Chapter I


Global Context of International Crime

Implications of a Changing World

Growing Global Reach of Organized Crime Groups

Greater Sophistication of Criminal Organizations

Insurgency and Extremist Group Involvement in Organized Crime Activities

Corruption and the Political-Criminal Nexus

Institutional Shortcomings

Global Context of International Crime

Implications of a Changing World

Law enforcement officials around the world have reported a significant increase in the range and scope of international criminal activity since the early 1990s. The level and severity of this activity and the accompanying growth in the power and influence of international criminal organizations have raised concerns among governments all over the world--particularly in Western democracies--about the threat criminals pose to governability and stability in many countries and to the global economy. International criminal networks have been quick to take advantage of the opportunities resulting from the revolutionary changes in world politics, business, technology, and communications that have strengthened democracy and free markets, brought the world's nations closer together, and given the United States unprecedented security and prosperity:

The advent of intermodal commercial shipping-- including standardized cargo containers, computerized cargo tracking, and automated cargo-transfer equipment--enables shippers to securely and efficiently transfer containers delivered by sea to other ships for onward shipment or to commercial railroads and trucks for overland transportation. Criminals are able to exploit the complexity of the intermodal system to hide drugs or other contraband or to conceal the true origin and ownership of cargo within which contraband is hidden.

Through the use of computers, international criminals have an unprecedented capability to obtain, process, and protect information and sidestep law enforcement investigations. They can use the interactive capabilities of advanced computers and telecommunications systems to plot marketing strategies for drugs and other illicit commodities, to find the most efficient routes and methods for smuggling and moving money in the financial system, and to create false trails for law enforcement or banking security. International criminals also take advantage of the speed and magnitude of financial transactions and the fact that there are few safeguards to prevent abuse of the system to move large amounts of money without scrutiny. More threateningly, some criminal organizations appear to be adept at using technology for counterintelligence purposes and for tracking law enforcement

In 1999, some 395 million people entered the United States overland from Mexico and Canada, 76 million people arrived on more than 928,000 commercial airline and private flights, and 9 million arrived by sea, according to the US Customs Service. In addition, 135 million vehicles--including automobiles and commercial trucks--crossed US borders with Mexico and Canada, and more than 200,000 merchant and passenger ships and other maritime vessels docked at US seaports or US coastal harbors. US seaports handled more than 4.4 million shipping containers and 400 million tons of cargo in 1999. US Customs is able to inspect only about 3 percent of the goods entering the United States, a figure that will drop to about 1 percent in the next five years as the volume of trade continues to grow. This tremendous volume of traffic and trade into the United States provides international criminals tremendous opportunity to smuggle contraband--including drugs and counterfeit products--into the country, as well as to illegally export firearms, stolen vehicles, and other contraband overseas.

Growing Global Reach of Organized Crime Groups

The phenomenon of international organized crime is not new. Italian, Chinese, and Nigerian criminal groups, for example, have long had members or cells in foreign countries and international connections to obtain, distribute, or market contraband. In general, however, their international criminal activities were more limited in scope, and their foreign cells operated mostly autonomously or performed a few specific functions for the larger group. Border controls, the slower pace of transportation and communication, and the requirement to move illicit money in bulk cash were significant impediments to international criminal activity. For many organized crime groups, their international criminal activities were more regional than global. For those with a more worldwide presence, their operations were mostly confined to countries with a large ethnic expatriate population.

Total Persons Entering the United States, 1990-99

Maritime Containers Entering US Commercial Seaports, 1990-99

International Commercial Flights and Persons Entering the United States By Air Transport, 1990-99

The dynamics of globalization, however, particularly the reduction of barriers to movement of people, goods, and financial transactions across borders, have enabled international organized crime groups to expand both their global reach and criminal business interests. International organized crime groups are able to operate increasingly outside traditional parameters, take quick advantage of new opportunities, and move more readily into new geographic areas. The major international organized crime groups have become more global in their operations, while many smaller and more local crime groups have expanded beyond their country's borders to become regional crime threats.

Since the end of the Cold War, organized crime groups from Russia, China, Italy, Nigeria, and Japan have increased their international presence and worldwide networks or have become involved in more transnational criminal activities. Most of the world's major international organized crime groups are present in the United States.


General Characteristics Common to Organized Crime Groups

Organized crime is defined by US law enforcement as a "continuing and self-perpetuating criminal conspiracy, having an organized structure, fed by fear and corruption, and motivated by greed." Organized crime groups often have a family or ethnic base, but members usually identify more closely with the organization than they do with blood relatives. They typically maintain their position through the threat or use of violence, corruption of public officials, graft, or extortion. The widespread political, economic, social, and technological changes occurring within the world have allowed organized crime groups to become increasingly active worldwide. The ability of organized crime groups to adapt to these changes and their use of improved transportation and communication technology have hindered law enforcement efforts against them.

Most organized crime groups have the following characteristics in common:

  • Seeking financial gain. A business must profit to survive, and organized crime functions in much the same way. Greed and the quest for profits probably dictate more organized crime decisions than any other single motive. It is this consuming desire for money, and the power that typically goes with it, which drives and sustains organized crime.
  • Requiring member loyalty through ethnicity and family considerations. Although not an absolute mandate for every organized crime group, most groups require their members to be of the same ethnic background. The purpose of this preference is twofold. First, criminals generally believe they can better trust those people they know, or know of, thereby reducing the likelihood of law enforcement infiltrating the group. Second, some of these groups originated from the pursuit of a common goal or scheme, whether economic, societal, or political.
  • Pursuing corruption of government officials. Most organized crime groups have been enormously successful in their illegal ventures because they have successfully corrupted those persons charged with investigating and prosecuting them. In fact, some of these groups have so thoroughly and utterly corrupted those officials that it is no longer possible to distinguish between the two.
  • Hierarchical structure. Generally, organized crime groups maintain a structure with defined leadership-subordinate roles, through which the group's objectives are achieved.
  • Criminal diversity. Typically, organized crime groups engage in more than one type of crime.
  • Organizational maturity. In most cases organized crime groups have some permanence and do not depend on the continuing participation of one or a few individuals for their existence.
  • Multijurisdictional activities. Usually, organized crime groups operate or have influence over large areas of a region, country, or countries.

Greater Sophistication of Criminal Organizations

International criminal networks--including traditional organized crime groups and drug-trafficking organizations--have taken advantage of the dramatic changes in technology, world politics, and the global economy to become more sophisticated and flexible in their operations. They have extensive worldwide networks and infrastructure to support their criminal operations; they are inherently flexible in their operations, adapting quickly to challenges from rivals and from law enforcement; they have tremendous financial resources to draw upon; and they are completely ruthless. International criminals spare no expense to corrupt government and law enforcement officials in foreign countries that serve as their bases of operation or as critical avenues for transshipment of drugs, arms, other contraband, illegal aliens, or trafficked women and children. Organized crime groups routinely resort to violence to advance and protect their interests.

Globalization has bred a more professional criminal element. International criminals make use of the latest commercial and technological developments to expand and improve the efficiency of their operations, and they have the financial resources to obtain whatever access, know-how, and technology they may need or desire. Many criminal groups employ individuals with specific expertise to facilitate their operations. As a result, they are able to quickly identify and adapt to market changes.

Globalization has enabled organized crime groups to diversify their criminal activities. Colombian drug-trafficking organizations, for example, are also involved in counterfeiting; Nigerian and Asian crime groups engage in alien smuggling; Russian and Asian crime groups traffic women for worldwide sex industries; and Russian, Asian, Nigerian, and Italian criminal syndicates engage in sophisticated, high-tech financial crimes. Many of the larger criminal organizations have established business-like structures to facilitate and provide cover for their operations, including front companies, quasi-legitimate businesses, and investments in fully legitimate firms.

Much more than in the past, criminal organizations are networking and cooperating with one another, enabling them to merge expertise and to broaden the scope of their activities. Rather than treat each other as rivals, many criminal organizations are sharing information, services, resources, and market access according to the principle of comparative advantage. By doing so, they can reduce their risks and costs and are better able to exploit illicit criminal opportunities. Although most cooperation between criminal organizations so far has been largely tactical--such as collaborating in smuggling ventures, arranging illicit financial transactions, or laundering money--the potential for broader alliances to undertake more complex criminal schemes in an increasingly global economy is significant. The willingness and capability of large, well-established international organized crime groups to move into new areas and develop mutually beneficial relationships with local criminal groups is unprecedented.

Insurgency and Extremist Group Involvement in Organized Crime Activities

One of the more significant developments since the end of the Cold War has been the growing involvement of insurgent, paramilitary, and extremist groups--whose crimes are primarily against the state--in criminal activities more associated with traditional organized crime groups and drug-trafficking syndicates. Although various insurgent and extremist groups had been involved in traditional criminal activities before, particularly the drug trade, their role typically was more a subsidiary one of extorting or offering protection to drug trafficking and crime groups operating in areas they controlled. Partnerships that some of these insurgent or extremist groups had with drug traffickers and other criminal organizations were often fleeting, but sometimes longer-standing symbiotic arrangements based on a coincidence of interests. In either case, the relationship was often strained and marked by mutual suspicion and wariness. For example:

Among the changes brought by the end of the Cold War, however, was the loss of Soviet, Cuban, and other Communist benefactors for many regional insurgencies and extremist groups. Unable to rely on aid from state sponsors, many insurgent and extremist groups were forced to find alternative sources of funds to remain militarily relevant, and involvement in drug trafficking and other criminal activity became a priority as an independent source of revenue.

Besides engaging in drug trafficking and other criminal activity to raise needed revenue, insurgent and extremist groups have other motivations for involvement. Among the most important is to advance their political objectives by isolating the regions they control from the national economy. By so doing, they deprive the government of the region's economic productivity--as is most notably the case with the diamond mines held by the insurgents in Angola and Sierra Leone--and increase the dependence of the local population on their control and authority. In some cases--such as in the drug-producing regions of Colombia, largely controlled by the FARC and rightwing paramilitary forces--insurgent and extremist groups support a widespread illegal economy or illicit activity that is the primary source of income for the local population.

With the substantial decline in state-sponsored support, many insurgencies and extremist groups reach out to criminal networks to acquire arms and supplies that cannot be obtained through more traditional or legitimate channels. Unlike insurgent groups, criminal groups are well-connected to outside gray arms merchants, transportation coordinators, money launderers, and other specialists who can provide the weapons and other logistics support once given by state sponsors. Organized crime groups are also more likely than armed illegal political, ideological, or religious movements to have stables of corrupt contacts in customs, immigration, and other law enforcement authorities to facilitate the smuggling of weapons and other contraband to extremist and insurgent groups. Armed groups are also turning to criminals to acquire high-technology items, like encryption software or global positioning equipment, that are otherwise unobtainable.

For some insurgent groups involved in criminal activity, the activity itself may eventually become their primary motivation. In Burma, for example, ethnic-based insurgent armies that were originally formed as national liberation movements supported by Communist China have become drug-trafficking armies. Particularly since Burma's military regime negotiated cease-fire agreements that leave them alone, insurgent armies like the United Wa State Army--the largest producer of heroin and methamphetamine in Southeast Asia--are now engaged almost exclusively in the lucrative business of drug trafficking. They turned increasingly to drug trafficking when China began substantially reducing its support in the 1970s.

Corruption and the Political-Criminal Nexus

While organized crime groups and other criminal networks have become more sophisticated in their operations and capabilities, corruption remains an indispensable tool of the criminal trade. Corruption is inherent to criminal activity; criminal groups corrupt society, business, law enforcement, and government. Beyond corrupting mid- and low-level law enforcement personnel and government bureaucrats to turn a blind eye or proactively facilitate their on-site criminal activities, crime groups seek to corrupt high-level politicians and government officials for a variety of reasons, including to:

Criminal groups are most successful in corrupting high-level politicians and government officials in countries that are their home base of operations. Countries with policies that favor government subsidies and foreign trade restrictions to protect domestic industries, foreign exchange controls, and state control of utilities and natural resources are particularly vulnerable to high-level corruption. Senior officials who have authority to grant import or export permits, fix import and export duties, determine preferential exchange rates, decide on government-let contracts or privatization offerings, or waive internal taxes are routinely targeted by criminal groups or may themselves seek out a relationship with criminal interests. High-level politicians and government officials enter into corrupt alliances with criminal groups to:

Corruption on a grand scale weakens social, political, and legal institutions and acts as a catalyst for further criminal activity--including drug and contraband smuggling, illegal migration, and the penetration of criminal groups into the legitimate economy. This is particularly true in countries that are making the difficult transition to market economies, where widespread corruption degrades their ability to enforce the rule of law.

In addition to undermining the political legitimacy of the government, the consequences of corruption can be severe for a country's economic performance. Corruption reduces incentives for investment because businessmen perceive whatever portion of an investment is claimed by corrupt officials as a tax. Corruption disrupts the productive allocation of talent and labor in society and distorts the composition of fiscal expenditure, since corrupt officials make key economic decisions that are often based on their own personal best interests, rather than those of the country. High levels of corruption are also associated with lower-quality public infrastructure projects and services, because productive expenditures are cut to offset costly kickbacks or the firms involved are inefficient or incompetent. Finally, in countries that are recipients of foreign assistance, the diversion of foreign aid flows from their intended projects by corrupt officials reduces the effectiveness of international donor efforts.

A Global Forum on Fighting Corruption: Safeguarding Integrity among Justice and Security Officials

In February 1999, the United States hosted the first global forum to fight corruption among government officials responsible for upholding the rule of law. Officials from 90 countries participated and agreed on a declaration that calls on governments to adopt effective practices to promote integrity and fight corruption among justice, security, and other public officials and to assist each other in this regard through mutual evaluation. As a result of this initiative, several nations--such as Romania and South Africa--convened their own regional conferences in the past year to continue the work on a more local level. The Netherlands, with help from the United States, will host a follow-up global forum at the Hague in May 2001. The Dutch anticipate officials from 135-to-140 countries will attend.

Institutional Shortcomings

The growth and spread of international crime have also fed off the many institutional shortcomings of countries around the world. Police and judicial systems in many countries are ill-prepared to combat sophisticated criminal organizations because they lack adequate resources, have limited investigative authorities, or are plagued by corruption. Many countries have outdated or nonexistent laws to address corruption, money laundering, financial and high-tech crimes, intellectual property piracy, corrupt business practices, or immigration. Moreover, many governments have been slow to recognize the threat posed by criminal activities and increasingly powerful organized crime groups. Criminals use these shortcomings--and their tremendous resources to corrupt and intimidate public officials and business leaders--to find safehavens for themselves, their illicit operations, and their tainted money.

International Crimes Affecting US Interests

The resourcefulness of organized crime groups worldwide in acquiring sophisticated technology is posing unprecedented challenges for law enforcement and security forces. Many law enforcement agencies in world regions hard hit by criminal activity are poorly funded and equipped and are increasingly outmaneuvered by crime syndicates using state-of-the-art technology. Technological sophistication gives crime groups more options to target or retaliate against the police, judicial, or government officials if law enforcement pressure becomes too threatening to their operations.

Law enforcement and security agencies increasingly may need to treat the security apparatus of sophisticated international criminal organizations the same as hostile intelligence services.

Finally, while globalization has allowed international criminals to operate virtually without regard to borders, governments and law enforcement agencies remain limited by national boundaries. National sovereignty concerns and jurisdictional restrictions are impediments to targeting criminal activities that cross international boundaries. Unlike criminals, governments and law enforcement agencies must respect other nations' sovereignty and legal statutes in law enforcement operations.