Project

Intelligent analysis and prediction of the economic and financial crime in a cyber-dominated and interconnected business world

Goal: Project supported by a grant of the Romanian Ministry of Education and Research, CNCS - UEFISCDI, project number PN-III-P4-ID-PCE-2020-2174, within PNCDI III titled “Intelligent analysis and prediction of the economic and financial crime in a cyber-dominated and interconnected business world”, conducted over the period 2021-2023

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Project log

Mircea Constantin Scheau
added a research item
Given the realities that we are experiencing in the Ukraine crisis, with military and financial-banking implications, the need to develop and implement an early warning platform in case of crisis or disasters has arisen. This work addresses this need, with expertise in defence and security, financial-banking and cybersecurity domains, and creates a platform specialized in identifying and evaluating early warning indices for crisis management. The goal is to provide state-of-the-art early warning systems that help the population at risk to avoid crisis situations, while serving as decision support tools for various authorities (Ministry of Defence, Ministry of Internal Affairs, Intelligence Services, Financial-banking systems) when confronted with a crisis situation similar to the one from Ukraine.
Achim Monica-Violeta
added a research item
The aim of this study was to determine the financial crime community pulse in Romania. For this purpose a survey questionnaire was distributed to 1,856 respondents between May 27th - June 6th 2022. The first objective of our study consists in finding the main patterns that characterize the Romanian community, related to the financial crime perception variables (the level of tax compliance, the level of tax morale reflected as the attitude of citizens towards accepting cheating taxes, the perception of corruption level in the Romanian public institutions, the level of skills possessed by citizens to detect the risk of money laundering and the attitude towards asking for information from the bank officers). We find that a majority of 64% from the interviewed citizens have a good and very good level of tax compliance meaning that they have declared that they paid their taxes long before the last deadline (for discount benefits or not only). Regarding their tax morale, we find that a majority of 74% from the Romanian respondents have an active attitude towards accepting cheating taxes (they usually or always receive their receipt and take it); about 13% of respondents have a proactive attitude (if they do not receive their receipt, they ask for it) while another 13% of our respondents have a passive attitude (if they receive or do not receive their receipt, it doesn't matter). When it comes to corruption, a majority of 66% from the Romanian citizens have declared that they perceived the level of Romanian corruption to be high and very high. Additionally, our results show that a majority of 70% from our citizens have low and very low skills to detect the risk of money laundering in a business; about 25% from the interviewed people have medium skills, while only a percentage of about 5% have high and very high skills to detect suspicious transactions. Regarding the attitude towards asking for information from the bank officers, a majority of about 68% from our citizens have a good attitude towards being asked for information from the bank officers while about 32% have a medium or bad attitude (refuse or hardly provide required information from the bank officers). The second objective of the study is to investigate how the demographic aspects considered in the survey (age, gender, region of living, professional status, and education) are associated with the considered financial crime perception variables. In majority, the demographic variables are found as determinants for financial crime perception, while age is found to hold the highest intensity of impact among all the demographic variables. The results are important for policy makers in order to acknowledge the level in which Romanian citizens perceive the best practices in governance and are aware about the financial crime tendencies, in order to adopt the proper policies that would reduce the level of financial crime in Romania.
Mircea Constantin Scheau
added a research item
In the context of a continuous technologization of the world, people create a lot of shortcuts and facilities, but unfortunately they leave room for opportunities to commit cybercrime. The financial and banking industries are two of the sectors affected when it comes to cyber-attacks. Banking products and services are now at our fingertips more than ever. Many of them are compressed in platforms and mobile applications, leading to time saving for customers. Unfortunately, the disadvantage is the risk of compromising their personal information. Over the last decade, a significant number of new vulnerabilities are identified each day. These refer to firmware and software that is provided to customers or used as components to build other software. The purpose of a cyber-attack is generally a financial gain, but it can also include exfiltration of sensitive financial data or identity theft. One of the objectives of our study is to classify several types of cyber-aggressions based on the existing research, with emphasis on identifying the vulnerabilities that facilitate cybercrime. In the financial sector, proper management of vulnerabilities in order to reduce risks is essential. For this reason, the pillar objective was to propose a risk-based approach. Our methodology was based on collecting data and processing statistics on attack techniques and mitigation measures. The analysis identifies criteria for performing the risk assessment in terms of malware actions prevention for mobile banking platforms. The results of the study show that certain types of cyber-attack techniques and vulnerabilities can be addressed by the payment service provider, while others require notifying the customer about the malware presence. In terms of policy implications, the main beneficiaries of the study are banks, financial institutions and their customers as well. Future research on this topic can contribute by making a risk-based approach in terms risk level for each vulnerability.
Mircea Constantin Scheau
added a research item
The purpose of this study is to evaluate the result of the decisions addressed in preventing and combating money laundering by Romania, together with the other member states of the European Union, following the regulations changes in the field. Against the background of technological developments and new threats, regulators have developed rules and procedures to prevent the exploitation of the financial system for the purpose of money laundering, with clear deadlines for transposition into national law. In order to determine the impact of the joint effort in the fight against money laundering, we analyzed the annual reports of European Financial Intelligence Units for 2018 and 2019 and the reports for the last ten years (2011-2020) of the National Office for Preventing and Combating Money Laundering in Romania. Based on the data from these reports, the study presents trends by using, inter alia, descriptive statistics. The results of our study draw attention to the increase in the number of reports of suspicious transactions, the number of cases sent for investigation to the competent authorities, the number of requests for information or dissemination of information to foreign FIUs, the volume of suspended transactions and amounts seized or confiscated by authorities. Although European Union Member States have responded to the obligation to transpose European directives, further steps are needed to create a common framework for action and reporting, so that the combined efforts have real results in line with the expectations of the European institutions. Through the results presented, the study supports governmental and non-governmental entities, highlighting the areas that need immediate attention.
Achim Monica-Violeta
added 2 research items
The book titled Business performances in the pandemic context. Part 2. Brief financial analysis on the Romanian small companies was designed as a guide for financial market players and prepared in such a way as to ensure a systematic treatment of financial statements published by companies listed on the Bucharest Stock Exchange. Our book can be seen as a monograph for companies in the regulated market, in the context of the pandemic caused by SARS-COV-2 and against the background of dynamic changes in financial statements at the level of companies. This book presents an analysis of the half-yearly financial statements for the period 2019-2020, making comparisons before and during the pandemic. This book presents only small companies, and the authors invite readers to check the first part of this book, regarding the big companies, for a complete image of the Romanian market.
The book titled Business perfromances in the pandemic context. Part 1. Brief financial analysis on the Romanian big companies was designed as a guide for financial market players and prepared in such a way as to ensure a systematic treatment of financial statements published by companies listed on the Bucharest Stock Exchange. Our book can be seen as a monograph for companies in the regulated market, in the context of the pandemic caused by SARS-COV-2 and against the background of dynamic changes in financial statements at the level of companies. This book presents an analysis of the half-yearly financial statements for the period 2019-2020, making comparisons before and during the pandemic. This book provides a financial analysis for the big companies, and the authors invite readers to check the second part of this book, regarding the small companies, for a complete image of the Romanian market.
Mircea Constantin Scheau
added a research item
Drones have been used in recent years more and more in various economic sectors (e.g., military, agriculture, retail, transport), but also for personal use and entertainment. The current legislative framework and cyber security standards do not fully address the identification of liable stakeholders in the drone ecosystem for cyber-incidents and the requirement to implement preventive cyber-security measures. The aim of this paper is to investigate how the usage of drones fits in the context of the digital economy. For this purpose, we use a complex questionnaire which was sent to a total of 233 respondents from May to July 2021. The responses are analyzed from a qualitative and quantitative perspective. Our results highlight the areas of improvement in the existing legislation and find the following: (1) respondents are willing to pay additional direct and indirect costs related to cyber security to benefit from more secure drones, (2) the entire ecosystem involved in drone production, distribution, and usage is responsible for ensuring the prevention of security breaches, and (3) respondents perceive a shared liability of stakeholders for certain types of cyber-attacks depending on the role of the stakeholders in the drone ecosystem and the type of vulnerability exploited by the cyber-attack. The details on the specific cyber-attack use cases detail each of the above for each type of cyber-attack. Finally, we make proposals to accommodate the new types of use cases brought by the use of drones in various economic contexts. The results of this research paper assist policy makers in terms of improvement to existing legislation in terms of the drone ecosystem. In addition, they increase visibility for stakeholders in the drone ecosystem in terms of aspects to focus on in order to increase the trust of clients in drone usage.
Achim Monica-Violeta
added 2 research items
This work entitled Corporate governance and business performances. Modern approaches in the new economy represents a display of the theories which are at the basis of modern mechanisms at the level of the organization management as well as of the concrete way in which these theories are applied in the general effects that the organization produces and in its global performances, respectively. The investigations made in order to outline the world economic framework and the development stages of the economy allowed us to emphasize the characteristics of the „new economy” and its impact on organizational theories (Chap 1 and Chap 2 (2.1., 2.2 and 2.3) from the present work. In the new framework of economy development, especially in the organizational one, there is a change of the approach to the management mechanisms of the organization in its new form and that is corporate governance. Effective corporate governance enables the shareholders to make sure that the enterprises where they own social parts are managed according to their interests. At the same time, corporate governance represents an answer to the mutations produced in the mechanisms for assessing the company performance.
The present book contains the modern approaches to diagnose a business performance of a company which activates in a modern sustainable development economy. Also it proposes general models for diagnosing a business. This work is necessary both for the academic environment and the business environment, providing the guarantee of acquiring rich and up-to-date skills in the the financial analysis area, in order to ensure the professionalisation of all economic specialists at a high level.
Mircea Constantin Scheau
added 2 research items
Cyber threats regarding drones have increased in the previous years due to the extended use and to the lack of proper preventive measures, not necessarily in the military domain, but in various civil sectors. The legal requirements in place and the best practices in the IoT or drone specific field emphasize specific cybersecurity requirements, however, currently do not view the need for cybersecurity in an integrated matter throughout the drone's life, but rather only for specific parts of the drone life cycle. This research focuses on the entire ecosystem related to drone usage and the need for a correlated and holistic approach to preventive measures against cyber-attacks and exploitation of vulnerabilities, given the position of each stakeholder to contribute to the security of the drone hardware, software, communication mechanisms and not only. In addition, this research also applies this approach for the entire lifecycle of the drone, from creation to decommissioning, (given the changing of cyber threats and cybersecurity landscape). This leads to an increased trust in drone usage in various economic and commercial purposes from both drone users and their customers. The conclusions drawn in the research are validated with a quantitative assessment by way of a questionnaire outlining reactions towards cybersecurity and the main needs of drone users. The questionnaire was chosen as methodology because this type of research method on this particular topic was not approached by the existing literature of the field. Thus, the research includes a multidisciplinary approach encompassing legal, economic and technical angles of the topic that aims to pave the way for integrated research in terms of all involved stakeholders.
The digital financial ecosystem depends on digital liquidity and has the role of supporting the business environment in terms of maintaining financial stability, integrating financial systems, and reshaping the concept of economic benefits per unit of time. Business models developed by interconnected partners are required in response to user needs. Suppliers, banks, insurers, investment or pension funds, licensed or unlicensed institutions should convey their products and services in digital format. For the products and services to reach the beneficiaries, specific infrastructures, regulations, and policies are necessary to ensure accessibility at reasonable prices. A digital ecosystem must facilitate interaction in high security environment. The aims of this paper are in the first stage to present the components of a digital financial ecosystem, in the second stage to present certain business models and services, and in the third stage to discuss evolution factors and risks. Therefore, our study attempts to identify areas for improvement of the existing legislation and formulate proposals for adapting to new technologies. The research tool is a complex questionnaire used precisely to reflect the opinions of the respondents with regard to the research topic.
Achim Monica-Violeta
added 35 research items
This study investigates whether the companies listed on the Bucharest Stock Exchange are susceptible to manipulation of financial statements. The tested models M-Beneish and M Risk-Fraud Beneish were used both nationally and internationally. For this purpose, we analyzed the financial statements of 19 companies listed on the Bucharest Stock Exchange, in the period 2017-2018, by statistically processing the data taken from the public financial statements. For each model we identified two, three, and four indicators, with a significant influence on the models in each field of activity selected for this study. In order to identify the degree of harmonization of the results obtained within the calculated scores, with the report issued by the external auditor, the type of opinion issued was also taken into account. The results emphasize that the opinions issued do not correlate with the calculated scores. The study's findings indicate the general tendency of selected companies to manipulate financial statements. Through the M-Beneish model, 58% of the analyzed companies resort to the manipulation of financial statements, as well as through the Robu model, 79% of the companies resort to manipulation techniques.
The main objective of this study was to investigate the influence of the level of corruption on business development. A large cross-countries survey of about 185 countries was used for the period 2012-2015. The empirical findings of this study show that corruption significantly reduced business development, being a major obstacle to economic growth. The influence of corruption on business development is highest when the index of doing business is used. This is significantly higher for developing countries as compared with developed countries. The findings emphasise the fact that corruption is a poverty-driven disease which significantly hinders business development. It was also found that that institutional quality plays a main role in reducing corruption thus enhancing the business development. This study may have significant implications for managers, investors, public bodies or business environment, by providing empirical evidences on the impact of corruption and institutional quality on business devel...
Mircea Constantin Scheau
added 3 research items
The aim of this study is to present the trends and effectiveness of money laundering countermeasures from the perspective of a number of suspicious transactions reported to the Financial Intelligence Units (FIUs), a number of analysis results submitted to law enforcement authorities, and the typologies of cases in European Union Member States. In order to determine the impact of the joint effort in the fight against money laundering, we used descriptive statistics to process the data and case studies from annual reports of the European FIUs for 2018 and 2019. The results of our study highlight the increase in the number of suspicious transactions notices, as well as in their quality level. There is an increasing tendency towards information exchange between European Union countries regarding the suspicion of money laundering, but there is no stable trend for referring cases to law enforcement and other responsible institutions. Based on the available data, it can be concluded that the EU anti money laundering measures are efficient, but further steps are needed to achieve higher international coordination and cooperation.
Specialty literature and solutions in the market have been focusing in the last decade on collecting and aggregating significant amounts of data about transactions (and user behavior) and on refining the algorithms used to identify fraud. At the same time, legislation in the European Union has been adopted in the same direction (e.g., PSD2) in order to impose obligations on stakeholders to identify fraud. However, on the one hand, the legislation provides a high-level description of this legal obligation, and on the other hand, the solutions in the market are diversifying in terms of data collected and, especially, attempts to aggregate data in order to generate more accurate results. This leads to an issue that has not been analyzed yet deeply in specialty literature or by legislators, respectively, the privacy concerns in case of profile building and aggregation of data for fraud identification purposes and responsibility of stakeholders in the identification of frauds in the context of their obligations under data protection legislation. This article comes as a building block in this direction of research, as it contains (i) an analysis of existing fraud detection methods and approaches, together with their impact from a data protection legislation perspective and (ii) an analysis of respondents’ views toward privacy in case of fraud identification in transactions based on a questionnaire in this respect having 425 respondents. Consequently, this article assists in bridging the gap between data protection legislation and implementation of fraud detection obligations under the law, as it provides recommendations for compliance with the latter legal obligation while also complying with data protection aspects.
The purpose of this study is to evaluate the result of the decisions addressed in preventing and combating money laundering by Romania, together with the other member states of the European Union, following the regulations changes in the field. Against the background of technological developments and new threats, regulators have developed rules and procedures to prevent the exploitation of the financial system for the purpose of money laundering, with clear deadlines for transposition into national law. In order to determine the impact of the joint effort in the fight against money laundering, we analyzed the annual reports of European Financial Intelligence Units for 2018 and 2019 and the reports for the last ten years (2011-2020) of the National Office for Preventing and Combating Money Laundering in Romania. Based on the data from these reports, the study presents trends by using, inter alia, descriptive statistics. The results of our study draw attention to the increase in the number of reports of suspicious transactions, the number of cases sent for investigation to the competent authorities, the number of requests for information or dissemination of information to foreign FIUs, the volume of suspended transactions and amounts seized or confiscated by authorities. Although European Union Member States have responded to the obligation to transpose European directives, further steps are needed to create a common framework for action and reporting, so that the combined efforts have real results in line with the expectations of the European institutions. Through the results presented, the study supports governmental and non-governmental entities, highlighting the areas that need immediate attention.
Mircea Constantin Scheau
added a project goal
Project supported by a grant of the Romanian Ministry of Education and Research, CNCS - UEFISCDI, project number PN-III-P4-ID-PCE-2020-2174, within PNCDI III titled “Intelligent analysis and prediction of the economic and financial crime in a cyber-dominated and interconnected business world”, conducted over the period 2021-2023