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Financial crimes like money laundering, fraud, tax evasion, and corruption, are as old as the Lydian Kings and have been vexing rulers, regulators and law enforcement officers ever since. 

The digital age has only made things harder. In the UK alone, fraud offenses increased by 25% and computer misuse increased by 89% from March 2020 to 2022.¹ Last year in the US, fraud cost consumers $8.8 billion, up 44% from 2021.² Traditional ways of investigating are struggling to keep up; but a potent new method, known as open-source research, is showing promising signs of turning the tide.

While collecting and analyzing public data isn’t new, its application in fighting financial crimes is gaining momentum. The power of the internet offers a wealth of information to track and identify the people behind the crimes.

One organization leading the charge in this is Bellingcat.

Bellingcat is an independent investigative collective that combines digital capabilities with the can-do attitude of investigative journalism. Since 2014 Bellingcat has been transforming the investigative landscape through its pioneering commitment to open-source research.

Bellingcat’s mission is to democratize access to investigative tools and techniques. With a diverse team spread across the globe, they blend advanced technology, forensic research, and journalism, to shine a light in the shadows. 

What are open-source research methods?

Before diving into the impact, it’s important to understand what open source research actually is. 

In a nutshell, it’s the practice of gathering, analyzing, and interpreting information from publicly accessible sources. From social media platforms, online databases, government publications, newspapers, to pretty much anything.

5 reasons it’s effective against financial crime

1. Wide reach & access: The internet is vast, and there’s a huge amount of data available at our fingertips. Open source research capitalizes on this, enabling investigators to access data across geographies and time zones.

2. Real-time monitoring: Financial criminals are always changing their strategies. By using open source tools, authorities can monitor financial transactions, market trends, and online conversations in real-time, identifying suspicious patterns or emerging threats much faster.

3. Cost-effective: While the cost of many investigative tools can be a roadblock, most open source tools are available free of charge or at a much lower cost, making them accessible for institutions of all sizes.

4. Collaboration & community: One of the most powerful aspects of open source research is the sense of community. Experts, developers, and researchers worldwide contribute to the refinement of tools and methodologies. This collective effort ensures that open source methods remain at the forefront of innovation.

5. Transparency & trust: As opposed to closed-source solutions, the open nature of these tools means that their algorithms and methodologies are transparent. This openness can lead to greater trust in the tools’ results, as users can validate the processes themselves.

Real-world impact: How Bellingcat helped shine a light on Irish Limited Partnerships’ role in financial crime

A great example of open source research methods effectively combating financial crime can be seen in a recent article by Bellingcat that uncovered the secret world of Irish Limited Partnerships (ILPs).

In June 2019, the Bitsane cryptocurrency platform, once boasting a trading volume of $7 million a day, abruptly disappeared along with deposits from almost 250,000 users. The platform was registered in Ireland but seems to have used its Irish address as a front. The real trail behind Bitsane spans across Ireland, the UK, Lithuania, Hong Kong, and Belarus.

This was linked to the wider issue of Irish Limited Partnerships (ILPs). A collaboration between Bellingcat and The Sunday Times exposed the misuse of ILPs, and showed that these corporate entities, unique to Ireland, are increasingly being used to hide the true ownership of businesses.

The investigation highlighted:

• A surge in the registration of ILPs: Almost 2,400 ILPs were established between 2015 and 2021, in contrast to just over 1,000 from the early 1900s to 2014.
• Opaque ownership structures: Nearly 1,000 of these ILPs have unclear ownership with ties to secrecy jurisdictions like Belize or Seychelles.
• The absence of substantial business activities for many ILPs: With numerous appearing to exist only online, showcasing stock photos and generic content.
• The link between ILPs and trade. Particularly in Russia and Ukraine, though the exact nature and beneficiaries of such trade remain hidden.
• The commercialization of ILPs: Some are being sold online, primarily targeted at Russian-speaking audiences, with prices far exceeding the registration cost, indicating a possible profitable resale market.

The key issue lies in the dated rules governing ILPs which don’t mandate the registration or naming of the true owner. While ILPs have legitimate uses, such as investment funds and property investments, they have become a dangerous tool for setting up entities whose beneficial owner remains hidden, especially when partners are companies from jurisdictions that allow complete anonymity.

For the broader community, this research serves as a cautionary tale about the potential pitfalls in the world of international finance and the urgency for more transparency and oversight.

Adding resources like OpenCorporates to the toolkit

As investigations expand beyond borders and industries, understanding the intricate web of corporate structures and relationships becomes essential. The task may seem overwhelming given the complex nature of company registries and the lack of standardization across jurisdictions. But tools like the OpenCorporates API can help.

Using APIs in open-source research gives you the ability to seamlessly extract and process information at scale, which is vital to researchers, journalists, and investigators. As shown in the role OpenCorporates played in the Panama Papers investigation, mountains of data can be sifted through very quickly, as long as you have the right tools for the job.

Conclusion

The digital age has brought with it both challenges and opportunities in the fight against financial crime. Open source research methods are emerging as a powerful weapon in this battle, offering flexibility, transparency, and a collaborative approach. While no single tool or method can claim to end financial crime entirely, the integration of open-source techniques with traditional methods is paving the way for a more proactive approach to securing our financial systems.

Groups like Bellingcat and resources like OpenCorporates are working towards a world where corporate transparency is the norm, not the exception. We are proud allies for those committed to unmasking hidden connections, unearthing illicit activities, and promoting accountability. 

Bellingcat is currently growing its team of financial crime investigators, ready to make a bigger impact than ever before in the fight for fair financial practices.

For those in the trenches seeking that truth, the methods pioneered by Bellingcat, and tools like the OpenCorporates API, are here to help you ensure that no stone remains unturned in the pursuit of clarity and justice.

For more information

Learn more about Bellingcat: https://www.bellingcat.com/

Footnotes

1. Office For National Statistics: Nature of fraud and computer misuse in England and Wales: year ending March 2022 ↩︎
2. CNBC: Fraud cost consumers $8.8 billion last year, Federal Trade Commission says. That’s up 44% from 2021 ↩︎