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THE TRANSNATIONAL UNDERWORLD
by MONTANA NEWS ASSOCIATION
by Jim Kouri, CPP
Global crime directly or indirectly affects every man, woman and child in the United States in numerous ways:
In 1995, Americans spent approximately $48 billion to buy cocaine and heroin, all of which originated from foreign sources. In 1996, more than 600,000 Americans were arrested for heroin or cocaine-related violations, and more than 60 percent of all adult male arrestees tested positive for drugs in 20 of 23 cities. Illegal drug use kills over 14,000 Americans annually and generates 225,000 hospital emergency room visits.
One billion dollars worth of stolen cars are taken out of the United States annually. The illegal duplication and piracy of U.S. films, compact disks, computer software, pharmaceutical and textile products results in annual losses to U.S. companies of up to $23 billion.
Two thirds of all counterfeit U.S. currency detected in the United States is produced abroad.
At least several hundred U. S. organizations, corporations, financial institutions, government agencies and universities have suffered computer-related security breaches so far in 1998, resulting in losses totaling hundreds of millions of dollars.
These and other international crime threats will be a growing challenge in the years ahead as criminals continue to take advantage of the same factors that are feeding the rapid globalization of trade. The challenge is particularly acute because, unlike governments and law enforcement agencies, international criminals exploit national boundaries and are not constrained by national sovereignty. As articulated in the National Security Strategy, international crime today poses a direct threat to important U.S. interests whether occurring in this country or overseas.
American citizens living and working at home or abroad are primary targets for international criminal activities. In addition to the toll on individual American victims, international criminal activity undermines the safety and integrity of communities across the United States.
International Drug Trafficking
Drug trafficking is one of the greatest threats to Americans and their communities. International organized crime groups take advantage of sophisticated global transportation and communications links to funnel illicit drugs into the United States. They have increasingly demonstrated both innovation and technological sophistication in conducting their drug smuggling activities. Their ruthlessness and financial strength make them a potent threat.
Drug abuse exacts a terrible human toll in addiction and associated health costs. This abuse also undermines family cohesion, reduces workplace productivity and correlates strongly with other crime. In 2003, Americans spent approximately $57 billion on illegal drugs -- including $38 billion to buy cocaine and $10 billion on heroin, both of which are smuggled into the United States from countries in Latin America and Asia by international criminal organizations. Illegal drug use costs our society additional tens of billions of dollars each year. Approximately 60 percent of federal prisoners are sentenced for drug violations.
As evidenced by the 1988 bombing of Pan Am flight 103 over Lockerbie, Scotland, the 1993 World Trade Center bombing in New York City, the 1995 Riyadh and the 1996 Khobar Towers bombings in Saudi Arabia, and the 1995 assassination of two U.S. nationals in Karachi, Pakistan, international terrorism is a significant threat to American lives and property, at home and abroad. In 1997, there were 123 terrorist attacks against U.S. targets worldwide, including 108 bombings and eight kidnappings. And the most devastating terrorist attack occurred in 2001 in New York and Washington, DC.
International terrorists are adept at exploiting the advantages associated with reduced political and economic barriers to move people, money and material -- including arms and explosives -- across international borders. They are becoming more sophisticated in their use of computer and telecommunications technology to support their operations. Terrorists also use drugs trafficking and other criminal activities to finance their operations.
Illegal Immigration and Smuggling
The Department of Homeland Security estimates there are 10 million undocumented aliens illegally in the United States, representing nearly 4 percent of the total U.S. population. This figure includes aliens who were smuggled into the United States, those who illegally entered on their own, and those who are in the country illegally because they have overstayed their visas.
The aliens who are smuggled into the United States are subject to use by drug traffickers as "mules" to carry illegal drugs and often treated as "human cargo" -- shipped into the United States in cramped, unhealthy and dangerous conditions. They suffer abusive treatment from their handlers en route and sometimes are held in enforced servitude, including prostitution and drug peddling, for years after their illegal arrival to pay off debts to their smugglers. Moreover, illegal immigration is often tied to document fraud, a criminal offense that facilitates the commission of many other international crimes, such as terrorism and drug trafficking. There are many crimes committed by illegals, including the murder of police officers.
Contraband smuggling across U.S. borders -- including currency, stolen cars, firearms, cigarettes, alcohol and wildlife -- is also a significant problem. Much of this trafficking is to evade import-export taxes imposed on legal international commerce, thereby allowing criminals to reap significant profits, often while undercutting legitimate businesses. Smuggling stolen vehicles out of the United States is a very profitable criminal venture. The National Insurance Crime Bureau, a private investigative organization, estimates that, of the 1.4 to 1.6 million automobiles stolen every year in the United States, 200,000 -- valued at approximately $1 billion -- are illegally transported out of the
country. Trafficking in exotic species, a $5 billion dollar per year operation worldwide, threatens biodiversity and could expose unsuspecting Americans to deadly diseases.
Organized Crime Gangs
Organized crime groups are threats to Americans and U.S. businesses around the world. They are active in drug trafficking, arms trafficking, extortion, intimidation and violence. Organized crime groups have increasingly displayed a willingness to cooperate and work together on joint criminal enterprises. This increased cooperation is facilitated by technological enhancements in communications and transportation and transcends ethnic and cultural lines. These groups and the disreputable business interests sometimes aligned with them use corrupt political connections, payoffs and intimidation to secure highly profitable deals at the expense of free and fair competition. American business persons are not immune to the strong-arm tactics, including extreme violence, used by criminal groups to protect their interests or resolve disputes.
Wide ranging and often complex financial frauds by international criminals are robbing Americans of billions of dollars annually. One of the most notorious fraud schemes is the advance fee fraud. Nigerian and other international criminals have sent thousands of unsolicited letters and faxes with fraudulent representations to individual Americans with the promise of great profits after paying up front cash fees. In 1996, Americans were bilked of at least $100 million in Nigerian advance fee scams alone. The total loss is probably significantly greater, however, because fear and embarrassment keep many victims from reporting this crime. International criminals also victimize American businesses and financial institutions, resulting in lost opportunities, lost revenue and lost jobs.
Financial fraud crimes have become more prevalent in recent years as international criminals take advantage of the significantly greater personal and corporate financial information now available and readily exploitable through computer technology and access devices such as credit cards, debit cards and smart cards. As a result, financial losses to American businesses from insurance and credit card fraud are increasing. Major credit card issuers suffered fraud losses in excess of $2 billion in 1996, about one-third of which occurred because of international fraudulent activity. The Association of Certified Fraud Examiners estimates financial losses in the United States from fraud schemes by domestic and international criminals at more than $200 billion per year.
Money Laundering Operations
Criminals launder money to prevent governments and law enforcement agencies from identifying the source of illicit proceeds, from tracing the funding for specific criminal activities, and from freezing or seizing criminals' financial assets. Some estimates place the amount of money laundered internationally at between $300 billion and $500 billion annually. In addition to proceeds from criminal activities like drug trafficking, substantial amounts of money are being transferred abroad to avoid U.S. taxes.
International criminals invest billions of dollars annually around the world to acquire legitimate businesses as fronts for criminal activity and money laundering. Criminal purchases and investments in legitimate business enterprises drive honest investors away and place legitimate business persons at a comparative disadvantage.
The use of banks and other financial institutions to launder money, finance illicit transactions, or conduct financial fraud also can undermine their solvency and credibility. For example, the collapse in 1995 of Latvia's largest commercial bank occurred because the bank had been controlled by a criminal group that used the bank to make bad loans to its front companies and defrauded the bank's accounts of as
much as $40 million. That collapse provoked a major financial crisis in Latvia, contributed to a change in the government and forced Latvia to seek short term assistance from the International Monetary Fund.
International criminals have the resources and funding to utilize cutting edge technologies very effectively. Emerging new electronic payment systems -- known collectively as cybercurrency -- are particularly vulnerable to criminal penetration and theft because of the speed and anonymity of these transactions and the fact that, so far, they have been largely unregulated. Cybercurrency transactions also
can be conducted via the Internet, often without leaving an audit trail. The implications for the international financial system could be severe if
criminals acquire the capability to hack into global financial computer networks. For example, in 1994, individuals in St. Petersburg, Russia broke into a U.S. bank's electronic money transfer system. Once inside, they attempted to steal more than $10 million by making approximately 40 wire transfers to accounts around the world. Members of the gang have since been arrested in several countries, and most of the stolen funds have been recovered.
To make matters worse, hundreds of information system vulnerabilities are discovered every day. Most of those vulnerabilities are subsequently posted publicly, usually appearing first on the Internet. World Wide Web mailing lists routinely distribute vulnerability information and software that can be used to exploit vulnerabilities. More publicity usually follows through a succession of books, magazine and
newspaper articles, electronic bulletin board messages, and a growing list of Web sites that are targeted at informing a global network of hackers, crackers, "phreakers," and potentially, members of terrorist organizations and foreign intelligence services about the latest methodology for staging cyberattacks. Although broad dissemination of vulnerabilities permits system owners and operators to identify and counter them, the heavy reliance of modern infrastructure systems on information technology nevertheless makes them critical assets highly vulnerable to cyberattacks, and even more vulnerable to cyberattacks accompanied by physical attacks on infrastructure systems.
International criminals produce and use counterfeit U.S. currency and other counterfeit and fictitious financial instruments to make illicit transactions and to finance illegal activities. Of significant concern is the use of counterfeit U.S. money by international terrorist groups to fund their operations. Advanced design, copying and publishing technology is enhancing the capability of international criminals to produce high-quality counterfeit U.S. currency and financial instruments. For example, the percentage of counterfeit U.S. currency passed in the United States that was produced using inkjet color copiers has jumped from 0.5% in 1995 to 39% so far in fiscal year 1998. Most counterfeit U.S. currency is produced outside the country, with about two-thirds of all counterfeit currency detected here in fiscal year 1997 originating abroad.
The availability of large numbers of cheap, high-quality, military-style weapons from Central and Eastern Europe and the Newly Independent States of the former Soviet Union (NIS) continues to fuel international arms trafficking. Although the illicit global arms trade has traditionally been dominated by independent brokers, Russian and Italian organized crime groups have tapped into this trade both to acquire more weapons for themselves and to profit from arms trafficking. In Latin America and the Caribbean, drug trafficking groups are major customers for illicit arms. The illegal arms trade also helps fuel regional conflicts around the world, increasing the threat to American soldiers who may
be deployed in peacekeeping missions in trouble spots such as Bosnia.
Weapons of Mass Destruction
The threat posed by smuggling materials used to make weapons of mass destruction is of particularly great concern. In 1994, there were four incidents where individuals were prevented by authorities in Germany and the Czech Republic from smuggling uranium and plutonium out of Eastern Europe. One case, in Prague, involved kilogram quantities of weapons-useable highly enriched uranium. Except for a small seizure of highly enriched uranium in mid-1995, there have been no subsequent confirmed seizures of weapons-usable nuclear materials. While
so far these incidents have involved individuals or small groups taking advantage of opportunities presented by changing security
environments, the growing sophistication and international connections of criminal procurement networks raise the specter of organized criminal groups' involvement in helping to broker, finance or facilitate the smuggling of nuclear warheads or weapons-useable nuclear materials stolen or purchased on the black market. In recent years, there have been growing indications of outlaw regimes, international terrorist groups, and organized crime groups intent on acquiring material for weapons of mass destruction.
A major result of the end of the Cold War has been the disintegration of many political barriers around the world. With this breakdown has come greater freedom of individual movement and easier international transportation of goods and services. Sixty million foreign passengers were processed at U.S. airports and pre-clearance stations in fiscal year 1995. These developments have allowed international criminals to operate and move more easily across national frontiers, expanding their networks and increasing their cooperation in illicit activities and financial transactions. Communications advances and increased air travel also have allowed crime syndicates to enter into joint ventures more easily, including those in countries as far apart as Russia, Colombia, Italy and Nigeria.
Countries where international criminals operate with near impunity are a significant threat to U.S. national interests. Criminals rely on such safe havens as staging or transit areas for moving illicit contraband and for laundering, securing, hiding and investing their illicit proceeds. Countries that limit extradition, do not accept the validity of some U.S. laws, or have no laws to address some criminal activities are often ideal sanctuaries for criminals seeking to evade justice in the United States.
International crime affects all Americans. The drugs being sold on many of our street corners, the threat of terrorist bombs exploding in buildings where we work at home or abroad, the counterfeit bills passed at our businesses, the illegal aliens being abused in our midst, the fraudulent letters from abroad promising us false rewards, the credit cards used to defraud us, the cars stolen from us for illegal export and the layoffs at our companies victimized by intellectual property theft, economic espionage and foreign corruption can all be linked to international criminal enterprises. While it is difficult to quantify the total impact of these international crimes on Americans, our ability to estimate financial costs is improving. The Office of National Drug Control Policy estimates that illegal drugs alone cost our society tens of billions of dollars each year, a significant percentage of which is attributable to abuse of cocaine and heroin -- both drugs produced
abroad. Other international criminal activity is responsible for annual losses to Americans of an additional $400 billion according to conservative estimates. These estimates do not even begin to include the human costs in disrupted lives
Sources: US Dept. of Justice Archives , National Security Institute, Federal Bureau of Investigation, National Association of Chiefs of Police
Jim Kouri, CPP is currently fifth vice-president of the National Association of Chiefs of Police. He's former chief at a New York City housing project in Washington Heights nicknamed "Crack City" by reporters covering the drug war in the 1980s. He's also served on the National Drug Task Force and has trained police and security officers throughout the US. He writes for many police and crime magazines including Chief of Police, Police Times, The Narc Officer, Campus Law Enforcement Journal, and others. He's appeared as on-air commentator for over 100 TV and radio news and talk shows including Oprah, McLaughlin Report, CNN Headline News, MTV, Fox News, etc. His book Assume The Position is available at Amazon.Com, Booksamillion.com, and can be ordered at local bookstores.