International operation dismantles encrypted communications platform serving organised crime

Last week, law enforcement agencies in Australia, US and Canada announced that they have successfully dismantled a criminal enterprise servicing the organised crime market with secure, encrypted communications.

The Australian Federal Police, the US Federal Bureau of Investigation, the Royal Canadian Mounted Police, the Australian Criminal Intelligence Commission, New South Wales Crime Commission, New South Wales Police, Queensland Police, Victoria Police, South Australia Police, the Australian Taxation Office and AUSTRAC (Australian Transaction Reports and Analysis Centre) were involved in the operation.

According to the media release, it will be alleged that Canadian-based company Phantom Secure specifically designed devices for the organised crime market allowing criminals around the globe to use unrestricted, secure communications beyond the capability of law enforcement interception.  The devices were used for the purpose of committing offences such as money laundering and drug trafficking.

Law enforcement agencies across multiple continents worked together to dismantle the network infrastructure of Phantom Secure, located in various offshore jurisdictions, disabling the encrypted platform and the thousands of secure devices used on it.

Five men have been indicted in the United States in connection with the operations of Phantom Secure, including the company’s CEO, on charges they knowingly participated in a criminal enterprise that facilitated the transnational importation and distribution of narcotics through the sale and service of encrypted communications.   

The media release state that the impact of this takedown to the global operations of Phantom Secure, its infrastructure and client base in Australia have been significant, and will be sustained.

Australian authorities allege that Phantom Secure was the largest single supplier to the Australian organised crime market and this product was the first encrypted communication platform available on a wholesale scale in Australia. The number of these devices sold and used in Australia since inception is estimated to be well in excess of 10,000 - the company’s largest customer base.

This is the first time the US government has targeted a company and its principals for aiding and abetting criminal organisations by knowingly providing them with tools to ‘go dark’ and evade law enforcement and obstruct justice while committing crimes such as transnational drug trafficking.

Australian authorities entered into the investigation in early 2017 following an exchange of intelligence with the Federal Bureau of Investigation (FBI) and Royal Canadian Mounted Police (RCMP).

Australian authorities executed 19 search warrants on premises across four states as part of the international disruption action on 6 March 2018, where more than 1000 encrypted mobile devices were seized. There was one arrest in Victoria for offences relating to drug possession and trafficking.

Australian Federal Police (AFP) Assistant Commissioner Organised Crime, Neil Gaughan said, “The action taken in the US directly impacts the upper echelons of organised crime here in Australia and their associates offshore. Using this equipment, criminals have been able to confidently communicate securely and control and direct illicit activity like drug importations, money laundering and associated serious, often violent criminal offending, yet have remained removed from these criminal acts.”

Assistant Commissioner Gaughan highlighted the importance of domestic as well as international partnerships, saying, “Close partnerships have been the key to this operation's landmark success in Australia and recognition and thanks must go to our many partners in this investigation, principally the Australian Criminal Intelligence Commission and the New South Wales Crime Commission. Police in New South Wales, Victoria, Queensland and South Australia were also integral to the success while the Australian Tax Office involvement and information from AUSTRAC was invaluable.”

“International partners at the FBI and RCMP had been outstanding working methodically around the clock together with Australia on this unique and complex investigation. Without the cooperation, commitment and shared drive, Australian law enforcement agencies would not be announcing this significant result,” he added.

US Attorney General Jeff Sessions said with one American dying of a drug overdose every nine minutes, the country is suffering the deadliest drug epidemic in its history.

He said that the US Department of Justice will aggressively prosecute not just drug traffickers, but also those who help them spread addiction and death in communities. He thanked the FBI, DEA, Customs and Border Protection, Homeland Security Investigations, Washington State Police, the Bellingham and Blaine Police Departments, and all of the US’ law enforcement partners around the world, including Australia, Canada, Panama, Hong Kong, and Thailand for their hard work on this case.

RCMP Criminal Operations Officer, Investigative Services and Organised Crime Assistant Commissioner, Jim Gresham, said the investigation is a prime example of law enforcement agencies from around the world working together to identify, investigate and charge people involved in transnational criminal activity.

Commissioner of the NSW Crime Commission, Peter Bodor QC described the disruption of the Phantom Secure platform as one of the most significant blows to organised crime in Australia in the last twelve months.

AUSTRAC National Manager, Intelligence, Dr John Moss said that AUSTRAC’s financial intelligence and information played a critical role in helping investigators follow the money trail and identify payments made by individuals and companies to purchase encrypted communications devices.

NSW Police Force State Crime Commander, Assistant Commissioner Mal Lanyon, commented, “We will continue to proactively deploy a variety of strategies and tactics, and harness the reach of our partners, to strip criminal enterprises of assets and disrupting any activity that impacts on the community of NSW.”

The AFP will continue to work with the FBI and RCMP offshore and with domestic partners. Further arrests and charges have not been ruled out as the investigation continues.

Authorities are also aware of similar platforms, some with direct connections to Phantom Secure, and their operators are currently under law enforcement scrutiny.

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