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Internet Money Laundering: New Funding for Old Crimes By Thomas D. Sydnor II

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Presentation on theme: "Internet Money Laundering: New Funding for Old Crimes By Thomas D. Sydnor II"— Presentation transcript:

1 Internet Money Laundering: New Funding for Old Crimes By Thomas D. Sydnor II tsydnor@actonline.org

2 My Research A new paper will examine how internet advertising can fund or promote crimes associated with money laundering, including: – Sales of Illegal, Unprescribed Controlled Drugs, – Prostitution and Human Trafficking. This presentation shows how streaming-video ads for illegal drugs and prostitution can cause US advertisers to fund domestic and international criminal enterprises.

3 Why YouTube? Previously, little research has examined online video streaming and advertising 83% of Americans who watch online video, watch YouTube–3x more viewers than the next competitor YouTube “video ads” illustrate the broader problem of lawful advertising funding illegal websites.

4 YouTube “Video Ads” YouTube is a free, youth-focused hosting service for short, third-party videos. YouTube hosts many 2-10 minute “video ads” promoting commercial products or services. Google uses these YouTube video ads as platforms to display paid advertisements. Google then splits some advertising revenues generated from a video ad with its uploader.

5 How YouTube Monetizes Video Ads YouTube can monetize video ads promoting illegal products or services in six ways: 1.Prequel ads 2.Popup ads 3.Display ads 4.Streaming ads 5.Featured videos 6.Music sales

6 “Prequel” Ads

7 “Prequel” Political Ads

8 How Internet Political Ads Can Fund Prostitution & Worse

9 “Popup” ads

10 Display and streaming ads, featured videos and music sales

11 ILLEGAL ACTIVITY ON YOUTUBE

12 YouTube and Drug-Trafficking Ads YouTube hosts hundreds of monetized video ads for Internet sites selling controlled or prescription drugs without a prescription. Google has admittedly known since 2003 that such sites violate the US Controlled Substances Act and the Food and Drug Act. Nevertheless, Google and YouTube aggressively monetize these illegal-drug site video ads.

13 Sched. II: Morphine

14 Sched. II: Hydrocodone

15 Sched. II: Oxycodone

16 Sched. II: Percocet

17 Sched. II: Codeine

18 Sched. II: Ritalin & Adderall

19 Sched. II & III: Lots of Narcotics

20 Sched. III: Vicodin

21 Schedule III: Lots of steroids

22 Sched. IV: Darvocet

23 Sched. IV: Valium

24 Sched. I: Cathinone “Bath Salts”

25 Sched. I: Magic Mushrooms

26 Potential Search Manipulation Get Oxycodone Online Video Ad GONE from Google Search results

27 YouTube and Global Sex-Trafficking Google’s “Adult Sexual Services” policies show that Google knows that sex traffickers use “code words” to signal the selling of sex. Google thus prohibits ads not only for “prostitution and other adult sexual services,” but also for “escort services,” “call girls,” “VIP… companionship,” “discrete… companionship,” “intimate companionship,” and “erotic massage.” NOT ENFORCED

28 U.S. Escort and Call-Girl Services: Arizona CENSORED

29 U.S. Escort and Call-Girl Services: Arizona

30 U.S. Escort and Call-Girl Services: Colorado, Hawaii, Massachusetts

31 U.S. Escort and Call-Girl Services: Nevada, New Mexico, South Dakota

32 U.S. Escort and Call-Girl Services: Tennessee, Utah, Washington

33 U.S. Escort and Call-Girl Services: Los Angeles, California

34

35 International Sex Trafficking: Canada & Central/South America

36 International Sex Trafficking: Western &Eastern Europe

37 International Sex Trafficking: Middle East & Africa

38 International Sex Trafficking: Russia & Central Asia

39 International Sex Trafficking: China & North Asia

40 International Sex Trafficking: Southeast Asia

41 India – A Case Study Recently, the brutal, public rape and murder of a female medical student exposed the abuse of women in India. India has a serious prostitution problem, but has recently strengthened its domestic laws. But Google and YouTube are profitably promoting what India is trying to deter….

42 72,800 Results

43 Video Ads Like This

44 And This…Are Rampant and Monetized

45 Dominican Republic Sex Tourism

46

47 Internet Ad-Laundering: Severe, Systemic Consequences Leading US advertisers are unwittingly funding foreign criminal syndicates. Law-abiding Internet ad-network operators cannot compete. Illegal advertisers and websites can act as “shills” who increase advertising costs and decrease profit-sharing for the law-abiding.

48 WHAT AG’S CAN DO

49 The 2011 Non-Prosecution Agreement Google admittedly helped sites sell illegal, no- prescription controlled drugs in the US from 2003 through 2009. US Attorney: “‘Larry Page knew what was going on…. This was a corporate decision to engage in this conduct.’” Google “agreed not to contest” liability for a $  500M forfeiture; $ 290 M went to Rhode Island—which used the settlement to save its police pension fund. Has Google fulfilled its duties under the NPA?

50 Comparing no-Rx Oxycodone Ads

51 Internet Ad-Laundering: State AGs Can Defend Rule of Law State money-laundering laws recognize that civil monetary penalties can best deter any attempts to profit from or fund crimes. Culpable attempts to fund or profit from illegal acts can trigger liability. Most laws impose broader liability related to “specified unlawful acts,” like trafficking in drugs or sex.

52 Internet Ad-Laundering: State AGs Can Defend Rule of Law State racketeering laws can impose severe civil and criminal remedies for repeated violations of even federal laws. Profitable economic crimes tend to be racketeering predicates. State anti-racketeering laws can be used to punish violations of federal laws.

53 Internet Ad-Laundering: State AGs Can Defend Rule of Law State consumer protection laws can deter even huge corporations from profiting from deceptive advertising. Ads that imply that illegal acts are lawful or accepted are inherently deceptive and unfair. Most State CPAs/DTPAs can impose per- violation penalties of at least $5,000.

54 Internet Ad-Laundering: State AGs Can Defend Rule of Law Efforts to deter ad-laundering can leverage existing resources: Many IP-intensive industries have carefully studied ad-funded counterfeiting and piracy. Existing reports and research document problems. Corporate policies and settlements can reveal knowledge or admissions. Advertisers can be warned.

55 CONCLUSIONS and QUESTIONS This presentation presents a subset of the evidence presented in my forthcoming paper. I would be happy to provide any further assistance or information to any AG. Contact me at tsydnor@actonline.org or at (202) 420 7488.tsydnor@actonline.org


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