Some organized crime activities attempt to devise a demand for protection, bribery or other illicit services, rather than merely exploiting an existing demand for illicit goods or services. In these situations, organized criminal groups seek to impose themselves on others through coercive methods.
The infiltration of legitimate business or government is more inherently predatory than the provision of illicit goods and services. When infiltrating businesses and governments, organized criminal groups often attempt to create a demand for their services, rather than simply exploit an existing market as they do when providing illicit goods and services. For example, organized criminal groups might run protection rackets, i.e. systems of illegal "taxation" imposed on persons or business in exchange for freedom from molestation, protection from damage or harm to its employees and customers. In this way, they use violence and threats to gain some form of monopolistic control (e.g., of territory, land, subsidies, garbage collection, or delivery services).
In legal terms, organized criminal groups can use coercion or extortion in the infiltration of legitimate business and governments, which involves implied or explicit threats to obtain a criminal objective. Coercion and extortion are not necessary to provide illicit goods or services although, as discussed in Module 1, there are exceptions such as human trafficking. This is because the demand for illicit goods and services already exists among the public, so no threats are required to attract customers to buy counterfeit products, illegal firearms or other products and services described in Module 3.
Such practices should not be confused with most forms of corruption, where both the briber and recipient of the bribe gain some form of benefit. In the case of infiltration of business and government, victims (often small to medium-sized companies, sole proprietors, or family businesses) do not receive a benefit, but are coerced to pay in order to avoid worse treatment. That is to say, the failure to pay will result in property damage, violence to employees or their loved ones, harassment of customers, interruption in deliveries, or related problems that businesses cannot afford to experience (Transcrime, 2012).
To “legitimize” the ill-gotten gains of these criminal activities, organized criminal groups disguise their illegal origin and often reinvest them in the legal economy through money-laundering, a process of critical importance as it enables the criminals to enjoy the profits of criminal activities without jeopardizing their source. If left unchecked, money-laundering can have very high social and political costs, since it allows organised criminal groups to infiltrate financial institutions, acquire control of large sectors of the economy through investment, or offer bribes to public officials (FATF, 2020).
Transnational Organized Crime and the Impact on the Private Sector: The Hidden Battalions
(Cartwright and Bones, 2017)
In the report Transnational Organized Crime and the Impact on the Private Sector: The Hidden Battalions, the authors analysed the ways in which six private sector industries (financial services, technology, consumer goods and retail, construction and real estate, transport and logistics, and natural resources) are affected by organized crime. There have been few attempts to study this phenomenon within the private sector. Their findings revealed six types of organized crime activities as either materially affecting these private sector industries or using the industries to facilitate their crimes. The six prominent forms of organized crime identified are:
The analysis resulted in five key findings:
According to the authors, these issues require international attention and action because the impact of these criminal activities extend far beyond private sector financial losses and in fact "present fundamental barriers to sustainable development as defined by the UN Sustainable Development Goals".
The sub-pages of this section provide a descriptive overview of the key issues that lecturers might want to cover with their students when teaching on this topic.