Background

Modern structures of organised crime and terrorism

Mechanisms and tools of international cooperation

International cooperative bodies

BACKGROUND

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 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:

• Corruption – do you trust the other country’s police with the information you are giving them? Can offenders bribe judges to refuse requests for assistance and will this compromise your own investigation?
• State complicity – where nations may actually benefit economically from the crimes complained of (e.g. the economic benefit derived by the military junta in Burma from the production of opium, or the way in which the Taliban derived revenue from Al-Qaeda when it was hosting Al-Qaeda in Afghanistan).
• Politics – governments can oppose mutual assistance on political grounds (e.g. dislike of another country’s foreign policy or when trying to extract concessions during international negotiations).
• Sovereignty – closely connected to politics, this is where national pride and historical enmities come into play; effectively, disliking another country and what it stands for, more than you dislike your own criminals.
• ‘Turf’ considerations at the agency level – sometimes members of an agency in one country dislike the idea that agencies from another country should be getting involved in their affairs. It is a case of ‘this is my area, you can’t tell what me to do’.
• Conflicts of laws – this is a major problem and very complex to resolve. Conflicts of laws occur where what is legally defined as a crime in one country is not a crime in another, or where a defence applies which would not be available in the other country, or where observing the law in one country would entail breaching it in another (e.g. bank secrecy laws) or where enforcement in one country is viewed as being harsh/immoral/illegal in another country (e.g. the death penalty).
• Breach of contract and poor customer relations – at the institutional level, many financial institutions are reluctant to extend cooperation across borders to other financial institutions for fear that their actions may result in legal action by their own customers against them. For example, this may occur when a bank is requested to release information regarding a customer’s account by another institution (breach of confidentiality) or when it is requested to freeze an account (breach of mandate).

MODERN STRUCTURES OF ORGANISED CRIME AND TERRORISM

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.

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:

• lawyers
• accountants
• financial advisers
• bankers
• stockbrokers
• IT specialists
• business people
• politicians
• civil servants (judges, magistrates, police officers, customs, military personnel)
• compliant media professionals
• clerics.

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:

• First, as generational replacement has occurred within terrorist organisations and their affiliates new leaders have become less concerned with ideological constraints and adverse public opinion.
• Second, in the media age the new leaders desire above all to maintain media attention, and to receive attention they have escalated their levels of violence and used bolder, more shocking tactics.
• Finally, the international dynamics of terrorist groups require that the organisation should demonstrate to its members that it is moving inexorably towards its goals. Increasingly violent tactics generate the impression amongst members and supporters that things are heading in the right direction.

MECHANISMS AND TOOLS OF INTERNATIONAL COOPERATION

The UN Convention Against Trans-National Organised Crime, 2000 (the Palermo Convention)

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:

• participation in an organised criminal group
• laundering the proceeds of crime
• corruption, and
• obstruction of justice.

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:

1. in more than one state
   
2. in one state but a substantial part of its preparation, planning, direction or control takes places in another state
   
3. in one state but involves an organised criminal group that engages in criminal activities in more than one state, or
   
4. in one state but it has substantial effects in another state.

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:

• drug trafficking
• money laundering
• trafficking in women and children
• trafficking in illegal fire arms
• smuggling of alcohol, cigarettes and higher-value goods
• illegal immigration
• protection racketeering
• intellectual property piracy
• corruption
• terrorism
• proliferation of WMD.

The Palermo Convention describes certain core areas where international co-operation is required:

• cooperation with international requests for assistance in the confiscation and repatriation of criminal assets
• extradition, and
• mutual legal assistance.

Extradition

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).

Mutual legal assistance

This is also required under the Convention (subject to exceptions, see below) and includes providing assistance to other states in the following areas:

• taking evidence or statements
• effecting service of judicial documents
• search, seizure and freezing of assets
• examining objects and sites
• provision of information, evidence and expert evaluations
• asset tracing and ‘any other type of assistance not contrary to ... domestic law ...’
• joint investigations and the use of ‘special investigative techniques’ (e.g. surveillance, electronic listening, phone tapping, controlled delivery, etc.)
• transfer of criminal proceedings from one State Party to another
• transfer of prisoners serving custodial sentences in one country, for the purpose of giving witness evidence in another country
• facilitation and admission of video evidence of witnesses unwilling or unable to travel to the country of the proceedings.

Mutual legal assistance may be refused in the following circumstances:

• if the request does not conform with the provisions of the Palermo Convention
• if the request ‘is likely to prejudice the sovereignty, security, public order or other essential interests...’ of the requested State Party
• if domestic law would prohibit the action requested
• interestingly, State Parties may not refuse requests on the sole ground that the offence is also considered to involve fiscal (tax) matters.

INTERNATIONAL COOPERATIVE BODIES

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.

The Financial Action Task Force (FATF)

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.

International Cooperation Review Group and its predecessor the Non-Cooperative Countries and Territories (NCCT) List

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.

Moneyval

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.

Interpol

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.

The Egmont Group

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).