a safer society.

(Editor's Note: The article was written by Chris Andrew; original article here. Reposted with permission.)

About

We use intelligence-led insights to help defend governments, nations and societies from financial crime and cyber-attacks. We spent the past two decades serving more than 175 customers globally, including more than half of the world’s top 40 financial institutions, to detect and combat financial crime. We employ data science practitioners and subject matter experts with more than 15 years of domain and financial services experience.

Our solutions provide a breadth of functionality: holistic platforms, white box detection, efficient and intuitive user interfaces, and tight integration. Our unprecedented access to world-leading analysts and market-leading technology means we can help our customers adapt, evolve, and stay ahead of the criminals.

Other Articles