FINANCIAL CRIME
understanding + prevention + intervention
Elena Rusconi – e.rusconi@ucl.ac.uk
Theodosis Mourouzis – theodosis.mourozis.09@ucl.ac.uk
Inka Karppinen – inka.karppinen.09@ucl.ac.uk
Elena Rusconi
Background:
General and Experimental Psychology
Cognitive Neuroscience
Research Expertise: neural basis of cognition (mathematics and number processing)
multimodal selective and spatial attention
Main methods:
mental chronometry, neuropsychology, brain imaging (fMRI,DTI),
transcranial magnetic stimulation (TMS)
Some Recent Works:
•The enigma of Gerstmann's syndrome revisited: a telling tale of the vicissitudes of neuropsychology
Rusconi E, Pinel P, Dehaene S, Kleinschmidt A.
Brain (in press)
•A disconnection account of Gerstmann syndrome:
Functional neuroanatomy evidence
Rusconi E, Pinel P, Eger E, Lebihan D, Thirion B, Dehaene S, Kleinschmidt A.
Annals of Neurology 2009 Nov;66(5):654-62.
•A brain for numbers
Sandrini M, Rusconi E.
Cortex 2009 Jul-Aug;45(7):796-803.
Tax Evasion
• US federal tax gap amounts to $345 billion in 2001
• 16.3% of tax liability in the US
• Amount of tax evasion is comparable in most OECD countries
• In U.S. only about 15% of the tax gap is eventually recovered
via correspondence and field audits
(reach about 1% of taxpayers)
Homo Economicus vs. Homo Sapiens
•
Economics of crime: Expected COST/BENEFIT ratio predicts behaviour
•
When tested empirically:
Higher compliance than predicted!
‘Whilst the odds are heavily in favour of evaders getting away with it,
the vast majority of taxpayers behave honestly’ (Pyle, 1991)
•
Additional factors should be taken into account
A possible role for social emotions?
Shame derives from being looked at …”one is completely
exposed and conscious of being looked at, in a word,
self-conscious” (Darwin, 1872)
NAME and SHAME
An Effective form of Punishment and Deterrence?
Disclosing Cheaters’ Indentity in a Tax Game
Period t
Period t
income
200€
30€
income
200€
declared income
declared income
30€
AUDIT
caught
STIGMA
caught
cheating
GUILT
SHAME
end of t
monetary
fine
50
end of t
…
45
monetary fine
shame proneness
monetary fine
cheating
PARDON
AUDIT
…
40
end of t + 1
35
30
…
25
?
…
20
15
0
0.2
0.4
0.6
0.8
1
cheating score
stigma
pardon
Linear (stigma)
Linear (pardon)
end of t + 2
?
Research.Project@UCL: THE MIND BEHIND SUCCESS
Cognitive Neuroscience
. Cost/Benefit evaluation in financial decision making
Security and Crime Science
.What happens when something goes wrong
. Design and test preventive measures (lab + real world)
ONLINE FRAUD PREVENTION
Theodosis Mourouzis
 Background : BA in Mathematics , University of Cambridge
CASM in Number Theory/Geometry , University of Cambridge
 Research Interests:
 Cryptography using Number Theory and Elliptic Curves

Algebraic Complexity
Prevention of financial fraud is extremely IMPORTANT because it
is increasingly occurring on a daily basis.
In general we are interested for the following “arguments” to be well-preserved
throughout many processes :
 AUTHENTICITY
 INTEGRITY
 CONFIDENTIALITY
 NON-REPUDIATION




Financial Fraud is a very complicated issue so a multidisciplinary approach seems to gives the golden ratio
Mathematics (rich structure)
Computer Science (implementation)
Economics (bounded resources)
Psychology (decision making, Being secure or feeling
secure?)
Current proposed preventions
 Classical Cryptographic Schemes (KG,Enc,Dec)
Can be used to encrypt data transmitted during online
transactions, so a possible adversary cannot
understand the content
 Smart Cards
[1] Hardware Part (circuit,store data)
[2]Software Part ( cryptographic schemes)
Main Function: Do efficient calculations, unbreakable
Message Authentication Codes
Origin/Content of a message
Use of Hash-Functions
Hard to find collision
Biometrics
Further Improvements:
o Construct more efficient algorithms
o Combine efficiently different crypto-techniques
o Take into account more the human-factor
Inka Karppinen
MSc Occupational Psychology
BSc Psychology
Programme Specialist, Business School, Credit Suisse
Project coordinator, Learning and Development, HSBC
Programme coordinator, Insurance Institute of London, CII
Conducting innovative research in the fields of
science and technology, with emphasis on people
factors and how to design persuasive
technologies and to develop security awareness
framework to prevent financial crime.
Financial Crime
Organisations
Employees
Security Policy
Human Computer
interaction
Increase security awareness
through persuasive technology and
cost and time effective training
Psychological contract
Valued and trusted
employee
Security as part of employees
day-to-day behaviour
Loyalty and job security
Inka’s
Research
Interest
People factors
Organisations
-Knowledge, Skills & Abilities
Security Policy
-Perceptions and Attitudes
Increase security awareness
through persuasive technology and
cost and time effective training
Security as part of employees
day-to-day behaviour
-Decision-making / risk behaviour
-Motivation
Employees
Human Computer
interaction
Psychological contract
Valued and trusted
employee
-Trust
Loyalty and job security
Inka’s
Research
Security Systems
Interest
Training
-Design, development and
implementation
-Training Needs Analysis (skill
gaps)
-Usability and Complexity
of the system
-Design, development and
implementation
-System vulnerabilities
-Evaluation
People factors
-Knowledge, Skills & Abilities
-Perceptions and Attitudes
-Decision-making / risk behaviour
-Motivation
-Trust
Inka’s
Research
Interest
Human Computer Interaction
Persuasive Technology (Captology)
Security behaviours and training
Human error
Criminal behaviour – Susceptibility