Transnational organized crime

Transnational crime

How can transnational organized crime networks be stopped from becoming more powerful and sophisticated global enterprises?


Short Overview

Transnational organized crime (TOC) is estimated to get twice the income of all military budgets combined per year. Distinctions among organized crime, insurgency, and terrorism have begun to blur, giving new markets for organized crime and increasing threats to democracies, development, and scrutiny. The world has started to wake up to the enormity of this evolving phenomenon, but has yet to adopt a global integrated strategy to counter organized crime as a complex set of systems. However, the new INTERPOL Global Complex for Innovation (IGCI) that opened in April 2015 in Singapore might address this need. The IGCI is a global center for policy, research, training for the identification of crimes and criminals, operational support, and partnerships.


The UN Office on Drugs and Crime (UNODC) has called on all states to develop national strategies to counter TOC as a whole, which can provide input to the development and implementation of global strategy and coordination; its periodic regional reports are an invaluable source of information on the worldwide fight against TOC. However, UNODC notes that states are not seriously implementing the UN Convention against Transnational Organized Crime, which is the main international instrument to counter organized crime. UNODC, with other agencies, has founded the International Anti-Corruption Academy, near Vienna; one of its goals is to tackle the connection of TOC and corruption. That combination, allowing government decisions to be bought and sold like heroin, makes democracy an illusion. estimates the total black market value of 91 of the world's 196 countries at $1.8 trillion per year. Among their total estimates for those countries are $339 billion for illegal drugs; $200 billion for counterfeit drugs; $186 billion for prostitution; and $334 billion for counterfeit products. The economic costs of environmental damage due to illegal logging, gem mining, hazardous waste dumping, and other environmental impacts are not yet included in the big picture of organized crime's impacts. The World Bank estimates bribery, often linked to TOC, between $1 and 1.6 Trillion per year. A CSIS/McAfee study estimates the loss to global economy from cybercrime and cyberespionage, which often has ties to transnational organized crime, at $375 billion to $575 billion per year, others have estimated it at $2 trillion per year. Hence, adding up all sources - which do not include extortion, the total organized crime income should be more than $3 trillion—about twice as big as all the military budgets in the world and twenty times more than the all overseas development assistance in 2014. UNODC and UNESCO are considering the priceless destruction of historical sites by ISIL as a form of organized crime.

Developing countries lose ten times more money through fraud, corruption and shady business transactions than they receive from development assistance says a report from Global Financial Integrity. IGFI found that developing countries lost $946.7 billion in 2011, an increase of 13.7% from the previous year. It has become clear that anti-TOC programs must be part of any country’s development plan.


The UN Global Commission on Drug Policy concluded that the law enforcement of the “War on Drugs” has failed and cost the U.S. $2.5 trillion over 40 years. It recommends a “paradigm shift” to public health over criminalization. Some political leaders support decriminalization of drugs as a potential strategy to take some of the money out of TOC. There are an estimated 272 million drug users worldwide with 250,000 deaths annually. A major complicating factor in the drug situation is the rapidly growing popularity of "new psychoactive substances".


The Commercial Crime Services of the International Chamber of Commerce helps track and combat all forms of commercial crime. Together with the IMO and navy's of major powers, they are working to fight piracy and armed robbery. Although piracy fell dramatically along the east coast of Africa during 2011-13 and is an international cooperation success study, worldwide piracy and armed robbery at sea rose by 26% in 2014, the highest since 2011.

There are more slaves today than at the peak of the African slave trade. Estimates range from 12 million to 30 million people being held in slavery today, with the vast majority in Asia. An estimated two to four million persons are sold into slavery per year; UNODC states that 79% of trafficked persons are for sexual exploitation. Smuggling of migrants is a profitable TOC enterprise; two of the principal smuggling routes - East, North and West Africa to Europe and from South America to North America - are estimated to generate about $6.75 billion annually.

The transition of much of the world’s activities to the Internet and mobile phones has opened up a wealth of opportunities for TOC to profitably expand its activities from drugs and human trafficking to cybercrime, affecting all aspects of personal and business life. The online market in illegally obtained data and tools for committing data theft and other cybercrimes continues to grow, and criminal organizations are offering online hosting of illegal applications. The financial crisis and the bankruptcy of financial institutions have opened new infiltration routes for TOC. INTERPOL has noted the experts’ warning that the cost of cybercrime is larger than the combined costs of cocaine, marijuana, and heroin trafficking. International financial transfers via computers of over $5 trillion per day make tempting targets for international cyber criminals. The International Carder’s Alliance, a confederation of online criminals, is based mostly in Eastern Europe, the heart of cybercrime, which the FBI estimates costs U.S. businesses and consumers billions annually in lost revenue.


UNODC is developing a cybercrime database with three sections: case law, legislation, and lessons learned organized by countries. It has also launched a new global awareness-raising campaignand published a Global Report on Trafficking in Persons updating the trends from its previous 2009 data, and providing guidance as to what remains to be done.

There should be an international treaty against tax heavens and accounts with anonymous beneficiaries, with enforcement mechanisms that include collective sanctions imposed on the relevant banks and countries. Undisclosed funds should be confiscated and made available to a development fund and to finance the fight against TOC.

It is time for an international campaign by all sectors of society to develop a global consensus that an effective global strategy is needed to counter TOC. OECD’s Financial Action Task Force has made 40 good recommendations to counter money laundering; however, the impcat of these recommendations are not clear. Two conventions help bring some coherence to addressing TOC: the UN Convention against Transnational Organized Crime, which came into force in 2003, and the Council of Europe’s Convention on Laundering, which came into force in May 2008. A financial prosecution system could be established as a new body to complement the related organizations addressing various parts of TOC today. In cooperation with these organizations, the new system would identify and establish priorities on top criminal groups (defined by the amount of money laundered) to be prosecuted one at a time. It would prepare legal cases, identify suspects’ assets that can be frozen, establish the current location of the suspects, assess the local authorities’ ability to make an arrest, and send the case to one of a number of preselected courts. Such courts, like UN peacekeeping forces, could be established and trained, and then be ready for instant duty. When investigations are complete, arrest orders would be executed to apprehend the criminal(s), freeze access to their assets, open the court case, and then proceed to the next TOC group on the priority list. Prosecution would be outside the accuseds' countries. Although extradition is accepted by the UN Convention against Transnational Organized Crime, a new protocol would be necessary for courts to be deputized like military forces for UN peacekeeping. Each time a court would be needed, it could be selected via a lottery system among volunteering countries. After initial government funding, the system would receive its financial support from frozen assets of convicted criminals rather than depending on government contributions - that could be subject to bribery by organized crime. Countries that made the arrests and courts that prosecuted the cases would receive reimbursements from the frozen assets.


This Challenge will be seriously addressed when money laundering and crime income sources drop by 75% from their peak.


Regional Considerations


Africa: The income from foreign aid to Africa and its losses from organized crime over the last 50 years are about the same - one trillion dollars; each year since 2000 it loses over $50 billion to illicit financial flows. Hundreds of billions of dollars are siphoned out of the continent through money laundering and industrial scale corporate tax avoidance. Over 15 million AIDS orphans in Sub-Saharan Africa, with few legal means to make a living, constitute a gigantic pool of new talent for the future of organized crime. ECOWAS is working with West African governments to improve coordinated implementation of counter-crime strategies. The Brazzaville Declaration signed by six Central African countries and related organizations pledges to counter illegal logging in the Congo Basin rain forest which is losing cover at a net rate of 700,000 ha per year. An estimated 1,215 rhinos were poached in South Africa in 2014, in a market valued at $60-200 million yearly, along with 360 great apes in Africa and Asia. Some experts are saying that the only solution is to completely ban trading in ivory. A UNEP official estimates the world wildlife illegal income to be at least $213 billion annually.The Kofi Annan Foundation held an expert meeting on The Impact of Organized Crime and Drug Trafficking on Governance, Development & Security in West Africa, with the summary of the proceedings available online. The increased production and trade with qat (khat), which is legal in Djibouti, Ethiopia, Somalia, and Yemen is of growing concern to the international organizations. East Africa piracy has been dramatically reduced; as 27 February 2015 no major vessels were being held for ransom. There were 15 incidents off Somalia in 2013 compared to 75 in 2012, and 237 in 2011. However, piracy on the coast of West Africa continues to be a problem with 51 attacks in 2013. In September 2013 an INTERPOL operation in Ethiopia and Uganda resulted in the arrest of 53 persons, the liberation of more than 300 trafficking victims, and the identification of a large number of illegal immigrants. Nigeria, jointly with UNODC and the EU, has launched a nationwide three-year anti-human trafficking campaign. There are reports of males being trafficked from Kenya to the Gulf States as sex slaves. Kenya is starting a project to implant tracking chips in the horns of more than 1000 rhinos, to stem an epidemic of wildlife poaching, a crime that is a severe problem in much of the continent to supply Asian markets with rhino horns and other animal parts. Corruption remains one of the most serious impediments to fighting organized crime in most African countries.


Asia and Oceania: Asia continues to have the greatest number of slaves. ILO reports that 59% of human trafficking happens in Asia and the Middle East. China has 13% of the value of global illegal markets, the second largest in the world at $261 billion. The world's worst drug addiction rate, more than 2%, is in Iran, which is spending $1 billion per year on countermeasures. UNODC estimates that the annual income to all those involved in the Afghan drug trade totals close to $3 billion, with the largest share going to the traffickers, and predicts the trade will increase. A UN/World Bank opinion is that the Afghan opium problem will take decades to eliminate. China is the main source for counterfeit goods sent to the EU. The relative deficit of females in China is leading to their being trafficked in from adjoining countries for marriage. India is a major producer of counterfeit medicines. North Korea is perceived as an organized crime state backed up by nuclear weapons, involved in illegal trade in weapons, counterfeit currency, sex slavery, drugs, and a range of counterfeit items. Myanmar is accused of deporting migrants to Thailand and Malaysia, where they are exploited, and has reportedly become a center for the ivory trade and elephant smuggling. Myanmar and China remain the primary sources of amphetamine-type stimulants in Asia, the top illicit drug threat in the area, although there are indications that TOC may be targeting the area's huge and largely untapped cocaine market. Laos had almost eliminated opium production, but the problem has now returned. Opium cultivation in Myanmar increased by 13% in 2013, marking the seventh consecutive yearly increase. The country’s highly regarded product (especially in China) is rapidly overtaking Afghanistan’s output. UNODC and five countries of Central Asia committed $70 billion between 2015 and 2019 to counter organized crime between 2015-2019. The PATROL project, funded by Australia and the U.S., seeks to improve border security at land borders, seaports and airports by working with frontline officers in China and all the countries of Southeast Asia. The Tri-Border Initiative protects the vital seaways between Indonesia, Malaysia, and the Philippines against piracy, but piracy is reported returning to the Malacca Strait. Large tracts of land in Fiji are believed to have been bought up by the Russian Mafia. A report says Australia has a multi-billion-dollar drug enterprise, and Australians are among the world’s highest per capita consumers of illicit stimulants. There is a thriving illegal international trade in human organs bought from very poor people and sold to very rich ones.


Europe: Europol has published the EU Serious and Organised Crime Threat Assessment (SOCTA 2013), a systematic analysis of law enforcement information on criminal activities and groups affecting the EU. The report estimates that there are 3,600 active organised crime groups in the EU, 70% are composed of multiple nationalities, and that counterfeiting, substandard products, and cyber crimes are growing. There is a tendency for gangs to be replaced by individual criminal enterprises. The main illicit markets in the EU generate around 110 billion euro each year. The SOCTA is designed to assist strategic decision-makers in the prioritization of organized crime threats. Further, the European Monitoring Centre for Drugs and Drug Addiction (EMCDDA) is an agency of the EU, and publishes an annual European Drug Report. Europol is also funding a new European Cybercrime Centre to provide technical, analytic, and forensic help in investigations. The EC has adopted the EU Strategy towards the Eradication of Trafficking in Human Beings 2012–2016. The U.S. State Department has brought Russia, China, and Uzbekistan to the lowest level in the ranking of countries on their anti-human-trafficking performance. The UK’s Serious Organized Crime Agency Annual Plan 2012/13 stressed flexibility in its first national integrated strategy, Local to Global, but did not stress anticipation; however, it created the National Crime Agency which continues to operate under the same principals. Organized crime costs the UK £20-40 billion a year, and has 38,000 known individuals as part of 6,000 gangs. The EU has strengthened controls on money transfers across its borders to address trafficking and money laundering, especially in Eastern Europe, but the 2007 accession of Bulgaria and Romania has made trafficking of women from those countries easier. In 2012 an INTERPOL-led operation against illicit goods trafficking in Eastern Europe rounded up more than 1,400 individuals and seized 7.3 million illegally trafficked goods. Russian officials have declared the drug situation in that country “apocalyptic”, but the Financial Action Task Force has moved Russia up a level in its evaluation of countries' combating of illegal financial transactions, putting it higher than the U.S. and Japan in that regard. Russia has enacted a tough new anti-poaching law, making it a crime to simply possess any endangered species material. Unfortunately, the country has an estimated 2.5 million drug addicts, 70 thousand of whom die in a year, largely because of a serious lack of treatment facilities. Use of cocaine in Europe has peaked, possibly due to the recession.


Latin America: Because Mexico and Colombia are succeeding against organized crime, criminals are migrating to other countries in Latin America from these two countries. Large numbers of children are fleeing drug wars in Central America to cross into the US. More than 60,000 people were killed in Mexican drug violence in 2006-2012; and 2,200 deaths were reported in December 2012 - January 2013. Mexico’s cartels receive more money (an estimated $25–$40 billion) from smuggling drugs to the U.S. than Mexico earns from oil exports. Mexican drug cartels are rapidly moving south, into Central America, and are branching out, with La Familia exporting $42 million worth of stolen iron ore from Michoacán in a year. Heavy police crackdowns in El Salvador, Guatemala, and Honduras have only made the gangs better organized and more violent. UNODC says crime is the single largest issue impeding Central American stability. Some Latin American countries say it is time to legalize drugs, considering the costs/benefits and as a strategy to curb gang violence. Drug purveyor is often the only cash job available to a youth in Latin America. Colombia’s government passed a bill for decriminalizing the cultivation of “drug plants,” while drugs’ processing and trafficking remain criminal. Uruguay became the first country in the world to legalize marijuana.The OAS has held discussions around changing drug laws, calling for drugs to be treated as public health issue, judicial reforms, and recognizing that TOC is a major factor in the regions drug issues. These are part of Latin America’s strategy for curbing drug trafficking. Brazil has instituted a $2.2 billion plan to combat crack trafficking and abuse nationwide, and UNODC and the federal government have begun a program to promote protective family relationships. The drug gangs have largely replaced the paramilitaries. Ecuador has become an important drug route, with its drug trade being controlled by foreign organizations. Mexican cartels control cocaine production in Peru generating more than $22 billion per year. While cocaine production is down 12% in Bolivia, and 25% in Colombia, Peru became the world's top cocaine-producing nation. The “war on drugs” in Latin America is hindered by the lack of joint strategy among the governments of North and Latin America. It is also complicated by Latin America's being a major locale for the phenomenon of "criminal diaspora" - criminals being driven to adjoining countries by law enforcement or seeing more opportunities for profit in the territory just over the border. The UNODC report Transnational Organized Crime in Central America and the Caribbean: A Threat Assessment presents some mechanics of illicit trafficking and its potential impacts on governance and development of the region. The Caribbean has 27% of the world’s murders, including gang-related killings, with only 8.5% of world’s population.


North America: The FBI closed down the original online illegal drug market, Silk Road, in 2013.The Obama Administration issued its Strategy to Combat Transnational Organized Crime to bring more national coherence a counter organized crime strategy. Transnational Organized Crime Rewards Program authorizes the Secretary of State to give rewards for actions that help dismantle transnational criminal organizations, identify or locate key leaders, disrupt financial mechanisms, and lead to the arrest or conviction of members and leaders. The U.S. has a third of the world’s illegal market value at $625.6 billion. The International Organized Crime Intelligence and Operations Center integrates U.S. efforts to combat international organized crime and coordinates investigations and prosecutions. Drug criminal gangs have swelled in the U.S. to an estimated 1 million members, responsible for up to 80% of crimes in communities across the nation. Organized crime and its relationship to terrorism should be treated as a national security threat. Canada continues as a major producer and shipper of methamphetamines and ecstasy. A nationwide poll found that 66% of Canadians support decriminalization of marijuana possession in small amounts, an idea also endorsed by some main political parties. Colorado, Washington, and Washington, D.C. have legalized marijuana for recreational purposes; other states are expected to follow creating a legal conflict between state and federal law.


Value of countries’ illegal markets; 10 highest ranked countries and the rest of the world (billions, USD)


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