Licit economy at grave risk of infiltration across the world
Crisis increases likelihood of struggling companies falling under control of organized crime
The COVID-19 pandemic has swept across the world, killing hundreds of thousands of people, and testing public healthcare systems to a breaking point. Many areas of economic activity have either been shut down by governments to halt the spread of the virus or have seen demand collapse. In many countries where organized criminal groups are prevalent, struggling private businesses – many unable to access enough public funds to keep them afloat – are more likely to seek out loans on the illicit market than they would be at other times.
Businesses in the transport, hospitality, arts, retail, and beauty sectors are particularly vulnerable to infiltration by organized criminal groups (OCGs). As these businesses begin to reopen, some will find themselves either in the debt of OCGs, or directly controlled by them. The OCGs can seize control either through exchange of money for buying shares or by directly taking over operations. This generates more opportunities for criminal activity, including money laundering and trafficking activities, enabling OCGs to further expand their control and power over the licit economy.
High demand coupled with low supply in key sectors opens way for OCGs
The pandemic has brought dramatic spikes in demand to some sectors, for example medical devices, pharmaceutical products, e-commerce, food retail, cleaning, and funeral services. The demand for sanitary masks, breathing devices, and medicines has also risen notably. As governments seek to shore up their defences against the pandemic, procurement procedures in some countries have been relaxed.
There is already evidence from countries around the world that organized crime has moved into these sectors – especially where traditional means of making illicit profits, such as illicit drugs and firearms trafficking and smuggling of migrants are being tightly constricted by restrictions on movement. For example, falsified medical masks have been seized in Spain and Italy, attempts to smuggle vital equipment have been stopped in Ukraine, Iran, and Azerbaijan; one Mexican cartel has been promoting the production of falsified COVID-19 medical products and forcing pharmacies to sell them.
An international operation coordinated by INTERPOL recently led to the seizure of more than four million potentially dangerous pharmaceuticals worth more than USD 14 million and interrupted the activities of 37 OCGs. More than 34,000 unlicensed or fake products were being sold across some 2,000 websites. They included falsified masks, substandard hand sanitizers, “corona spray,” “coronavirus packages,” and unauthorized antivirals.
Depending on the evolution of the pandemic, the market for prevention products – vaccines in particular – could be the next area to face high demand and low supply, making it vulnerable to organized crime.
Flows of public money will be at risk
Governments around the world are investing large sums of money to shore up their economies and make sure the most vulnerable people are cared for. Although it is too soon to have robust evidence on the appropriation of public funds by organized criminal groups, information from previous crises suggests that these groups will target such funds. Aid destined for distressed companies, medical and pharmaceutical goods, public works such as improvements to hospitals, and waste disposal services will be particularly at risk. Similar processes were seen after tropical cyclone disasters in Latin America, an earthquake in Italy, and the 2011 tsunami in Japan. In each case, organized criminal groups benefitted from public procurement processes.
Organized criminal groups push further into communities during the pandemic
Criminals use propaganda and aid distribution to tighten grip on territory
The pandemic has exposed weaknesses in governing structures on several levels – not least in providing the emergency aid desperately needed in the poorest communities. Across the world, criminal groups have stepped in to deliver aid packages and other necessities to those most in need, which has allowed them to exert further control over the territories where they operate.
In Italy, mafia affiliates used fake charities to deliver packages to the needy. Mexican cartels supplied bundles containing food and sanitizers to the states and cities under their influence. Yakuza groups in Japan handed out free masks, toilet paper, and tissues to pharmacies and kindergartens. The Taliban posted health teams to remote areas of Afghanistan to help tackle the virus and militant group Hayat Tahrir al-Sham distributed health information to the public in the Syrian province of Idlib. In South Africa, there are reports that gangs in Cape Town called a temporary truce to hand out food parcels.
In carrying out these activities, many of these groups staged publicity stunts to make sure the communities – and the wider population – knew who was supplying the aid. One of the Mexican cartels posted videos of armed individuals handing out bags of groceries from the back of a pickup truck, and other cartels stamped their logos on the packages they delivered. Yakuza groups made grand offers of help, making them appear powerful and benign even when they ultimately did not deliver the aid.
As well as solidifying the position and status of organized criminal groups in the community, these activities serve to highlight the failures of governments and diminish the legitimacy of official agencies. As a result, organized criminal groups are likely to find it easier to continue their activities in the future in those territories and to expand their ranks with new recruits.
Enforcing lockdowns helps bolster credentials of criminal groups
As the virus spread and governments ordered increasingly strict controls on their populations, officials in many countries began to struggle with the sheer extent of the task of enforcing the measures. OCGs saw another opportunity to boost their standing in communities, stepping in to enforce lockdowns and curfews.
In Afghanistan, the Taliban enforced quarantine measures on those arriving from Iran. Gangs throughout Latin America imposed curfews on the population. Former rebel fighters in Colombia and Hayat Tahrir al-Sham in Syria helped to restrict public gatherings and enforce lockdowns.
Brazilian OCGs and militias operating in the favelas became deeply involved in the process, imposing price controls on in-demand products such as disinfectants and masks. This saw the criminal groups move firmly into traditional areas of government regulation, with the aim of making profit while burnishing their reputation at the expense of politicians and officials.
Pandemic and lockdowns disrupt traditional activities of OCGs
Criminal groups forced to innovate to protect their income
Just as the pandemic has disrupted the licit economy, decimating some industries and mothballing others, it has also constrained many of the illicit activities of OCGs. Lockdowns and border restrictions have hampered their ability to organize prostitution, infiltrate security forces, and traffic drugs, humans, and firearms. The evidence suggests that reconstructing these sectors will take some time.
Some of the more stable and structured OCGs have used the crisis to strengthen their control of illegal markets and territories. However, many OCGs consist of loose networks of criminals – they are dynamic, small-scale and engage in opportunistic crimes. Some of these smaller groups have used the crisis to supply markets with illicit services and products that are in high demand during the pandemic, such as substandard and falsified face masks, disinfectant and medicines associated with COVID-19, such as chloroquine.
The present crisis has also created an opportunity for criminals to engage in cybercrime. During the pandemic, there has been an increase in phishing, credit card fraud, pirated websites asking for fake donations, and cyber-attacks. There have also been multiple reports of fake and cloned websites as well as sham email addresses being used to perpetrate online scams
The COVID-19 crisis has also forced OCGs to innovate as regards their traditional areas of operation. In the Balkans, some evidence suggests traffickers are changing the types of drugs they smuggle and using young children to deliver the merchandise. Gangs smuggling heroin from Afghanistan to markets in Western Europe are reportedly diversifying their routes to avoid strict controls on movement.
