December 22, 2024

You are here: Home / Archives for law enforcement officials

In China, Hacking Has Widespread Acceptance

May 22, 2013 by Leave a Comment

Pitches like that, from a salesman for Nanjing Xhunter Software, were not uncommon at a crowded trade show this month that brought together Chinese law enforcement officials and entrepreneurs eager to win government contracts for police equipment and services.

“We can physically locate anyone who spreads a rumor on the Internet,” said the salesman, whose company’s services include monitoring online postings and pinpointing who has been saying what about whom.

The culture of hacking in China is not confined to top-secret military compounds where hackers carry out orders to pilfer data from foreign governments and corporations. Hacking thrives across official, corporate and criminal worlds. Whether it is used to break into private networks, track online dissent back to its source or steal trade secrets, hacking is openly discussed and even promoted at trade shows, inside university classrooms and on Internet forums.

The Ministry of Education and Chinese universities, for instance, join companies in sponsoring hacking competitions that army talent scouts attend, though “the standards can be mediocre,” said a cybersecurity expert who works for a government institute and handed out awards at a 2010 competition.

Corporations employ freelance hackers to spy on competitors. In an interview, a former hacker confirmed recent official news reports that one of China’s largest makers of construction equipment had committed cyberespionage against a rival.

One force behind the spread of hacking is the government’s insistence on maintaining surveillance over anyone deemed suspicious. So local police departments contract with companies like Xhunter to monitor and suppress dissent, industry insiders say.

Ai Weiwei, the dissident artist, said he had received three messages from Google around 2009 saying his e-mail account had been compromised, an increasingly common occurrence in China among people deemed subversive. When the police detained him in 2011, he said, they seized 200 pieces of computer equipment and other electronic hardware.

“They’re so interested in computers,” Mr. Ai said. “Every time anyone is arrested or checked, the first thing they grab is the computer.”

There is criminal hacking, too. Keyboard jockeys break into online gaming programs and credit card databases to collect personal information. As in other countries, the police here have expressed growing concern.

Some hackers see crime as more lucrative than legitimate work, but opportunities for skilled hackers to earn generous salaries abound, given the growing number of cybersecurity companies providing network defense services to the government, state-owned enterprises and private companies.

“I have personally provided services to the People’s Liberation Army, the Ministry of Public Security and the Ministry of State Security,” said a prominent former hacker who used the alias V8 Brother for this interview because he feared scrutiny by foreign governments. He said he had done the work as a contractor and described it as defensive, but declined to give details.

And “if you are a government employee, there could be secret projects or secret missions,” the hacker said.

But government jobs are usually not well paying or prestigious, and most skilled hackers prefer working for security companies that have cyberdefense contracts, as V8 Brother does, he and others in the industry say.

Self-trained, the hacker teamed up with China’s patriotic “red hackers” more than a decade ago. Then he began working for cybersecurity companies and was recently making $100,000 a year, he said.

Jonathan Ansfield contributed reporting, and Mia Li contributed research.

Article source: http://www.nytimes.com/2013/05/23/world/asia/in-china-hacking-has-widespread-acceptance.html?partner=rss&emc=rss

Filed Under: Media Business Tagged With: , ,

DealBook: HSBC Is Said to Avoid Charges Over Laundering

December 11, 2012 by Leave a Comment

HSBC's headquarters in London.Facundo Arrizabalaga/European Pressphoto AgencyHSBC’s headquarters in London.

9:49 p.m. | Updated
State and federal authorities decided against indicting HSBC in a money-laundering case over concerns that criminal charges could jeopardize one of the world’s largest banks and ultimately destabilize the global financial system.

Instead, authorities on Tuesday are expected to announce a record $1.9 billion settlement with the bank, according to law enforcement officials briefed on the matter. The bank, which is based in Britain, faces accusations that it transferred billions of dollars for nations like Iran and enabled Mexican drug cartels to move money illegally through its American subsidiaries.

While the settlement is a major victory for the government, the case raises questions about whether certain financial institutions, having grown so large and so interconnected, are too big to indict. Four years after the failure of Lehman Brothers nearly toppled the financial system, regulators are still wary that a single institution could undermine the recovery of the industry and the economy.

But the threat of criminal prosecution acts as a powerful deterrent. If authorities signal such actions are remote for big banks, the threat could lose its sting.

Behind the scenes, authorities debated for months the advantages and perils of a criminal indictment against HSBC.

Some prosecutors at the Justice Department’s criminal division and the Manhattan district attorney’s office wanted the bank to plead guilty to violations of the federal Bank Secrecy Act, according to the officials, who spoke on the condition of anonymity. The law forces financial institutions to report any cash transaction of $10,000 or more and requires banks to bring any dubious activity to the attention of regulators.

Given the extent of the evidence against HSBC, some prosecutors saw the charge as a healthy compromise between a settlement and a harsher money-laundering indictment. While the charge would most likely tarnish the bank’s reputation, some officials argued that it would not set off a series of devastating consequences.

A money-laundering indictment, or a guilty plea over such charges, would essentially be a death sentence for the bank. Such actions could cut off the bank from certain investors like pension funds and ultimately cost it its charter to operate in the United States, officials said.

Despite the Justice Department’s proposed compromise, Treasury Department officials and bank regulators at the Federal Reserve and the Office of the Comptroller of the Currency pointed to potential issues with the aggressive stance, according to the officials briefed on the matter. When approached by the Justice Department for their thoughts, the regulators cautioned about the impact on the broader economy.

“The Justice Department asked Treasury for our view about the potential implications of prosecuting a large financial institution,” David S. Cohen, the Treasury’s under secretary for terrorism and financial intelligence, said in a statement. “We did not believe we were in a position to offer any meaningful assessment. The decision of how the Justice Department exercises its prosecutorial discretion is solely theirs and Treasury had no role.”

Still, some prosecutors proposed that Attorney General Eric H. Holder Jr. meet with Treasury Secretary Timothy F. Geithner, people briefed on the matter said. The meeting never took place.

After months of discussions, prosecutors decided against a criminal indictment, but only after securing record penalties and wide-ranging sanctions.

The HSBC deal, which is expected to be filed on Tuesday in the Eastern District of New York, includes a deferred prosecution agreement with the Manhattan district attorney’s office and the Justice Department. The deferred prosecution agreement, a notch below a criminal indictment, requires the bank to forfeit more than $1.2 billion and pay about $650 million in fines, according to the officials briefed on the matter. The case, officials say, will claim violations of the Bank Secrecy Act and Trading with the Enemy Act.

As part of the deal, one of the officials briefed on the matter said, HSBC must also strengthen its internal controls and stay out of trouble for the next five years. If the bank again runs afoul of the federal rules, the Justice Department can resume its case and file a criminal indictment.

“We are cooperating with authorities in ongoing investigations,” said Rob Sherman, a spokesman for the bank. He added, “The nature of any conversations is confidential.”

The Justice Department and the Manhattan district attorney’s office declined to comment, as did the bank regulators.

The HSBC case is part of a sweeping investigation into the movement of tainted money through the American financial system. In 2010, Lanny A. Breuer, the head of the Justice Department’s criminal division, created a money-laundering task force that has collected more than $2 billion in fines from banks, a number that is set to double with the HSBC case.

The inquiry — led by the Justice Department, the Treasury and the Manhattan prosecutors — has ensnared six foreign banks in recent years, including Credit Suisse and Barclays. In June, ING Bank reached a $619 million settlement to resolve claims that it had transferred billions of dollars in the United States for countries like Cuba and Iran that are under United States sanctions.

On Monday, federal and state authorities also won a $327 million settlement from Standard Chartered, a British bank. Standard, which in September agreed to a larger settlement with New York’s top banking regulator, admitted processing thousands of transactions for Iranian and Sudanese clients through its American subsidiaries. To avoid having Iranian transactions detected by Treasury Department computer filters, Standard Chartered deliberately removed names and other identifying information, according to the authorities.

“You can’t do it. It’s against the law, and today Standard Chartered is being held to account,” Mr. Breuer said in an interview.

HSBC’s actions stand out among the foreign banks caught up in the investigation, according to several law enforcement officials with knowledge of the inquiry. Unlike those of institutions that have previously settled, HSBC’s activities are said to have gone beyond claims that the bank flouted United States sanctions to transfer money on behalf of nations like Iran. Prosecutors also found that the bank had facilitated money laundering by Mexican drug cartels and had moved tainted money for Saudi banks tied to terrorist groups.

HSBC was thrust into the spotlight in July after a Congressional committee outlined how the bank, between 2001 and 2010, “exposed the U.S. financial system to money laundering and terrorist financing risks.” The Permanent Subcommittee on Investigations held a subsequent hearing at which the bank’s compliance chief resigned amid mounting concerns that senior bank officials were complicit in the illegal activity. For example, an HSBC executive at one point argued that the bank should continue working with the Saudi Al Rajhi bank, which has supported Al Qaeda, according to the Congressional report.

Despite repeated urgings from federal officials to strengthen protections in its vast Mexican business, HSBC instead viewed the country from 2000 to 2009 as low-risk for money laundering, the Senate report found. Even after HSBC’s Mexican operation transferred more than $7 billion to the United States — a volume that law enforcement officials said had to be “illegal drug proceeds” — lax controls remained.

HSBC has since moved to bolster its safeguards. The bank doubled its spending on compliance functions and revamped its oversight, according to a spokesman. In January, HSBC hired Stuart A. Levey as chief legal officer to come up with stricter internal standards to thwart the illegal flow of cash. Mr. Levey was formerly an under secretary at the Treasury Department who focused on terrorism and financial intelligence.

On Monday, the bank said it was promoting Robert Werner, who oversaw the group at the Treasury Department that enforces sanctions, to run a specially created division focused on anti-money laundering efforts.

Regulators have also vowed to improve. The Congressional hearings exposed weaknesses at the Office of the Comptroller of the Currency, the national bank regulator. In 2010, the regulator found that HSBC had severe deficiencies in its anti-money laundering controls, including $60 trillion in transactions and 17,000 accounts flagged as potentially suspicious, activities that were not reviewed. Despite the findings, the regulator did not fine the bank.

During the hearings this summer, lawmakers blasted the regulator. At one point, Senator Tom Coburn, Republican of Oklahoma, called the comptroller “a lapdog not a watchdog.”

Article source: http://dealbook.nytimes.com/2012/12/10/hsbc-said-to-near-1-9-billion-settlement-over-money-laundering/?partner=rss&emc=rss

Filed Under: Global Business Tagged With: , ,

DealBook: Standard Chartered Agrees to Settle Iran Money Transfer Claims

December 10, 2012 by Leave a Comment

A Standard Chartered bank in London.Facundo Arrizabalaga/European Pressphoto AgencyA Standard Chartered bank branch in London.

The British bank Standard Chartered reached a deal with federal and state prosecutors on Monday over accusations that it had illegally funneled money for Iranian banks and corporations.

The 150-year-old bank will pay $327 million to settle claims by the Justice Department, the Manhattan district attorney’s office, the Federal Reserve Bank of New York and the Treasury Department. The settlement deals included a deferred prosecution agreement with the Justice Department, which accused the bank of “concealing” its ties to sanctioned countries like Iran and Sudan.

“You can’t do it, it’s against the law and today Standard Chartered is being held to account,” Lanny A. Breuer, head of the Justice Department’s criminal division, said in an interview.

The agreement allows the bank to move beyond a turbulent period.

In August, the New York State Department of Financial Services, headed by Benjamin M. Lawsky, broke from regulators and moved to accuse Standard Chartered of scheming for nearly a decade to hide 60,000 transactions worth $250 billion. Standard Chartered agreed to pay $340 million over the matter a month later.

United States authorities have been cracking down on banks that flouted federal law to transfer money on behalf of sanctioned nations. Investigations into Standard Chartered began in 2009, according to several law enforcement officials.

Executives at Standard Chartered have spent months trying to work out a settlement and resolve the investigation. Lawyers for the bank, in numerous conversations with federal and state prosecutors, maintained vociferously that a large majority of the transactions with Iran were permitted under a federal law that previously allowed foreign banks to transfer money for Iranian clients to another foreign institution through their American subsidiaries.

Since January 2009, the Justice Department, Treasury and the Manhattan prosecutor have charged five foreign banks in an effort to crack down on the illegal movement of tainted money across the globe. In June, ING Bank reached a $619 million settlement to resolve claims that it had transferred billions of dollars in the United States for Cuba and Iran.

“Investigations of financial institutions, businesses and individuals who violate U.S. sanctions by misusing banks in New York are vitally important to national security and the integrity of our banking system,” Cyrus R. Vance Jr., the Manhattan district attorney, said in a statement.

As part of the agreement announced on Monday, Standard Chartered admitted to processing more than $200 million for Iranian and Sudanese clients through its American subsidiaries. To avoid having those transactions detected by Treasury Department computer filters, Standard Chartered deliberately removed identifying information, according to the authorities.

Until 2008, foreign banks like Standard Chartered were permitted to transfer money for Iranian clients through their American branches to separate offshore institutions. These so-called U-turn transactions required banks to provide scant information about the original client to their American operations as long as they had checked for questionable activities. The Iranian loophole was closed in 2008 after American authorities suspected that Iranian banks were funneling money to support nuclear weapons development.

While the overwhelming majority of payments processed by Standard Chartered for Iran and Sudan were technically legal, they should have been disclosed, the Manhattan district attorney said on Monday. Mr. Lawsky of the New York financial services department had based his case against Standard Chartered, in large part, on similar claims that the bank had thwarted efforts to spot sanctions violations by cloaking the identities of Iranian clients and lying to regulators.

Article source: http://dealbook.nytimes.com/2012/12/10/standard-chartered-agrees-to-settle-iran-money-transfer-claims/?partner=rss&emc=rss

Filed Under: Global Business Tagged With: , ,

Senate Judiciary Committee Approves Overhaul of Electronic Communications Privacy Act

November 30, 2012 by Leave a Comment

The bill is not expected to make it through Congress this year and will be the subject of negotiations next year with the Republican-led House. But the Senate panel’s approval was a first step toward an overhaul of a 1986 law that governs e-mail access and that is widely seen as outdated.

Senator Patrick Leahy, the Vermont Democrat who is chairman of the committee, was an architect of the 1986 law and is leading the effort to remake it. He said at the meeting on Thursday that e-mails stored by third parties should receive the same protection as papers stored in a filing cabinet in an individual’s house.

“Like many Americans, I am concerned about the growing and unwelcome intrusions into our private lives in cyberspace,” Mr. Leahy said. “I also understand that we must update our digital privacy laws to keep pace with the rapid advances in technology.”

Mr. Leahy held a hearing about two years ago on whether and how to update the 1986 law, called the Electronic Communications Privacy Act. But the effort has moved slowly, in part because some law enforcement officials have opposed restricting an investigative tool now used increasingly.

Under the law, authorities need to obtain a search warrant from a judge — requiring them to meet the high standard of showing that there is probable cause to believe that a subject is engaged in wrongdoing — only when they want to read e-mails that have not yet been opened by their recipient and that are fewer than 180 days old.

But the law gives less protection to messages that a recipient has read and left in his or her account. In some cases, officials may obtain a court order for such material merely by presenting a judge with facts suggesting the messages are relevant to an investigation; in other cases, prosecutors can issue a subpoena demanding the materials without any court involvement.

Senator Leahy’s bill would generally require prosecutors to obtain a search warrant from a judge, under the stricter probable-cause standard, to compel a provider to turn over all categories of e-mails and other private documents.

The Center for Democracy and Technology, a nonprofit organization that advocates for electronic privacy rights, hailed the committee vote as “historic.”

In a statement, Gregory T. Nojeim, director of the center’s program on security and technology, said it “sets the stage for updating the law to reflect the reality of how people use technology in their daily lives. It keeps the government from turning cloud providers into a one-stop convenience store for government investigators and requires government investigators to do for online communications what they already do in the offline world: get a warrant before reading postal letters or searching our homes.“

Still, the ranking Republican on the committee, Senator Charles Grassley of Iowa, argued that the bill does not strike the proper balance between privacy and public safety. He expressed concerns that changing the standard of proof for obtaining e-mails would inhibit certain investigations, such as child pornography or child abduction cases.

Mr. Leahy argued that the bill does not alter criminal and antiterrorism laws related to search warrants, including exceptions in emergencies where time is of the essence. But he also said the bill was a starting point and he was open to further negotiations. The panel approved it by a voice vote.

Article source: http://www.nytimes.com/2012/11/30/technology/senate-committee-approves-stricter-privacy-for-e-mail.html?partner=rss&emc=rss

Filed Under: Business News Tagged With: , ,

Bank of America Explains Web Site Problems

October 6, 2011 by Leave a Comment

With nearly 30 million online banking customers and the nation’s busiest bank Web site, the failures spurred consumer anger, with account holders in some cases unable to pay bills electronically or check their balances.

“Our priority is delivering the speed and functionality our customers expect,” said David Owen, senior vice president and head of online and mobile banking for Bank of America. “We take this very seriously, and this has been very disappointing in terms of not meeting those expectations this week.”

While the site seemed to be functioning normally by Wednesday evening, Mr. Owen was not declaring victory. “We’re taking this day by day,” he said.

The problems first cropped up on Friday, a day after the bank, the nation’s largest, announced it would impose a new $5 a month charge for some debit cardholders. But Mr. Owen insisted the problems were not caused by hackers unhappy with the new fee or by efforts to flood the site with traffic as a protest, a strategy called a denial-of-service attack.

“Everything we know does not point to third-party intervention,” he said. Along with hundreds of internal analysts and technical staff, Mr. Owen said the bank had also been consulting with federal law enforcement officials and outside industry experts to get to the root of the Web troubles.

The problems were at their worst on Friday — the day after the $5 fee was announced — but Mr. Owen pointed to other causes like weekly paydays and federal government disbursements at the beginning of the month for the increase in visitors to the site.

“It’s a series of events that have converged,” Mr. Owen said. Besides the increased traffic, Mr. Owen said the company was in the middle of an effort to replace an old computer system while also offering customers new options when they used the site. The combination of factors made the problem more time-consuming to fix.

As the company identified and fixed individual bottlenecks, he said, other problems would spring up elsewhere, delaying the effort to get the Web site working normally again. “Sometimes, it’s as simple as fixing a box or changing a setting. But that’s not the case in this instance.”

The Bank of America Web site had 24.3 million unique visitors in August, according to data compiled by comScore, several million more than rivals like JPMorgan Chase, Wells Fargo and Capital One.

Article source: http://feeds.nytimes.com/click.phdo?i=fb33d35f3fdaf9e2fefc1647b6cb1e25

Filed Under: Economy News Tagged With: , ,

News of Turnaround in Dominique Strauss-Kahn Case Stuns France

July 2, 2011 by Leave a Comment

The question divided opinion as much among Mr. Strauss-Kahn’s own Socialist Party followers as those on the right. Moments after his release, the party spokesman, Benoît Hamon, told reporters that the court’s decision had come as an “intense relief.” Beyond that, the calculation likely to absorb party strategists revolved around the degree to which Mr. Strauss-Kahn, the former head of the International Monetary Fund, had been damaged by weeks of disclosures and accusations that, even days ago, seemed to have drawn an abrupt and indelible line across his ambitions and his career.

Before Mr. Strauss-Kahn’s release from house arrest, two well-placed law enforcement officials in New York said that the case against him was on the verge of collapse because of major questions about the credibility of his accuser, a hotel housekeeper who said he had sexually assaulted her in a suite at the Sofitel hotel in Manhattan in mid-May.

The surprising shift in his favor both fascinated and divided France on Friday, spurring calls from his supporters for his rehabilitation. “France needs his competence, his talents and his international standing,” said the former culture minister Jack Lang, a Socialist and close ally. Earlier, other Socialists expressed doubts.

“Let’s all stay calm,” Gérard Le Gall, a Socialist and public opinion expert, said hours before a court in Manhattan changed the terms of Mr. Strauss-Kahn’s bail, freeing him on his own recognizance. “The version of the story has changed before and could change again. It’s too early to draw any conclusions.”

Jean-Marie Le Guen, a Socialist lawmaker, said it was “premature to talk about politics” but added that “in the battle of the presidential elections of 2012, he could play a very important role.”

Before his arrest, Mr. Strauss-Kahn had been widely expected to resign from the International Monetary Fund to run as the Socialist candidate against President Nicolas Sarkozy next year. But after his arrest he was forced to quit, and the fractious French Socialists embarked on a potentially draining quest for a new candidate.

All that changed Friday when France awoke to reports that the case against him was crumbling.

“This is like a thunderbolt,” said Lionel Jospin, a former Socialist prime minister who is close to Mr. Strauss-Kahn. On the streets here, opinion seemed divided about whether the personal details that had emerged since Mr. Strauss-Kahn’s arrest would preclude him from high office, whatever the outcome.

“People are not going to forgive him. At a political level, he is dead,” said Agnès Bergé, 44, who works for a law firm. But Sophie Leseur, 50, an artist, said the saga could turn Mr. Strauss-Kahn into a “martyr.”

“His reputation is tarnished forever,” said Marie Chuinard, 25, a legal adviser. “I think he can come back to French political life, but internationally he is burned.”

His arrest had also led to soul-searching about the treatment of women in France, inspiring what some see as a new readiness among women to challenge male dominance.

The news from New York spread rapidly across television, radio and Internet news outlets. Blaring headlines spoke of what the conservative newspaper Le Figaro called a “thunderbolt” and the left-leaning Libération termed a “coup de théâtre.”

Martine Aubry, the Socialist Party leader, was quoted on the Web site of the magazine L’Express as feeling “immense joy” that the case seemed to be faltering. “Speaking as a friend of DSK, I hope the American justice system will establish all the truth and allow Dominique to get out of this nightmare,” she said, using the initials by which Mr. Strauss-Kahn is widely known here.

The development seemed to offer more ambiguous tidings for Mr. Sarkozy and his allies, and some acknowledged that they had been premature in celebrating Mr. Strauss-Kahn’s political demise.

“I think Sarkozy and his friends are going to have a very unpleasant morning,” said Claude Bartolone, a Socialist legislator.

A presidential spokesman said Mr. Sarkozy had no immediate comment. If the charges against Mr. Strauss-Kahn are dropped, he could still affect the presidential elections, said Mr. Lang, the former culture minister. “He could still play a major role in France, without being a candidate,” he said. “This would give an extra chance for victory.”

Mr. Strauss-Kahn could even be appointed a minister under a Socialist president, Mr. Lang added.

There had been expectations that the developments in New York would unleash anti-American tirades.

Reporting was contributed by Liz Alderman, Katrin Bennhold, Richard Berry and Romain Parlier.

Article source: http://www.nytimes.com/2011/07/02/world/europe/02france.html?partner=rss&emc=rss

Filed Under: Global Business Tagged With: , ,