Our correspondent Andreas Frank reports:  The multi-billon dollar illicit trade of commodities (from cocaine to blood diamonds, weapons and human beings) has many complexities, from creating or extracting the product to moving the product to international markets to delivering payments.

The return cycle is equally complex, including the types of payments used to acquire the commodities, from cash to weapons and other goods the seller may need. This cycle relies on a specific group of individuals who act as facilitators in connecting different facets of the criminal and/or terrorist networks of state and non-state actors.

In order for transnational criminal pipelines and networks to function, different parts of the network need to communicate with each other and be able to supply mutually beneficial services and commodities to each other.

• The fixers, or links, between different parts of the network, provide this vital service connecting different facets of the criminal and/or terrorist networks of state and non-state actors.

• Local fixers, often members of the local elites and/or entrenched diaspora communities, help move the illicit product from production in conflict zones, criminalized states or territories not governed by the state, to the internal market.

• Super fixers, those with broader international connections, can then move the product to the international market and provide some financial services. However, they rely on shadow facilitators to acquire the more complex and sophisticated equipment, often weapons or high technology components that are not readily accessible through normal market channels.

The shadow facilitators usually deal with more than one criminal or terrorist network, providing rare and valuable services to multiple actors who may even be in conflict with each other. As the Viktor Bout case shows, if one provides good enough services that are highly specialized, one can arm multiple sides of the same conflict and greatly increase one’s profits in the process.

Because shadow facilitators’ international contacts and structures are so specialized, difficult to replace and operate for multiple groups, targeting them by law enforcement and intelligence communities should be a high priority. The Drug Enforcement Administration (DEA), in particular, has focused on this group. The high profile cases of the Viktor Bout and Monzer al-Kassar, two of the world’s most elusive and powerful brokers in recent decades, show that operations can be undertaken and prosecuted successfully.

The impact in both cases was significant. Viktor Bout’s arrest and conviction crippled and grounded an air fleet that was supplying weapons, across Africa, including Somalia, and seeking inroads into Latin America. The cost of replacing items outside that network was possible but costly both financially and in time.

Almost four years after his arrest (he was convicted in November 2011) no one has successfully put the pieces of the enterprise back together. In the Al-Kassar case, the network also collapsed. In both cases, there are indications that other individuals have picked up pieces of the network, but in neither case has capacity emerged to offer anything like the full range of services these two super facilitators did.

However, much of the conventional strategy for combating Transnational Organized Crime (TOC) relies on conceiving of illicit networks as hierarchical organizations with a strong top-down structure. Rather than focusing on the links (individuals providing specific services) mutual usefulness to each other of different small, relatively flat networks that overlap and rely on many of the same specialists, the focus remains on kingpins.

Targeting fixers is not a silver bullet but is one of the most efficient methods for weakening and disrupting illicit networks.

Global forced labor generates yearly profits of $150 billion, and more than half of that amount comes from commercial sexual exploitation, the International Labor Organization ILO said.
ILO Report
Zwangsarbeit und sexuelle Ausbeutung

Andreas Frank reports: Urging the international community to “come together at the highest political level” to halt the escalation of wildlife and forest crime, the United Nations crime chief said today that the $8-$10 billion reaped annually from this “ruthless trade” ranks it alongside the trafficking of human beings, arms and drugs in terms of illicit profits.

“The rate of poaching is such that a number of iconic and lesser known species risk being wiped out over the next decade – and we will all bear responsibility for those losses,” warned Yury Fedotov, Executive Director of the UN Office on Drugs and Crime (UNODC), at a special event taking place in Vienna on the margins of the 23rd session of the Commission on Crime Prevention and Criminal Justice.

Mr. Fedotov stressed that the illegal wildlife trade – broadly considered poaching and other illicit exploitation of the world’s wild flora and fauna – needed to be recognized everywhere for what it is: a very serious transnational organized crime requiring effective legislation and criminal justice systems. The London Conference that took place in February 2014 had added to the political commitments expressed in Paris, Gaborone, Marrakesh and Bishkek in 2013.

“We must now translate our resolve into concrete action and channel this momentum into the General Assembly,” he said.

Stemming this tragedy is a shared responsibility, said Mr. Fedotov, explaining that UNODC is working with Governments and partners, such as the International Consortium on Combating Wild Life Crime (ICCWC), to improve legislation, strengthen law enforcement and criminal justice systems that can investigate, prosecute and sentence criminals in source countries and end-markets, and forge closer international cooperation.

In addition, UNODC will soon launch the Global Programme for
Combating Wildlife and Forest Crime, which would deliver regional and national assistance to support law-enforcement responses, put in place legislation to address this crime, strengthen investigative, prosecutorial and judicial capacities, as well as combat the related issues of money-laundering and corruption. It will also support States in their efforts to introduce livelihoods to affected communities.

Mr. Fedotov stressed however that law enforcement alone cannot eliminate wildlife crime, and he underlined the need to tackle the underlying development dimension. “Education and public awareness campaigns are needed to reduce the demand for protected fauna and flora, together with efforts to promote sustainable livelihoods for communities in source countries, where poverty and their lack of economic opportunities drive many to engage in this criminal enterprise,” he said.

Mr. Fedotov said he hoped that more countries would implement the UNODC Wildlife and Forest Crime Analytic Toolkit developed with ICCWC to assess countries’ preventive and criminal justice responses to wildlife and forest crime, following the example of Gabon, Nepal, Bangladesh and Peru.

Other initiatives of UNODC include the recent “Be a responsible traveller” campaign jointly launched with the UN World Tourism Organization (UNWTO) to curb demand for wild animals, exotic plants and endangered wood products.
UNODC_PressRelease_13.5.14
Is the last Siberian Tiger Corrupt
Reports on Corruption

Andreas Frank writes: The report, compiled by the
ICSS and the Sorbonne University in Paris, said that 80% of global sports betting was being carried out on illegal markets, placing it beyond the reach of regulators and investigators.  Manipulation takes place in a growing sports economy, which now accounts for 2% of the global GDP.   The transnational sports-betting market is estimated with wagers worth between €200 – 500 billion, more than 80% of which is illegal.

Criminals are using betting on sports events to launder $140 billion each year, exposing a lack of effective regulation that allows match-fixing to spread.

The findings assume:  Asia and Europe represents 85% of the total legal and illegal market.  Europe makes up 49% of the legal market, whilst Asia makes up 53% of the illegal market.  Legal sports betting currently delivers only €4 billion of official tax revenues for countries.  More than 8,000 legal operators offer sports betting – 80% are in territories with a low rate of tax and few inspections.

The internet has led to an unprecedented expansion of sport betting offers, with online betting now representing 30% of the global market.  The sports betting market has been transformed into a multi-billion dollar industry with betting exchanges, live betting, betting on more low-profile events and derivative betting formulas, as well as higher return rates for bettors.

Soccer and cricket were identified as the sports most threatened by criminals seeking to rig the gambling market but tennis, basketball, motor racing and badminton were also affected, according to the report.

A number of soccer leagues have been hit by match-fixing scandals in recent years and three Pakistani cricketers were jailed for a plot to deliberately bowl no-balls during a test match against England at Lord’s in 2010.

Practical solutions will help combat match-fixing and illegal betting.  These include creating a sports betting tax to finance investigations into match-fixing and illegal betting.  Players, coaches and administrators must be prohibited from betting on competitions and matches within their sport.

Protecting the Integrity of Sport Competition – The Last Bet for Modern Sport
Corruption Reports

When lottery email scam turns into murder!

A gang of five, who used to cheat people through lottery email, killed one of their own “aged 15-17 years”. The gang was using the girl’s bank account for collecting money. How did the bank allow a minor girl to operate the account? Where were the KYC norms?

With banks becoming ‘hyper active’ in creating awareness about not to share bank account numbers and passwords with anyone, the criminal minds are, more often, found using ‘lottery’ route to dupe people. Unfortunately, the loss in such lottery scam messages is not limited to money alone. As the recent incident from Pune points out, these criminals even killed their own accomplice as she wanted to leave the gang.

According to a report from Mid-Day, on 7th May the police found body of 17-year old Rani Singh in a red suitcase abandoned at Talegaon railway station near Pune. Police arrested three people, Rahul Ravindra Barai, Ershan Ali Khureshi and Santosh Jugdar from Mumbai and after the probe found that they, including Rani belonged to a five member gang and were involved in cheating people. “Recently, Singh, the victim who was also a member of the gang, had told them that she planned to leave the group. Angry with her for defecting, the trio killed her on the orders of the gang leader,” the report says.
When lottery email scam turns into murder

Andreas Frank reports: Hundreds of billions of pounds of international criminal money is laundered through banks and their subsidiaries every year, according to the National Crime Agency’s latest analysis of the serious and organised crime threats faced by the UK.

The analysis has suggested that high transaction volumes, the developed financial services industry and political stability have made the UK’s financial system particularly attractive to money launderers.

The NCA said that most proceeds of UK serious and organised
crime were laundered through UK banks, wire transfer companies and other regulated businesses, including money service businesses.

National Crime Agency director general Keith Bristow said: “To relentlessly disrupt serious and organised crime as effectively as possible, we need to take informed decisions about how law enforcement co-ordinates and targets its resources. This assessment is the most detailed and broad-ranging crime threat analysis ever produced by law enforcement.

“The assessment, and the response to it, is owned by the whole of law enforcement, including police forces and other national agencies, as well as Whitehall departments, local government, industry partners and the third sector. It helps us maximise our collective impact in order to cut serious and organised crime.”

One of the key themes of the coming year is an increase in the use of denial-of-service attacks, and technology ransom demands. The UK’s networked systems are said to be at particular risk and this economic crime is expected to continue over the next three years.

Currently, says the NCA, organised crime accounts for economic losses of around £24bn per year. Cybercrime has increased over the past two decades and represents increasing threats.

The report says: “Over the last two decades, the internet and digital communications technology have steadily increased their penetration into all sectors of UK society and business. More and more government and public services are going online and it is likely that attempted cyber attacks against government services will increase.

“In much the same way as criminals – including serious and organised criminals – have in the offline world, they identify and exploit any advantage they can to perpetrate their crimes.”

The NCA said that a handful of cybercrime risks would have the most impact over the three-year period, and said that the threat of data hauls, denial of service attacks and network disruption were all likely to increase.

Note: Mr. Frank commends the UK for undertaking this study and for facing a serious problem which remains unaddressed in most of the civilized world.
NCA National Strategic Assessment of Serious and Organised Crime 2014

Rodrigo de Matos

Corruption Reports

Silvio Berlusconi – Italy’s former Prime Minister and one of the world’s most recognisable politicians – did business with the mafia for nearly two decades.

That is the conclusion of the country’s Supreme Court of Cassation in Rome. The billionaire tycoon, nicknamed the Teflon Don, worked with Cosa Nostra, the Sicilian Mafia, via his conduit and former senator Marcello Dell’Utri after judges sentenced Dell’Utri to seven years for mafia association.
Silvio Berlusconis links with Italian organised crime confirmed

Hilmi Simsek

Andreas Frank reports: President Pranab Mukherjee today asked Enforcement Directorate to achieve greater efficiency and cooperate with concerned international agencies to expedite steps to bring back “stolen assets spirited abroad”.

Mukherjee made this veiled reference to blackmoney during the second ‘Enforcement Day’ function organised by the Enforcement Directorate (ED).

The meeting was attended by President of the Financial Action Task Force (FATF) Vladimir Nechaev and Federal Office of Justice Swiss Confederation Mario Michel Affentranger among others.

“The Directorate should aim to work out modalities with international partners so that action with regard to restoration of stolen assets spirited abroad is expedited,” he said and asked it to interact with multilateral fora like FATF, the Eurasian Group on Combating Money Laundering and Financing of Terrorism (EAG) and the Asia Pacific Group on Money Laundering (APG).

He said the cooperation needs to be optimally utilised by the ED for bilateral exchanges and follow up with counterpart enforcement agencies for better mutual cooperation on Anti Money Laundering (AML) and Countering the Financing of Terrorism (CFT).

He also called for an international cooperation to tackle cross-border money laundering and terror financing so that a more “business friendly” legitimate investments flow into the country.

“Effective measures against Money Laundering and Terror Financing are essential in today’s global economic and security environment, and these are rightly being addressed on priority by most countries.

“Such measures also foster a more business friendly setting and facilitate legitimate investments and financial flows,” the President said at the function which was also attended by Revenue Secretary Rajeev Takru.

The President said India too has put in place a strong Anti Money Laundering legislation, the Prevention of Money Laundering Act (PMLA) to counter the menace.

“I also had the privilege of introducing in Parliament the Amendment Bill 2011 of the PMLA, through which, our nation strengthened the money laundering legislation, in line with the Recommendations of FATF,” Mukherjee said while recalling his days as the Union Finance Minister.

He drew attention about the presence of Affentranger and said it underlines the growing bilateral cooperation on law enforcement matters between Switzerland and India, as also the partnership between the counterpart agencies.

“Money laundering is a global menace, and law enforcement agencies of all countries have to cooperate to fight it,” he said.

India has been pressing Switzerland to give details of some Indians having money in the banks in that country but the Swiss authorities maintain they would be furnishing details of cases only after 2012 when Direct Tax Avoidance Treaty came into effect.

Switzerland does not cooperate in the matter of stolen data:

Swiss ambassador to India Linus Von Castelmur said his country could not cooperate in the matter as it related to stolen data, days after finance minister P Chidambaram sent a fresh letter to Switzerland pressing authorities to share information on Indian account holders in the HSBC Geneva list,

Swiss authorities had written to the finance ministry recently refusing to share data on the HSBC list. Following this, the FM had sent another letter – the third in four months – requesting Swiss authorities to expedite the matter.

The HSBC list had been given to India by French authorities who had obtained it from a disgruntled employee of HSBC. Switzerland has recently passed a law easing norms for sharing information of Swiss bank account holders with other countries. However, it does not cover stolen data.

Speaking at a function organized by Enforcement Directorate, Castelmur said, “We still have this position in our law that says that so-called stolen data cannot be used. I know India has not been stealing these data and they were given to Indian government by another European government but at the very beginning there was an act of robbery and obviously that is something that is disturbing.”

He said there has been stiff resistance in Swiss parliament on the issue of sharing of information on stolen data and though the matter was moving forward India would have to be patient. “Talking about taking time in India, you must be sympathetic to that because when I look sometimes to the speed, the pace of Indian judges and tribunals, I am sure you will give us another couple of months, even years,” he said.

Interestingly, tax authorities in India have already realized Rs 200 crore in taxes from account holders mentioned in the list and most accounts have been investigated.
GOV_Mukherfjee_Speech_1.5.14