Computer related economic crimes in Hungary

I. Introduction -concept of economic crim es and com puter related crimes

It is a very difficult task to give an exact definition of economic crime. There is no consensus in the legal literature as well. Under Anne Alvesalo and Steve Tombs1 economic crime is: "a criminalized act or neglect which is committed in the framework of, or using a corporation or other organisation. The act is done with the aim of attaining unlawful direct or indirect benefit. A criminalized, systematic act that is analogous to entrepreneurship and has the aim point of considerable benefit is also defined as economic crime. " We agree with the definition of Professor Tóth: "In a criminological aspect economic crime is a form a crime which is realised in the economic process (or closely related to it). This form of crime is able to -in the aspect of perpetration behaviour (often with the use of legal forms of business or with the abuse of it) and in the aspect of the result of the crime -breach or endanger the fair and legal order of the economy."2

The revolution of information technology (e.g. Computer technology) has changed the conditions and possibilities concerning economic crime. For example nowadays criminals with high tech printers can easily produce counterfeit money with high quality. The general characteristics of Computer related crimes are the following:

1. anonymity 2. speed 3. high degree of latency 4. the large number of victims 5. international and 6. it is hard to detect the source of the crime. 3 The aim of this article is to analyse the Hungarian regulation of some computer related economic crimes. In this article the following crimes will be analysed which are closely related to each other:

-counterfeiting currency -counterfeiting of cash-substitute payment instruments and the aiding in counterfeiting cash-substitute payment instruments -cash-substitute payment instrument fraud

II. Counterfeiting currency

After almost one hundred amendments of the Act IV of 1978 (The previous Hungarian Criminal Code) it was timeous to create a new and coherent Criminal Code to answer the changes in the society. After a long codification process the lawmakers has finally passed the new Criminal Code in 2012. The Act C of 2012, the fourth written Criminal Code of Hungary came into effect on the first of July 2013.

In the previous Criminal Code counterfeiting was regulated in the Economic Crimes chapter. 4 The new Code regulates counterfeiting currency in a separate Chapter XXXVIII. The title of the chapter is "Criminal offenses relating to counterfeiting currencies and philatelic forgeries." Even though the Economic Crimes chapter does not exist in the Criminal Code, from a criminological aspect counterfeiting currency is still considered as an economic crime. 5 Regarding counterfeiting, the new regulation does not contain significant changes compared to the previous Code. The extent to which this crime is punishable lies on the rules of the international agreement, established in Geneva, on the 20th of April 1929, which came into effect in Hungary in the Act XI of 1933.

The legal object of the crime is the trust in the issued money and securities flow, as well as the legal order of the financial management. The object o f perpetration is controversial in the legal literature. According to some views the object of perpetration is money, as well as securities and bank notes that are equivalent to money in the criminal law, and therefore considered as money.6 Under other views not all criminal conduct counterfeiting currency has a subject of perpetration. In the case of the first perpetration conduct, the imitated money is not the object of perpetration but the product of it.7 A practical change in the new Criminal Code that it states the definition of money within the statutory provisions of counterfeiting currency (In the previous regulation it was found in another Act), furthermore it clarifies the definition on several points. Under the current regulation not only the bulletin of the institution that is authorized to issue money, but also the legislation, and the legal act of the European Union can specify the legal tender (coins and banknotes) and the obligations to exchange the banknotes withdrawn from circulation.

The new Criminal Code extends the concept of paper money, however, as opposed to the previous Criminal Code, it not lists the securities that satisfy the criteria to be considered as paper money fully comprehensively (in a holistic way), but only ascertain the printed version of securities issued in a continuous flow to be considered as equivalent to banknotes, only if the exchange and transfer of such securities is neither limited nor prohibited by legal measures or contracts of those securities. It is also important to note here at the object of perpetration that foreign currencies and securities are granted protection identical with the domestic ones.8 This regulation adapts to the Geneva Convention.

There are five perpetration conducts of counterfeiting currency: -imitation, -counterfeiting (or in other word falsification), -the intentional acquisition, -the export, import, or transport through the territory of the country -the distribution of false or falsified money These five are extended with the interpretation section: the application or removal of a sign serving as an indication that the currency is valid only in a specific country, and any alteration of currency that has been withdrawn from circulation to create an impression as if it was still in circulation shall be considered imitation of currency.9 Counterfeiting in the practice is committed typically with highly advanced printers and computers. This crime is a felony and punishable in the basic case by imprisonment between two to eight years.

The crime has two aggravated cases when counterfeiting currency -involves a particularly considerable or greater amount of money; or -is committed in criminal association with accomplices. According to the closing provisions of the Criminal Code particularly considerable amount of money is between 50 million plus one and 5 hundred million Forints so the aggravated case of counterfeiting currency can be committed above 50 million plus one Forints which is equivalent to about 161235 Euros. Criminal association is formed when two or more persons are engaged in criminal activities in an organized fashion, or they conspire to do so and attempt to commit a criminal act at least once, without, however, creating a criminal organization. 10 The state of affairs is stricter compared to previous regulations, in aggravated cases the punishment can be imprisonment for up to 15 years at maximum (previous Criminal Code had 10 years at maximum). The preparation of counterfeiting currency is also punishable by imprisonment not exceeding three years. Under the Criminal Code preparation is committed when someone "provides the means necessary for committing a criminal offense or facilitating that, and who invites, volunteers or undertakes to commit a crime, or agrees to commit a crime in league with others shall be punishable for preparation."11

The new Criminal Code, as opposed to previous legal traditions, enacts the issue and distribution of counterfeit money not as an independent statutory provision, rather within the act of counterfeiting. The actual difference between the two acts is that, in this case the perpetrator obtains the money legally and "bona fide", and realizes it's wrong, disingenuous and sophisticated nature only after. Legality refers to the legal pretence of acquisition. Therefore, the acquisition is not legitimate if the person obtains the counterfeit money through a criminal act. The legal tradition measures this act as a privileged case with respect to the cause emerged from the expectations, what the international agreement has made feasible and what it has given potential. For the security of the money flow (the circulation) the initiation of increased protection is reasonable. The distribution of forged or counterfeit money of substantial or greater amount cannot be measured as the lack of expectations, since the perpetrator is aware of the increased risk, therefore the new Criminal Code ensures the possibility for the mitigation of the punishment only in specific cases, tied to a threshold limit (when the value of the money is trivial or even less substantial) and with an unlimited mitigation of the punishment.12

III.

Counterfeiting of cash-substitute payment instruments and the aiding in counterfeiting cash-substitute payment instruments

The predecessors of the cash replacing plastic cards were introduced by oil companies, hotels in the 1920s. The first credit card was introduced by the Bank of America in 1958, while the first European credit card the so called "Karte Blau" appeared at a Rothschild Bank.13

In Hungary the first card which was linked to a foreign currency account appeared in 1988. In the same year appeared the first ATM card as well. The use of credit cards started to spread in the early 90's. Today in Hungary there are about 8.5 million credit cards which are supposed to perform financial transaction. There also more than 100 thousand plastic cards which are not produced by banks but from the American Express, oil companies, trading companies etc. The numbers of credit cards are decreasing due to the economic situation in Hungary. 14 The legislator realized that credit cards are needed to be protected by criminal law measures. There were two crimes introduced in the Hungarian Criminal Code in 1994:

-Counterfeiting of credit card -Credit card fraud. Since its introduction the scale of the object of perpetration expanded and thus the name of the crime has changed to counterfeiting of cash-substitute payment instruments, cash-substitute payment instruments fraud.15 These crimes are regulated within the same chapter as counterfeiting currency.

The legal object of the crime is the safety of the flow of the cash-substitute payment instruments as well as the legal order of the financial management. 16 With this statutory provision not just the interests of the bank account owners are protected but the financial institutes as well. 17 The object o f perpetration are the cash-substitute payment instruments which may be in material or electronic form. The definition of these can be found in the closing provisions of the Hungarian Criminal Code:

'cash-substitute paym ent instrum ent shall mean non-cash means of payment provided for in the act on credit institutions, as well as treasury cards, traveller's checks, credit tokens and bills of exchange made out in accordance with the Personal Income Tax Act, provided they contain protective fixtures, such as coding or signature, against duplication, fraudulent making or forgery, and against unauthorized use. 18 'electronic paym ent instrument' shall mean, in addition to the non-cash means of payment provided for in the act on credit institutions, treasury cards and electronic credit tokens made out in accordance with the Personal Income Tax Act, provided that they are used through the information system. 19 These includes credit cards, debit cards meal vouchers, cheques, travellers cheques etc.20 Under the Criminal Code cash-substitute payment instruments and electronic payment instruments issued in other States shall receive the same protection as those issued in Hungary.21

The statutory provisions consists of three perpetration conducts: -falsification of non-cash payment instruments -manufacturing counterfeits -and recording data stored on electronic payment instruments or the related security features, using technical means.

We would like to illustrate the last perpetration conducts with some examples: -ATM frau ds: Nowadays more and more people are victimized by ATM frauds. The criminals can plant so-called skimmer devices (electronic card readers, tiny cameras etc.) to ATM slots. After the ATM user puts the credit card into the ATM card reader slot, the skimmer device picks up all the information from the card's magnetic strip. With miniature cameras offenders can obtain our PIN code as well. After the criminals obtained the data, they can create with these clone credit cards and use it as the original one.

recording radio frequ en cy signals. Easy and comfortable payment methods such as paypass has risks. Paypass credit card communicates with the point of sale terminal with radio frequency signals but these can recorded by skimmer devices.22

It is very easy to be victimized of this crime thus we would like to present some prevention proposals:

-try to use ATM machines which are inside of a building, -If you notice some problem contact the bank, or the police and do not accept help from third persons.

-keep your certificate of the ATM transaction.

Lastly it is important to note that the preparation of this crime is also punishable.23

The independent crime of aiding in counterfeiting cash-substitute paym ent instruments is very similar to preparation of the previous crime. This crime is established when somebody:

-produces, supplies, receives, obtains, keeps, exports or imports, or -transports in transit through the country, or -distributes any material, means, equipment or computer program intended to be used for counterfeiting cash-substitute payment instruments or -for the recording of data stored on electronic payment instruments or -the related security features, using technical means. This crime is a misdemeanour and punishable by imprisonment not exceeding one year.

The most important difference is comparing to the preparation of counterfeiting is that here to effectuate the crime, no intention of use required. The most typical example when someone sells a skimmer device to a criminal. This crime was introduced in the Hungarian Criminal Code in 2003 due to legal harmonization24 and prevention purposes. The offence has an aggravated case: if somebody commits the crime in criminal association with accomplices or on a commercial scale and it is punished by imprisonment not exceeding two years.25 The crime is deemed to be committed on a commercial scale if the perpetrator is engaged in criminal activities of the same or similar character to generate profits on a regular basis.26

IV. Cash-substitute payment instrum ent fraud

The legal subject and the object o f perpetration of the crime is the same as mentioned at counterfeiting of cash-substitute payment instruments. However there are differences in the perpetration conducts. We can categorize the conducts into three groups.

-unlawful obtainment of cash-substitute payment instruments -commandeer cash-substitute payment instruments -and transit type of conducts: o supplies, obtains, exports or imports, or transports in transit through the territory of Hungary any counterfeit or falsified cash-substitute payment instrument o or a cash-substitute payment instrument that has been commandeered or obtained in the manner specified in Paragraph a), o or data stored on electronic payment instruments or the related security features;27

This crime in the basic case is a misdemeanour and punishable by imprisonment not exceeding one year.

Types of credit card abuse in the practice: The aggravated case of this crime is a felony, and it is established when somebody commits the offence in criminal association with accomplices or on a commercial scale and is punishable by imprisonment at the maximum of three years.29

V. Criminal statistics and Conclusions

The following The