Why Encrypted Messaging Is Getting Love from Bad Actors
August 17, 2023
Note: This essay is the work of a real and still-alive dinobaby. No smart software involved, just a dumb humanoid.
The easier it is to break the law or circumvent regulations, the more people will give into their darker nature. Yes, this is another of Arnold’s Laws of Online along with online data flows erode ethical behavior. I suppose the two “laws” go together like Corvettes and fuel stops, tattoos and body art, or Barbie and Ken dolls.
“Banks Hit with $549 Million in Fines for Use of Signal, WhatsApp to Evade Regulators’ Reach” explains a behavior I noticed when I was doing projects for a hoop-de-do big time US financial institution.
Let’s jump back in time to 2005: I arrived for a meeting with the bank lugging my lecture equipment. As I recall, I had a couple of laptops, my person LCD projector, a covey of connectors, and a couple of burner phones and SIMs from France and the UK.
“What are you looking at?” queries the young financial analyst on the sell side. I had interrupted a young, whip-smart banker who was organizing her off-monitoring client calls. I think she was deciding which burner phone and pay-as-you-go SIM to use to pass a tip about a major financial deal to a whale. Thanks, MidJourney. It only took three times for your smart software to show mobile phones. Outstanding C minus work. Does this MBA CFA look innocent to you? She does to me. Doesn’t every banker have multiple mobile phones?
One bright bank type asked upon entering the meeting room as I was stowing and inventorying my gear after a delightful taxi ride from the equally thrilling New York Hilton, “Why do you have so many mobile phones?” I explained that I used the burners in my talks about cyber crime. The intelligent young person asked, “How do you connect them?” I replied, “When I travel, I buy SIMs in other countries. I also purchase them if I see a US outfit offering a pay-as-you-go SIM.” She did not ask how I masked my identity when acquiring SIMs, and I did not provide any details like throwing the phone away after one use.
Flash forward two months. This time it was a different conference room. My client had his assistant and the bright young thing popped into the meeting. She smiled and said, “I have been experimenting with the SIMs and a phone I purchased on Lexington Avenue from a phone repair shop.”
“What did you learn?” I asked.
She replied, “I can do regular calls on the mobile the bank provides. But I can do side calls on this other phone.”
I asked, “Do you call clients on the regular phone or the other phone?”
She said, “I use the special phone for special clients.”
Remember this was late 2005.
The article dated August 8, 2023, appeared 18 years after my learning how quickly bright young things can suck in an item of information and apply it to transferring information supposedly regulated by a US government agency. That’s when I decided my Arnold Law about people breaking the law when it is really easy one of my go-to sayings.
The write up stated:
U.S. regulators on Tuesday announced a combined $549 million in penalties against Wells Fargo and a raft of smaller or non-U.S. firms that failed to maintain electronic records of employee communications. The Securities and Exchange Commission disclosed charges and $289 million in fines against 11 firms for “widespread and longstanding failures” in record-keeping, while the Commodity Futures Trading Commission also said it fined four banks a total of $260 million for failing to maintain records required by the agency.
How long has a closely regulated sector like banking been “regulated”? A long time.
I want to mention that I have been talking about getting around regulations which require communication monitoring for a long time. In fact, in October 2023, at the Massachusetts / New York Association of Crime Analysts conference. In my keynote, I will update my remarks about Telegram and its expanding role in cyber and regular crime. I will also point out how these encrypted messaging apps have breathed new, more secure life into certain criminal activities. We have an organic ecosystem of online-facilitated crime, crime that is global, not a local stick up at a convenient store at 3 am on a rainy Thursday morning.
What does this news story say about regulatory action? What does it make clear about behavior in financial services firms?
I, of course, have no idea. Just like some of the regulatory officers at financial institutions and some regulatory agencies.
Stephen E Arnold, August 17, 2023
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