Modern structures of organised crime and terrorism
Mechanisms and tools of international cooperation
International cooperative bodies
International cooperation is the mainstay of international efforts and is referred to time and time again in many of the international conventions and treaties referred to in Chapter 2, which contain many provisions designed to mandate or encourage it. The phrase refers to the capability and willingness of different parts of the world to assist each other in the task of bringing criminals and terrorists to justice, depriving them of the fruits of their crimes and preventing their attacks upon society. This has become even more important with the expansion of so-called ‘TransNational Organised Crime’ (TNOC) and international terrorism. International cooperation can occur at the state/governmental, agency or institutional/individual level.
The governments of two countries agree a bilateral treaty of extradition, meaning that a person who is alleged to have committed a crime in Country A, but who is currently physically present in Country B, can be legally transported or ‘extradited’ from Country B to Country A in order to stand trial.
Information on the same trading company is shared between Financial Intelligence Units (FIUs) and police forces from three countries regarding Suspicious Activity Reports (SARs) which all three FIUs have received independently from financial institutions in their countries, regarding large ‘in and out’ deposits. This information is in turn shared with authorities in a fourth country, where the trading company is incorporated and has staff, leading to a coordinated asset seizure across all countries and the prosecution of two of the company’s directors for money laundering.
A Compliance Officer within X Bank receives an internal SAR regarding the deposit of an unusually large sum by B Bank, a small bank based in an offshore jurisdiction, which only recently underwent and passed client acceptance checks. Simultaneously, X Bank receives notification from a third party that the money represents the proceeds of a fraud, and that the deposit is an attempt to launder the proceeds, using X Bank as a conduit for the stolen funds. Together with X Bank’s in-house lawyer, X Bank’s Compliance Officer speaks to the Compliance Officer of the third party’s bank, Y Bank, and obtains important information which enables it to freeze the funds received, and make a full report to the FIU.
The Financial Action Task Force (FATF) has published a number of such examples of international cooperation, demonstrating that when governments, agencies and financial institutions cooperate across borders in the spirit intended by the various treaties and conventions, then it is possible for successes to be achieved, despite the formidable obstacles posed by the existence of multiple jurisdictions.
However, at both the state, agency and institutional levels, experience points to a number of serious barriers to achieving the level of international cooperation which is actually necessary to facilitate the effective combating of transnational organised crime. On the face of it, in theory it should be in all parties’ interests to cooperate to the maximum degree possible, yet conversations with law enforcement officials reveal continuing challenges in achieving international cooperation.
The barriers identified include:
As was seen in Chapter 1, organised crime is growing and exerting an increasing effect on the world and its societies. Between $500 billion and $1 trillion each year is estimated to be laundered through the world’s financial system, controlled by organised criminal enterprises, some of which are better known than others. Having this kind of money allows criminal groups not just to enjoy luxurious work-free lifestyles, but to subvert international agendas, bribe corrupt politicians and government officials to pass laws which protect them and allow them to expand their criminal activities unchecked by law enforcement. If left unrestricted, such criminal groups could control entire countries and regions, destabilise world markets and strike lucrative deals with terrorist groups to permit training and organisation on their territory and provide sanctuary.
The battle against money laundering as it is played out within the financial community rests upon the theory of interdiction. Throughout history, and into the future, profit motivates criminal activity. This is represented in Figure 7.1. But the amount of profit produced by criminal activity these days is so large that an additional stage needs to be added for criminal organisations, which is the processing of the profits from crime. Modern international anti-money laundering strategy is predicated upon the assumption that if you can disrupt the processing of criminal proceeds – effectively interdicting them within the global financial system – then you can disrupt this ‘magic circle’ of causation.
Figure 7.1 The circle of criminal causation
Clearly such a strategy will never result in the elimination of crime. Rather, it is aimed at reducing the flow of criminal funds and trying to ensure that criminal activity should be made as risky as possible for those minded to undertake it, with no degree of profit certainty at the end of it.
Modern TNOC has several features that make it distinctive from more traditional stereotypes. (The following information and commentary is drawn from McFarlane, J. (2005) ‘Regional and international co-operation in tackling transnational crime, terrorism and problems of disrupted states’, Journal of Financial Crime, 12(4)). Modern transnational criminal groups will not organise according to traditional, hierarchical structures (compared with the rigid family hierarchies of the mafia type organisations, for example). This makes them harder to predict and penetrate. They are, rather, network based, using specialists on a ‘one job only’ basis (much the same as contracting firms may use sub-contractors only for specific, finite work).
For example, a modern TNOC syndicate might use different resources for importation of goods; transportation of those goods in-country; fraudulent documentation to legitimise the presence of goods in a particular country; street enforcement; and money laundering. This lack of formal structure and rapid appearance and disappearance of different combinations makes the organisation more secure. It also makes it more efficient; there is less scope for ‘gang politics’, with the organisation being purely profit driven and completely ruthless in the pursuit of its objectives.
According to this model of TNOC (see Figure 7.2), the global financial system is especially vulnerable to abuse because of the use of a wide range of professionals and others with traditionally easy access to the financial system, as fronts for introductions and the conduct of financial and business transactions. Examples of these representatives and agents are well known, but include:
Figure 7.2 Model of transnational organised crime
In relation to terrorism, after the collapse of the socialist world, the spread of ‘new’ terrorism, different in form from ‘old’ traditional terrorism, has taken place. New ideologies, new factors and new sponsors have entered terrorism, and ‘new’ terrorism is arguably much more difficult to deal with than ‘old’ terrorism. ‘Old’ terrorism was ‘political’: it was all about achieving concrete political aims and tasks. It supported left wing ideologies such as Marxism and Maoism, and also nationalism and separatism. ‘Old’ terrorists were invariably ready to negotiate: they promised to stop terrorist action in exchange for concrete political compromises and, for the most part, they did not feel any particular affiliation with religion. Indeed religious figures of all denominations often condemned them and their actions.
Old terrorism still exists and its most recent high-profile exponents have probably been the LTTE (or Tamil Tigers) in Sri Lanka (who, despite their apparent military defeat in 2010, may yet re-emerge as a coherent force). However, it has been superseded in recent years by the rise of ‘new’ terrorism, most notably stemming from the Islamic world, but also, it is important to note, from many other areas and from deep within what is generally considered to be the world’s most active anti-terrorist state, the US.
A feature of ‘new’ terrorism is that it often appears to possess no concrete, achievable political goals. Its goal is to destroy modern societies and much of humankind in the process. It uses the concept of the ‘asymmetrical threat’, at the heart of which lies the doctrine of the superiority of the attackers against their target at the specific location of the attack, despite the terrorists’ relative weakness against the target overall. Its focus is on the design and execution of indiscriminate attacks to spread panic and make life unlivable, or at least to cause people to question their own lives and views and those of their governments, whether elected or unelected. Eventually, it has to be assumed that Weapons of Mass Destruction (WMD) may be accessed and used thereby allowing a very small terrorist organisation to mount an attack that causes destruction that is totally disproportionate to its numbers.
In the US itself, besides the radicalised Islamist groups known to be operating or attempting to operate, groups and movements such as the Animal Liberation Front, the Earth Liberation Front, the Nation of Islam, the neo-Nazis and skinheads of the ‘Aryan Front’, the World Church of Creator, the National Alliance and, of course the Ku Klux Klan (KKK) have all engaged in terror attacks.
Many serious terrorist groups are evolving new organisational structures that are harder to detect and infiltrate. These groups are often a collection of factions with common interests which form, change and regroup in response to a specific agenda or planned actions. The groups ally themselves according to religious, ethnic or ideological affinities – often based on major grievances against the US, the world’s sole remaining superpower. They are not controlled or directed by any overall ‘director of operations’. Instead they tend to be autonomous in their planning and decision-making functions. The large number of these groups, as well as their lack of central direction and changing organisational structures, makes them very difficult to track and interdict.
As they have become more violent, terrorist groups have also expanded the range of targets they consider to be legitimate. As long ago as 1996, Brian Jenkins, senior adviser to the President at the RAND Corporation and an internationally recognised expert on terrorism, noted three potential reasons for this trend:
The Palermo Convention is currently the main international treaty detailing the obligations of signatory countries to combat cross-border organised crime. Articles 5, 6, 8 and 23 of the Convention identify four offences, which states are required to criminalise, these being:
A serious crime is defined in Article 2 of the Convention as, ‘an offence punishable by a maximum deprivation of liberty of at least four years or a more serious penalty’.
Article 3 defines the scope of the Convention as addressing such crimes ‘where the offence is transnational in nature and involves an organized criminal group’, and goes on to explain that an offence is transnational in nature if it is committed:
An organised criminal group is defined in Article 2 as ‘a structured group of three or more persons, existing for a period of time and acting in concert with the aim of committing one or more serious crimes or offences ... in order to obtain, directly or indirectly, a financial or other material benefit’. Examples of such crimes would include:
The Palermo Convention describes certain core areas where international co-operation is required:
Historically, extradition (from extradere, meaning the forceful return of a person to their sovereign) was sought for political opponents not common criminals. The earliest recorded extradition treaty dates back to 1280 bc in Ancient Egypt. By the mid-nineteenth century, however, countries were becoming concerned to fight crime and preserve social interests, with the growing acceptance within public international law that countries should either ‘extradite or punish’. In other words, if a criminal from another country was on your territory, you should either punish that person yourselves or extradite them back to their own country for them to be punished there.
This general obligation, however, has become considered insufficient and accordingly has been replaced by treaty obligations, either bilateral (between two states and applicable to no other states) or multi-lateral (applying to lots of states by international agreement). Because of the sensitivities of extradition (see above), the principle of a ‘speciality’ also features. This means that a state must only prosecute a person for the offence in respect of which they were extradited (this, presumably, to prevent ‘political prosecutions’ becoming embedded within the extradition system).
This is also required under the Convention (subject to exceptions, see below) and includes providing assistance to other states in the following areas:
Mutual legal assistance may be refused in the following circumstances:
In the Anti-Money Laundering (AML) and Counter Terrorist Financing (CFT) arena, there are a number of important bodies that exist to promote international cooperation, as follows.
This is the international body set up by the OECD countries in 1989 to promote good anti-money laundering practice around the world, described earlier.
In 2000, FATF took perhaps its most dramatic new initiative to ‘name and shame’ what it designated as ‘Non-Cooperative Countries and Terroritories’ (NCCTs). These were jurisdictions not participating in the general move towards stricter financial regulation and greater international cooperation and which were instead offering financial services under strict banking secrecy and without sufficient control or regulation by the authorities.
The NCCT initiative proved a successful one – at least in getting countries to address the issues through legislation and infrastructure. Of the 47 countries whose systems were initially reviewed by the FATF in 2000 and 2001, a total of 23 countries were listed as NCCTs. By 2000 the number had reduced to 15 and by 2001 the list was down to just eight countries. By the end of 2007 the list was empty, because all of the designated countries took steps deemed sufficient to get themselves removed, and passed AML and CFT laws.
If there was one criticism of the NCCT regime, it was that it was a very blunt instrument; it made no distinction between different severities of deficiency and you were either on the list or you were not. It was therefore replaced in 2007 by the International Cooperation Review Group (ICRG), which aims to be less ‘black and white’ in how it describes the world, instead attempting to engage in a dialogue with countries to improve their AML and CTF regimes, whilst also publicising those countries where it believes that varying degrees of problems still exist. It currently has three levels of sensitivity, being countries which the FATF has urged should be subject to a call for counter measures, countries subject to a call to consider the risks of transactions involving them, and countries which have made progress, but where strategic deficiencies still remain to be addressed in their AML regimes.
This is the body set up by the council of Europe in 1997 for the mutual evaluation of members states’ AML and CFT measures for Council of Europe and Member States which are not members of FATF.
Along with FATF it is influential in applying peer pressure to countries to get their AML and CFT regimes up to International Standards.
This is the international criminal police organisation. It has 190 member countries and was created in 1923. It facilitates cross-border police cooperation and supports and assists all organisations, authorities and services whose mission is to prevent or combat international crime.
This is the coordinating body for financial intelligence units worldwide. It was formed in 1995 to promote and enhance international cooperation in AML and CFT (see Chapter 2).