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Friday, November 16, 2007

Annals of the Russian Internet: Crime, and Plenty of it

The Guardian reports:

The Russian Business Network - which some blame for 60% of all internet crime - appears to have gone to ground. But, asks Peter Warren, has it really disappeared?


A curious game of cat and mouse is being played out on the internet, as high-tech hunters close in on a group of cybercriminals known as the Russian Business Network, or RBN. The chase started a week ago when the RBN - a Russian ISP alleged to be behind much of today's web crime - slipped its internet moorings in the Baltic coastal city of St Petersburg and made for servers in China. But the RBN's attempts nine days ago to hide there behind a hastily formed Italian front company failed. Only a day after setting up in its new home, the sites run by the RBN - which specialises in identity theft, denial of service, phishing, computer extortion and child pornography - vanished from the web. Since then sightings have been few. But does that mean the RBN has gone? And does it matter?

5 comments:

Misha said...

Everyone knows that the so called "RBN" network of "Russian" mafia internet businesses is not based in Russia at all. It is a pure invention of the British security agencies MI-5 and MI-6, which launch these so called "Russian" crime websites, including sites with child porn, as part of their total disinformation campaign which is designed to discredit Russia and legitimate Russian businesses, which depend on credit card transactions, such as Russian flower delivery services and so forth.

99 percent of Russian internet businesses are totally legitimate and right as rain, and the banking industry knows this full well.

Here's a basic reality. the way the whole credit card system works is based on banking, and that in turn is based on the mutual trust of banks between themselves. A Russian bank that allowed fake businesses to process fake (fraudulent) credit card transactions would quickly be cut off from the credit card network, based on market reasons alone, nevermind the efforts of international law enforcement.

If you set up a business, legitimate or fraudulent, and you hope to process credit card transactions through that business, you first have to have a relationship with a bank, because only a bank can clear these sorts of transactions and ultimately credit your account with real cash in exchange for the transactions. (I am speaking here of transactions via Visa, MasterCard, EuroCard, etc.) But if a bank, based in Russia or anywhere else, has a much higher than average percentage of fraudulent transactions, it will be cut off and shunned from the credit card clearing business. In turn this gives the banks an incentive to cut off those businesses which are creating those transactions, or the bank risks losing all its business, both legitimate and non-legitimate.

the entire credit card industry is based on bank's trust for one another (the Latin word for trust is "credit"). And if any bank allows shady businesses to bring fraudulent transactions into its network, under its (the bank's) name, those transactions will will result in complaints by cardholders and ultimately in charge backs. Either the bank has to dump those "businesses" generating such bad transactions, or the bank itself will risk being ostracized and cut off from the total banking network.

The entire banking industry is based on mutual trust between the banks. Therefore the bank that allows non-trustworthy clients to connect into banking networks, via itself and in its name, and generate fraudulent transactions, via its network, will risk having itself cut off from these networks, something that no bank wants or can tolerate, since its own survival is at stake.

In short, banks can only operate if they trust each other. If there is a bank that no one trusts it will be cut off from the community of banks (and it will lose its ability to process its transactions through banking networks).

Businesses, both legitimate and illegitimate can only do business through banks, because only the bank can materialize a credit transaction into the form of cash.

If businesses betray their bank, and betray the relationship with the bank, they they create a black mark not only for themselves but for the correspondent bank through which they do business.

Banks don't need to trust individual businesses connected to the network. They only need to trust other banks, who vouch for those businesses and the transactions created by those businesses, and guaranty those transactions, as far as other banks are concerned.

Banks only do business and clear transactions via other banks. the trustworthiness of any bank's business clients is only as good as that bank vouching for them.

In financial transactions the system works, and the "market" works. Additional regulation is not necessary. This is a problem of banking and credit (trust). It is not a problem of regulation and law enforcement.

Let's say someone uses a banking transaction to facilitate something illegal (such as the trade in child porn or to finance terrorism).. In this case there will be no complaint about the transaction from either party, regarding the legitimacy of the transaction. From a banking standpoint, the transaction is completed and legitimate. Party A signified that he want such and such funds transfered to Party B. Party B received the funds, as intended by Party A. As far as "banking" is concerned there is only a completed transaction, and both parties are happy. There is no basis for a breakdown of the banking system or a loss of trust between banks or between banking customers from such transactions.

But law enforcement, either national or inter-national may view a given transaction as being somehow "illegitimate" or "illegal" based on the nature of that transaction (say an Iranian transaction to buy Uranium or a transaction to pay for prostitution or child porn).

Here we have a transaction that is "legitimate" as far as the transaction itself is concerned, as far as the banks are concerned. One party signaled an intention to transfer funds to the other other party and the other party received and accepted those funds. No problem, at least for the banks and the bank's customers.

But you have law enforcement, which cannot stop the crime itself (whatever it is) and has therefore decided to go after the flip side of the coin, which is the financial transaction pertaining to the commission of the crime.

In this case, national law enforcement only succeeds in undermining transactions that are denominated in its own national currency (let's say the US dollar) and promotes the use of alternative currencies for such transactions.

There is something about the essential nature of cash that makes it cash. There is something about the anonymous nature of cash that makes a cash transaction a cash transaction.

Cash is cash because if its anonymous nature. A given quantity of currency (cash) has value independently of the people who posses that cash or how they got that cash. But that is the essence of why it is cash. That itself is the essence of cash. It is the essence of money, as such, and it is the primary source of the value of money, as such.

Nazi Germany may have had Deutsche Marks, but if it also asked one question, and required the bearer of such money to first prove he was not Jewish, before he could spend, deposit or transfer such funds, then it would be correct to say that such Deutsch Marks were not true "cash" inasmuch as they were missing the essential feature of cash, as such, namely the anonymous essence of cash, as such.

A banknote (cash) is a promise to pay the bearer of the banknote, without asking questions. this is the essential nature of "cash" as such. The mere Possession of it (cash) is the signal of its own legitimacy. No questions can be asked in a cash transaction to the extent that it is a cash transaction. Or, put another way, to the extent that questions can be asked (and must be answered), then no cash and no cash transactions can really exist.

When a country, such as the United States, links its currency (the dollar) and all banking pertaining to that currency, to a set of questions that each and every person must answer, when he wants to transact business in that currency, it essentially undermines its own currency in the very role of cash.

If the United States puts UPC symbols on every unit of its cash, on every ten and twenty dollar bill, and tracks its circulation around the world, wherever it may go, it will not stop crime, nor will it stop criminal transactions. It will succeed in accomplishing only one thing, which is to undermine the role of its own currency, its own "cash" in that role, as such.

A country can destroy its own currency, as an object of "Cash" in international transactions, or as any sort of reserve currency, but it cannot destroy the concept of cash itself. Intrinsic in the concept of cash is the idea that value can be transferred anonymously. that is what "cash" means if it means anything. The "cash" which cannot be transferred anonymously is for that reason not real cash.

At the end of the day the mad Americans will only succeed in destroying their own currency, as a form of true world cash, and destroying its value as a reserve store of values in international transactions, and they will never succeed in destroying cash or cash transactions.

Human freedom asserts itself again and again against every statist attempt to undermine it. And what I am writing here should not be construed as condoning this or that form illegal or immoral activity. I am simply stating a fact.

Acceptance of human freedom in the first instance means the acceptance of cash and cash transactions. the government or society which cannot accept cash transactions (which in essence can only mean anonymous transactions, where value it transfered anonymously) cannot accept the true freedom of its own citizens and subjects.

Can cash transactions be used to cloak evil transactions? Yes, in the same way that freedom of speech implies the right to say evil things, or freedom of thought implies the right to think evil or degenerate thoughts. But the fact still remains that cash, and cash (anonymous) transactions are an essential category of human freedom, and the society that is missing such transactions cannot claim to be truly free by any standard.

Freedom always implies a cloak for evil, because the essence of freedom is just that. Where no one has a cloak for his own private evil, freedom cannot exist. That is not to say that people ought to do evil, or think or say evil, but merely that where every possibility for the free person of choosing evil is pre-empted then there freedom is also non-existent.

Freedom cannot exist in the space where the human person is pre-empted from freely choosing evil. Where this choice is pre-empted and taken away from him, he may not chose evil (simply because he cannot), but also he is not a free human being. Money, and cash (meaning anonymous transactions, which is what money means) is an essential component of human freedom. Where true money, and the anonymity that true money implies is lacking, there can be no true human freedom.

La Russophobe said...

MISHA:

Do you realize that in your entire post there is not ONE SINGLE SHRED of actual evidence to back up your statements?

Obviously not "everyone" knows it, since this respected newspaper doesn't and neither do its sources.

Did it ever occur to you that you are repeating and blinded by the Kremlin's own propaganda?

John said...

La Russophobe, you must by now realise that "Misha" (ha ha) IS the Kremlin. They must employ hundreds of people monitoring internet and placing such comments. They take the internet very seriously. The regime's propaganda does not stop at the borders of Russian Federation. They are quite open about this.

Artfldgr said...

John,
what you say is true, they do. but there is no actual way to tell between that and a useful idiot. think of it as a question of real or dopplganger. :)

Anonymous said...

Misha's repsonse is verbose...zzzzzzzzz.