User:Brittney B. Fore

Impact of Illicit Networks on Civil Governance and Legitimate Commerce

Overview - Impact of Illicit Networks on Civil Governance and Legitimate Commerce

Organized crime: a growing threat to security

In the last 20 years, globalization has outpaced the growth of mechanisms for global governance. This has resulted in a lack of regulation – whether it be on the Internet, in banking systems, or free trade zones. The same conditions that have led to unprecedented openness in trade, travel and communication have created massive opportunities for criminals. As a result, organized crime has diversified, gone global, and reached macro-economic proportions. This is having an impact on security.

Illicit: How Smugglers, Traffickers and Copycats Are Hijacking the Global Economy

In defiance of regulations and taxes, treaties and laws, virtually anything of value is offered for sale in today's global marketplace — including illegal drugs, endangered species, human chattel for sex slavery and sweatshops, human cadavers and live organs for transplant, machine guns and rocket launchers, and centrifuges and precursor chemicals used in nuclear weapons development. This trade is illicit trade. It is trade that breaks the rules — the laws, regulations, licenses, taxes, embargos, and all the procedures that nations employ to organize commerce, protect their citizens, raise revenues, and enforce moral codes. It includes purchases and sales that are strictly illegal everywhere and others that may be illegal in some countries and accepted in others. Illicit trade is highly disruptive, of course, to legitimate businesses. Brittney B. Fore (talk) 18:39, 4 June 2010 (UTC)

United States National Security Strategy

Nonstate actors can have a dramatic influence on the world around them. Failing states breed conflict and endanger regional and global security. Global criminal networks foment insecurity abroad and bring people and goods across our own borders that threaten our people. Brittney B. Fore (talk) 18:39, 4 June 2010 (UTC)

Civil Governance – Illicit Networks as shadow powers (de facto governance) in civil society

Contemporary Challenges to State Sovereignty

The gang challenge to national security, stability, and sovereignty and the attempt to neutralize, control, or depose governments takes us to the strategic-level threat. In this context, crime, violence, and instability are only symptoms of the threat. The ultimate threat is either: (1) state failure, or (2) the violent imposition of a radical socioeconomic-political restructuring of the state and its governance in accordance with criminal values. State failure is when a state loses the capacity and/or the will to perform its fundamental governance and security functions. Over time, the weaknesses inherent in its inability to perform the business of the state are likely to lead to the eventual erosion of its authority and legitimacy. In the end, the state cannot control its national territory or the people in it. This results in a power vacuum that illicit networks, gangs, and criminals fill. Brittney B. Fore (talk) 18:39, 4 June 2010 (UTC)

Engaging Failed States

Self-interested rulers might progressively corrupt the central organs of government (as in Burma or in Nigeria during Sani Abacha's regime). Corrupt elites might ally themselves with criminal networks to divide the spoils (as in Liberia and parts of the former Yugoslavia). State authority might be undermined and replaced in particular regions, paving the way for illegal trading operations (as in parts of Georgia and Colombia). Brittney B. Fore (talk) 18:39, 4 June 2010 (UTC)

Political mechanisms – Networks use of bribery, extortion, and intimidation to be the puppet masters

Transparency International Corruption Perceptions Index 2009 Methodological Brief

Transparency International’s Corruptions Perceptions Index (TI-CPI) is an aggregate indicator that ranks countries in terms of the degree to which corruption is perceived to exist among public officials and politicians. It is a composite index drawing on corruption-related data by a variety of independent and reputable institutions. The main reason for using an aggregated index of individual sources is that a combination of sources measuring the same phenomenon is more reliable than each source taken separately.

All sources of information used to construct the CPI are produced by reputable organizations and data gathering organizations. To be included in the CPI, a source must measure the overall extent of corruption (frequency and/or size of corrupt transactions) in the public and political sectors and provide a ranking of countries, that is to say, measure perceptions of corruption in at least a few different countries. Also, the methodology used to assess these perceptions has to be the same for all assessed countries in order for the source to be selected. The number of surveys/assessments included might vary from one year to another depending on their availability at the time of the development of the index. The CPI 2009 is calculated using data from 13 different surveys or assessments produced by 10 independent organizations.

These organizations conduct surveys based on the following questions and issues among others:

1) Can the government contain corruption?

2) Is the government free from excessive business regulations and requirements?

3) Are there adequate laws regarding conflict of interest, regulation of money flow, etc?

4) Is there transparency in the government? Can the public see where the money goes and how?

5) Is bribery an everyday occurrence? Is it seen as apart of business?

6) Are the government and public officials accountable for use of funds?

7) Are there legal or political penalties for abusing an official position?

8) Is the general public tolerant regarding petty bribery and corruption?

A high degree of accountability and transparency discourages corruption, or the abuse of public office for private gain. An interactive map showing a country's rank in the index is available at media.transparency.org. Brittney B. Fore (talk) 18:39, 4 June 2010 (UTC)

Criminalization and/or Delegitimization of the State

• Massive and endemic corruption or profiteering by ruling elites
• Resistance of ruling elites to transparency, accountability and political representation
• Widespread loss of popular confidence in state institutions and processes, e.g., widely boycotted or contested elections, mass public demonstrations, sustained civil disobedience, inability of the state to collect taxes, resistance to military conscription, rise of armed insurgencies
• Growth of crime syndicates linked to ruling elites Brittney B. Fore (talk) 18:39, 4 June 2010 (UTC)

Contemporary Challenges to State Sovereignty

By using complicity, intimidation, corruption, and indifference, the irregular attacker can quietly and subtly co-opt individual politicians and bureaucrats and gain political control of a given geographical or political enclave. Such corruption and distortion can potentially lead to the emergence of a network of government protection of illicit activities, and the emergence of a virtual criminal state or political entity. A series of networked enclaves could, then, become a dominant political actor within a state or group of states. Thus, rather than violently competing directly with a nation state, an irregular attacker can criminally co-opt and begin to seize control of the state indirectly. Brittney B. Fore (talk) 18:39, 4 June 2010 (UTC) United Nations Convention Against Corruption

This evil phenomenon is found in all countries—big and small, rich and poor—but it is in the developing world that its effects are most destructive. Corruption hurts the poor disproportionately by diverting funds intended for development, undermining a Government’s ability to provide basic services, feeding inequality and injustice and discouraging foreign aid and investment. Corruption is a key element in economic underperformance and a major obstacle to poverty alleviation and development. Brittney B. Fore (talk) 18:39, 4 June 2010 (UTC)

Strategy for a New World: Combating Terrorism and Transnational Organized Crime

It is clear that criminal organizations use violence as part of their efforts to protect themselves and to advance their economic and financial interests. In effect, criminal organizations use contract killings to remove threats, whether from politicians, law enforcement personnel, journalists, or rivals. They also use such killings as a means of removing obstacles to their takeover of legitimate businesses—although in some cases only as a last resort after intimidation tactics have failed. For the most part, therefore, the violence is selective rather than random and usually is a matter of ‘business’. Brittney B. Fore (talk) 18:39, 4 June 2010 (UTC)

As well as violence, however, transnational criminal organizations use corruption as a major instrument—and target it is as carefully as they do the use of violence. In essence, there are two main purposes of corruption. Instrumental or operational corruption is designed to facilitate cross-border trafficking activities. The targets are customs and immigration officers charged with the responsibility for protecting the borders. In this sense, corruption payments are simply the cost of doing business. Perhaps even more serious is what Ethan Nadelmann (1993) termed ‘systemic corruption’ where organized crime seeks to corrupt policy-makers, bureaucrats, law enforcement personnel, and members of the judiciary in order to maintain a low-risk environment from which they can operate with a high level of impunity. In Mexico, for example, during the Presidency of Carlos Salinas, drug traffickers bought the protection of his brother, Raul Salinas,who eventually ended up with over 130 million dollars in Swiss bank accounts.While terrorists can also use corruption, this is less important for them than finding states which have some sympathy for the cause and provide a territorial safe haven or financial support. When Al-Qaeda was based in Sudan in the early 1990s, Bin Laden invested heavily in infrastructure projects for the country. Although it is possible that some politicians also received corrupt pay-offs, the investments were designed primarily to benefit the country as a whole rather than line the pockets of politicians. Brittney B. Fore (talk) 18:39, 4 June 2010 (UTC)

Financial operations anchoring Illicit Networks

Control over the Illicit Economy and Economic Based Threats to Peace

One of the biggest economic threats to peace arises from the political-economic nexus, where resources acquired from illegal trafficking, smuggling, extortion, and hijacking of state and private enterprises are used to acquire and maintain both formal and informal power. The actors involved this economy may use coercion, terror, intelligence activities, and paramilitary operations to threaten the peace process. Allowing them to operate can hamper prospects for good governance and peace by promoting violence against civilians when acquiring control over assets, or exploiting and capturing trade networks and remittances. The proceeds of illicit trade merge with the greatest of ease into the vast daily flow of interbank settlements and Western Union money transfers. And the Internet not only boosts the speed and efficiency of all of these trades but expands the possibilities by, for instance, hosting online markets for prostitutes from Moldova and Ukraine destined for shipment to markets in Britain, France, Germany, Japan, and the United States. Brittney B. Fore (talk) 18:39, 4 June 2010 (UTC)

The Globalization of Money-Laundering

Money laundering is frequently referred to as a financial crime. It has become increasingly complex, often involving numerous financial institutions, and increasingly non-bank financial institutions (e.g. bureau de change, check cashing services, insurers, brokers, traders). Other financial crimes can be associated with, or exist in parallel with, money laundering - for example corruption and fraud.

Upon the receipt of criminal proceeds, criminals may seek to launder them through the financial system. This, in turn, may also require a series of fraudulent activities such as counterfeiting invoices and the corrupting of bank employees. Therefore, a whole chain of criminal or illegal activities may culminate from the flow of criminal money through the financial system. Tax evasion, a form of financial crime, is facilitated by the existence of jurisdictions that have low tax rates, that maintain relatively lax financial regulations and practices and that do not share information on client accounts with other tax authorities.

Because of the clandestine nature of money-laundering, it is difficult to estimate the total amount of money that goes through the “laundry cycle”. According to recent United Nations Office on Drugs and Crime (UNODC) estimates, the estimated amount of money laundered globally in one year is 2-5 % of global GDP, or US$800 billion to US$2 trillion in current US dollars – heavily concentrated in Europe and North America. Brittney B. Fore (talk) 18:39, 4 June 2010 (UTC)

Illicit Finance and Global Conflict

Illicit finance has played and continues to play a role in undermining many of the goals of the United Nations and international security policy. Dirty money laundered through the world’s major financial institutions simultaneously threatens democracy, human rights, free markets, the environment, sustainable development, governance, political stability, and civil society. Brittney B. Fore (talk) 18:39, 4 June 2010 (UTC)

World currency – Impact of Illicit Networks financial operations on legitimate local and international markets

Annual Threat Assessment of the Intelligence Community for the Senate Select Committee on Intelligence

Some organized crime networks, groups, and individuals also have invested in energy and mineral markets in an effort to diversify and legitimize their business activities. Criminals’ coercive tactics, underhanded business practices, opaque motives, and self-serving loyalties can undermine the normal workings and integrity of these global markets. The most powerful, high-profile Eurasian criminal groups often form strategic alliances with senior political leaders and business tycoons and can operate from a relative safe haven status with little to fear of international arrest and prosecution. The leaders of many of these groups go to great lengths to portray themselves as legitimate businessmen and use front companies that give them more market access and leverage. They also employ some of the world’s best accountants, lawyers, bankers, and lobbyists to deflect and frustrate the efforts of authorities. The change in the structure and types of activities conducted by transnational criminal groups is making it increasingly difficult to identify and attack them. In particular, the increasing prevalence of loosely knit networks, the use of cyberspace and global financial systems, and political corruption have made it easier for them to hide their involvement, to thwart law enforcement efforts, and to create images of legitimacy. Brittney B. Fore (talk) 18:39, 4 June 2010 (UTC)

Transnational Crime: Definitions and Concepts

Infiltration of Legal Business: The cash money-laundering cycle ends with the infiltration of legal business, whether it be the purchase of stocks and bonds, the acquisition of businesses, or buying one’s way into profitable government operations. Evidence on means and methods is sporadic. Merely by way of example, it is known that the vast money-laundering cycle operated by a Mexican ‘drug baron’, ultimately resulted in the purchase of auto dealerships in Mexico and of a Blockbuster Video outlet in Houston, Texas, as well as securities investments. Quite frankly, we do not know how many businesses we frequent daily have been infiltrated, or are actually owned, by transnational organized crime groups. The prospect is nothing but frightening, however quantification of this phenomenon is impossible at this time. Brittney B. Fore (talk) 18:39, 4 June 2010 (UTC)

Annual Threat Assessment of the US Intelligence Community for the House Permanent Select Committee on Intelligence

International criminal organizations (IOC) almost certainly will increase its penetration of legitimate financial and commercial markets, threatening US economic interests and raising the risk of significant damage to the global financial system. International criminal organizations are amassing substantial financial clout.

International criminal organizations will increasingly damage the ability of legitimate businesses to compete and may drive some legitimate players out of the market. IOC engages in bribery, fraud, violence, and corrupt alliances with state actors to gain the upper hand against legitimate businesses.

Through piracy and state relationships that help criminal networks avoid regulation, IOC is flooding the world market with inferior products. IOC is likely to increasingly threaten industries that depend on intellectual property such as fashion, pharmaceuticals, computing, finance, entertainment, and publishing—all US economic strengths.

Emerging market countries are particularly vulnerable. Corruption, weak enforcement, and a lack of transparency provide fertile ground for IOC activity in these countries, making them less appealing for legitimate investors.

Organized crime’s coercive tactics and shady business practices most likely will further undermine transparency and confidence in key energy, metal, and other sectors where recent acquisitions and investments have occurred. Brittney B. Fore (talk) 18:39, 4 June 2010 (UTC)

Virtual money – A new unregulated frontier or the wild-wild economic internet

Virtual Money Laundering and Fraud

In the virtual world there is negligible means of monitoring financial activity, sparse due diligence, paltry customer identification rules, nor any mandated forms or reports to complete. The virtual realm is a completely unregulated and a voluminous means of money movement. This could potentially provide a safe harbor for a criminal element including money launderers, fraudsters and/or terrorists. This could be considered as the virtual counterpart to a Hawala.

A launderer opens up numerous separate virtual accounts, all using fictitious id. The accounts are all funded with the proceeds of an organized crime sports betting operation. The launderer can make purchases in the virtual world to and from himself by using those accounts as if he were purchasing assets from other residents. Subsequently, he may direct all his proceeds to an account that he maintains. He can then withdraw those funds either from the bank or using an ATM. It would be nearly impossible to trace the source of those funds. Brittney B. Fore (talk) 18:39, 4 June 2010 (UTC)

Mobile Payments--A Growing Threat

M-payments can take many forms but are commonly point of sale payments made through a mobile device such as a cellular phone, a smart phone, or a personal digital assistant (PDA). Cell phone money and credit transfers allow communities to bypass both brick-and-mortar banks and ATMs. The new mobile technology potentially provides a “virtual ATM” to every bearer of a mobile phone. Worldwide, there are fewer than one billion bank accounts, but approximately three billion cell phones. In developing countries and often cash based societies in South Asia, Latin America, and Africa, mobile communications proliferate, leapfrogging old landline technology. At the same time, there is a growing worldwide trend away from paper and towards electronic payments. It is only logical that the startling advances in communications are followed by innovations in m-payments. There are already indications that money launderers and those that finance terrorism will avail themselves of the new m-payment systems. Responsible jurisdictions must find a balance between the expediency of m-payments, particularly in the developing world, and the need to guard against abuse.

In traditional money laundering, “smurfs” or “runners” deposit or place small amounts of illicit or “dirty” money into financial institutions in ways that do not trigger financial transparency reporting requirements. Today, digital smurfs are able to bypass regulated banks and their financial reporting requirements and exchange dirty money for digital value in the form of stored value cards or mobile payment credits. Proceeds of crime or contributions to terrorist organizations can now be transferred via cell phones. With such transfers, criminals avoid the risk of physical cash movement, bypass financial transparency reporting requirements, and rapidly send digital value across a country or around the world. Further advantages for money launderers employing digital value smurfing instead of traditional money brokers include the quick conversion of cash to digital value, and the potential to integrate different digital value pools such as SMART cards, on-line accounts, and Internet payment clearing services.

Many law enforcement and intelligence agencies currently have little expertise in m-payment methodologies and technology. This gap in expertise is often coupled with a lack of codified authority to examine abuses in the communications systems. Moreover, most m-payment networks have security features that hinder law enforcement and intelligence services in their efforts to detect suspect transactions.

A lack of physical evidence further handicaps law enforcement investigations, as there may not be any cash or cash equivalents to monitor or seize. If value is transferred electronically and the conveyor or recipient phone is destroyed, it may be impossible to reconstruct or determine the information that was on the phone. If both a mobile phone service and the funds used to facilitate m-payments are prepaid, the service provider may not fully identify its customers due to the absence of credit risk. The problems could be compounded by the use of false identification to obtain subscriber status or to purchase or rent m-payment services. Using prepaid cellular phones could allow criminals to buy handsets incognito and use their minutes without leaving a trace of their calling records. Brittney B. Fore (talk) 18:39, 4 June 2010 (UTC)

Ungoverned territory – Illicit Networks use of lawless areas and how they sustain permissive environments

Contemporary Challenges to State Sovereignty

A government’s failure to extend a legitimate sovereign presence throughout its national territory leaves a vacuum in which gangs, drug cartels, leftist insurgents, the political and narco-right, and the government itself may all compete for power. In that regard, ample evidence clearly demonstrates that Central American, Mexican, Caribbean, and South American governments’ authority and presence have diminished over large geographical portions of those regions. However, contrary to popular perceptions, such areas are not “lawless” or “ungoverned.” These territories are governed by the gangs, warlords, drug barons, and/or insurgents who operate where there is an absence or only partial presence of state institutions. Brittney B. Fore (talk) 18:39, 4 June 2010 (UTC)

Nation State Cooperation – Challenges and opportunities for regional and international cooperation against Illicit Networks

United Nations Convention Against Transnational Organized Crime and the Protocols Thereto

States Parties shall endeavour, in accordance with fundamental principles of their domestic law, to reduce existing or future opportunities for organized criminal groups to participate in lawful markets with proceeds of crime, through appropriate legislative, administrative or other measures. These measures should focus on:

(a) The strengthening of cooperation between law enforcement agencies or prosecutors and relevant private entities, including industry;

(b) The promotion of the development of standards and procedures designed to safeguard the integrity of public and relevant private entities, as well as codes of conduct for relevant professions, in particular lawyers, notaries public, tax consultants and accountants;

(c) The prevention of the misuse by organized criminal groups of tender procedures conducted by public authorities and of subsidies and licences granted by public authorities for commercial activity;

(d) The prevention of the misuse of legal persons by organized criminal groups; such measures could include:

• The establishment of public records on legal and natural persons involved in the establishment, management and funding of legal persons;

• The introduction of the possibility of disqualifying by court order or any appropriate means for a reasonable period of time persons convicted of offences covered by this Convention from acting as directors of legal persons incorporated within their jurisdiction;

• The establishment of national records of persons disqualified from acting as directors of legal persons; and

• The exchange of information contained in the records referred to in subparagraphs (d) (i) and (iii) of this paragraph with the competent authorities of other States Parties. Brittney B. Fore (talk) 18:39, 4 June 2010 (UTC)

Failed or Failing States – potential roles of Illicit Networks in threatened states and the consequences

Contemporary Challenges to State Sovereignty

The lack of responsible governance and personal security generate greater poverty, violence, and instability─and a downward spiral in terms of development. It is a zero-sum game in which the gangs and the other nonstate protagonists involved are the winners, and the rest of the society is the loser. Additionally, the longer failing and failed states persist, the more they and their regional spillover effects endanger regional and global peace and security. Failing and failed states become dysfunctional states, rogue states, criminal states, narco-states, new “people’s democratic republics,” draconian states (for example, military or civilian dictatorships), or they reconfigure themselves into entirely new entities. Brittney B. Fore (talk) 18:39, 4 June 2010 (UTC)

Engaging Failed States

State failure directly affects a broad range of U.S. interests, including the promotion of human rights, good governance, the rule of law, religious tolerance, environmental preservation, and opportunities for U.S. investors and exporters. It contributes to regional insecurity, weapons proliferation, narcotics trafficking, and terrorism. Brittney B. Fore (talk) 18:39, 4 June 2010 (UTC)

United States National Security Strategy 2002

The events of September 11, 2001, taught us that weak states, like Afghanistan, can pose as great a danger to our national interests as strong states. Poverty does not make poor people into terrorists and murderers. Yet poverty, weak institutions, and corruption can make weak states vulnerable to terrorist networks and drug cartels within their borders. Brittney B. Fore (talk) 18:39, 4 June 2010 (UTC)

The Failed States Index 2009

The Conflict Assessment System Tool (CAST) methodology presents a framework for early warning and assessment of societies at risk of internal conflict and state collapse. The model can be used to enable the international community to take preventive action to stem conflict, prepare for peacekeeping and stability missions, assess conditions for sustainable security and provide metrics or measures of effectiveness for post-conflict reconstruction.

The steps of the methodology are the following:

1. To prepare for Conflict Assessment:

• Collect relevant conflict data

• Develop a complete chronology of events

• Choose key dates for Trend Point assessment

2. Rating the Twelve Indicators

The "What's Going On?" Step. Three types of indicators are used: Social, Economic, and Political. The indicators are rated from 0 (low intensity) to 10 (high intensity).

Social:

• Mounting Demographic Pressures

• Massive Movement of Refugees or Internally Displaced Persons creating Complex Humanitarian Emergencies

• Legacy of Vengeance-Seeking Group Grievance or Group Paranoia

• Chronic and Sustained Human Flight

Economic:

• Uneven Economic Development along Group Lines

• Sharp and/or Severe Economic Decline

Political:

• Criminalization and/or Delegitimization of the State

• Progressive Deterioration of Public Services

• Suspension or Arbitrary Application of the Rule of Law and Widespread Violation of Human Rights

• Security Apparatus Operates as a "State Within a State"

• Rise of Factionalized Elites

• Intervention of Other States or External Political Actors

3. Assessing the Core Five

The "What Have We Got to Work With?" Step. Core Five assessment helps determine the capacity of core institutions to manage the situation at hand or a state's "capacity to cope".

For sustainable security, a state should have the following Core Five:

• A competent domestic police force and corrections system

• An efficient and functioning civil service or professional bureaucracy

• An independent judicial system that works under the rule of law

• A professional and disciplined military accountable to a legitimate civilian government

• A strong executive/legislative leadership capable of national governance

4. Identifying STINGS

The "What Else is Relevant?" Step. STINGS are the unanticipated factors that act as catalysts to accelerate or decelerate the immediate risk of conflict

STINGS is an acronym used here to describe:

• Surprises (e.g., currency collapse)

• Triggers (e.g., assassinations, coup d'etats)

• Idiosyncrasies (e.g., non-contiguous territory, a deference to authority)

• National Temperaments (e.g., cultural or religious perspectives)

• Spoilers (e.g., disgruntled followers, excluded parties)

5. Building a Conflict Map

The "What's the Big Picture?" Step. Plotting the course of the conflict for each significant date allows one to visually depict the potential for the conflict to turn violent or to be resolved. Brittney B. Fore (talk) 18:39, 4 June 2010 (UTC)

An interactive map is located at foreignpolicy.com