The Disruption of International Organised Crime

An Analysis of Legal and Non-Legal Strategies

Angela Veng Mei Leong

• Publisher: Routledge
• Year: 2016
• ISBN:
  9781317035497
• Edition: 1
• Topic: Derecho
• Subtopic: Jurisprudencia

Analyzing the structures of transnational organized crime, this book considers whether traditional mechanisms and national jurisdictions can tackle this increasing menace. Highlighting the strengths and weaknesses in the present methods of control, the book discusses the possibilities of developing more effective national and international strategies, the creation of non-legal mechanisms outside the traditional criminal justice system and the implications of 'disruption strategies'. The roles of law enforcement officers, tax investigators, financial intelligence officers, compliance officers, lawyers and accountants - in enforcing both civil and criminal sanctions on organized crime - are also considered.

Chapter 1

Introduction

Organised crime is no new phenomenon and various legislative acts and strategies have been developed in different countries trying to control and prevent organised crime. Yet, the threat and harm caused by organised crime seems to increase as a result of globalisation1 and technology innovation. In the United Kingdom, ‘broad estimates put the economic and social costs of serious organised crime, including the costs of combating it, at upwards of £20 billion a year.’2

The traditional criminal justice system has tried to interdict criminal organisations by pursuing the proceeds of drug trafficking and serious fraud through tracing and seizing of such funds. Nevertheless, the value of property and money confiscated has been very small compared to the amount of money deployed to training and investigations. Furthermore, organised criminals tend to launder money through offshore jurisdictions where there is the assurance of absolute confidentiality and the registration fee or cost of opening a deposit account is relatively low. They also seek to operate through different underground banking or ‘hawala’ systems. This can be very destructive to the formal banking and financial systems when ‘dirty’ money is laundered into ‘clean’ money and enters the conventional financial or banking institutions. Terrorists commit similar ordinary crime to acquire funds in order to secure their objectives and they too launder the money in a similar manner. As a result, organised crime and terrorist enterprises become virtually indistinguishable with wealth as the lifeblood of criminal syndicates and ‘a means to an end’ for the terrorists. However, a substantial proportion of terrorist financing comes from legitimate donations, contributions from supporters (such as religious charities or political groups) and legitimate businesses, thus making the task of distinguishing legitimate from illegitimate funding so difficult. In fact, anti-money laundering strategies should be collaborated with counter-terrorism measures.

Various legal and policy efforts, such as the International Convention for the Suppression of the Financing of Terrorism signed by 132 nations in 1999, the Uniting and Strengthening America by Providing Appropriate Tools Required to Intercept and Obstruct Terrorism (USA PATRIOT Act 2001), the Proceeds of Crime Act 2002 and the Serious Organised Crime and Police Act 2005, have been enacted to identify, freeze, seize and forfeit the funding of organised criminal and terrorist activities. However, there are practical difficulties in implementing the apparent international legislation due to the diversity in the legal definition of money laundering and terrorist financing across countries with different values systems, especially in regard to civil liberties. Besides, certain provisions of the international legislation might conflict with the national legislation which will tend to limit the scope for international cooperation. Furthermore, the increasing security measures, including enhanced due diligence and transactional verification, will boost the cost of dealing with the United States and other western countries. As a result, those developing and third world countries would not be able to reach the western banking and financial systems causing more transactions going underground which may adversely affects the global economy and will further destabilise the world economy.

Aims and Significance

This book provides a detailed and comparative study of the legal and administrative mechanisms in the control of organised crime, particularly focusing on the issue of criminal funding. Relevant legislation is discussed in the context of the broader institutional framework focusing on enforcement and policy issues. This book is an analysis of law and practice aimed at scholars, researchers, law enforcement community, compliance officers, regulators and policy makers who have a concern with organised crime, money laundering and terrorist financing.

The main objective of this book is to examine whether the deviant structures of organised crime, which are capable of operating transnationally, can be dealt with through traditional mechanisms that only work within national jurisdiction, and if so, how it might be possible to develop effective national and international strategies in dealing with this matter. This book highlights some of the strengths and weaknesses in the present methods of control. It reviews the social, political and economic characteristics of traditional organised crime and also illustrates the development of non-traditional disorganised criminal structures. The historical response of the law and the law enforcement in the control and interdiction of organised crime is discussed. The adequacies of the traditional criminal justice system in addressing the threat posed by organised crime are examined. Monitoring of fundraising for organised crime is of utmost importance and the vulnerability of financial and non-financial institutions being used as a channel for money laundering is analysed. The creation of legal and non-legal mechanisms outside the traditional criminal justice system as well as the implications of ‘disruption strategies’ is explored.3 The roles of law enforcement officers, tax investigators, financial intelligence officers, compliance officers, lawyers and accountants in enforcing both civil and criminal sanctions on organised crime are considered. This book also provides an understanding of the rationale behind the Serious Organised Crime Agency and its objectives which are necessary to appreciate how this new approach will impact on the law enforcement arena. There is a strong need for a wide understanding of the risks, the complex legal and institutional frameworks and the regulatory regimes in relation to serious organised crimes and money laundering. This book will further contribute our current understanding of the subject and suggest a paradigm for effective national strategies in the context of international concern in combating serious organised crime.

This book is derived from in-depth research and the methodology adopted is essentially that of a criminologist in constructing a policy analysis in the control of organised crime. A considerable amount of published materials has been written in the area of the subject discipline (that is, law, criminology, social and political studies, economics and international affairs) on some aspects of my area of research. However, little has been put in context with other disciplines and there is virtually no academic analysis of the institutional aspects in relation to the interdiction of organised crime. There is a substantial amount of unpublished materials, some of which are classified materials, that pertains to the subject area of my research and in particular the institutional aspects. Having worked as a researcher for the Treasury Select Committee of the House of Commons, an accredited financial investigator for the Assets Recovery Agency and a lawyer working on major asset tracing cases for the Government of the People’s Republic of China, I am able to draw from my experience and develop privileged perspectives on issues related to this book. Secondary sources, including archives, law enforcement agency publications, government policies, legislation and case laws, are critically analysed. Collection of material for this research ceased in February 2007 and any subsequent changes in legislation and case law have not been incorporated in this book.

Chapter Analysis

We need to know what it is that we are fighting against before any useful discussions or policy recommendations can be derived. Chapter 2 provides the traditional definitions of organised crime and explores the problem and confusion in defining this phenomenon. It also illustrates the development of non-traditional disorganised criminal structures. Different theories in explaining the origins, organisational structures and activities of organised crime are reviewed in this chapter.

Traditionally, organised crime and terrorism are treated as two completely separate phenomena. However, there is a growing awareness that the contemporary organised criminals and terrorists may not be that distinct, rather they are converging and becoming almost indistinguishable, especially in relation to the methods for securing their sources of funding and safeguarding the proceeds of criminal ventures. Chapter 3 explains the concepts of criminal finance, money laundering and terrorist financing. The money laundering process and the different channels used by money launderers are discussed. The vulnerability of financial institutions, offshore financial centres and other professionals being used by organised criminals and terrorist groups is analysed. The development of relevant legislation, regulatory regimes and professional bodies in combating money laundering and terrorist financing at both national and international levels is also reviewed.

The next two chapters focus on how the traditional criminal justice system in the United Kingdom addresses and tackles the subject of organised crime.4 Chapter 4 reviews the response of law enforcement agencies in dealing with the threat of organised crime. This chapter examines the growth and functions of traditional and non-traditional policing in addressing organised crime. While organised crime is treated as a problem of internal security, terrorism is always a matter of national security. Nevertheless, terrorism has become more of a law enforcement matter as the terrorists tend to shift to organised criminal activities for the necessary funding. Since organised crime has become more transnational, the concept of inter-agency and multi-agency approach for combating this problem is also considered in this chapter.

Chapter 5 analyses how traditional criminal law in the United Kingdom deals with the incrimination of organised crime. Depending on the scope of the problem, various anti-organised crime legislation and approaches have been established in different countries. Some legislation focuses on criminalising the act of the crime, while others criminalise the membership of certain groups. The experience of the United States and other countries in establishing and implementing anti-organised crime legislation is discussed. The history and development of money laundering, forfeiture and confiscation provisions in the United Kingdom are also examined.

In Chapter 6, the effectiveness of the traditional criminal justice system in addressing and combating the threat posed by organised crime is analysed. The attitude of law enforcement agencies towards the problem of organised crime has changed gradually. The structure of law enforcement has also altered to accomplish the different strategies and policies. Various task forces and national agencies against organised crime have been established in the last decade throughout the United Kingdom and cross-agency cooperation is the approach adopted today. The adequacy of the traditional criminal legal framework, including the investigation, prosecution and trial processes, is examined. In addition, considerable amounts of legislation, rules and regulations have been enacted in the United Kingdom to deal with money laundering and terrorist financing. It is clear that no single industry or government can win the war on organised crime alone, a cohesive approach in both the public and private sectors are vital. But how far should corporate responsibility extend in patrolling organised crime, or whether it is worthwhile to increase the burden of compliance on the finance industry are issues discussed in this chapter.

With globalisation and technology innovation, organised crime has evolved rapidly and accelerated to a more international level, which calls for more radical anti-organised crime mechanisms. It is essential to recognise that criminal law is not the only weapon in the war against organised crime. Chapter 7 provides the new perspectives outside the traditional criminal justice system in the interdiction of organised crime. The focus is on innovative proactive strategies and intelligence-led approach in disrupting organised criminal activities. The whole new arena of civil recovery and taxation proceedings is introduced in the United Kingdom under the Proceeds of Crime Act 2002. The Act consolidates, updates and reforms the money laundering provisions into one single legislation. It also widens the powers for police, customs and civilian officers in confiscation, civil recovery and money laundering investigations. Other measures (such as plea-bargaining, Queen’s evidence and witness protection programmes) are introduced under the Serious Organised Crime and Police Act 2005 to facilitate the cooperation of witnesses in organised crime trials. The importance of intelligence in disrupting organised criminal groups cannot be denied. The issues on how to fully utilise intelligence under the new regime and to what extent intelligence could be drawn into the evidential structure are explored. The legality of undercover operations and the concern of entrapment are also examined in this chapter.

The United Kingdom gives further effect to rights and freedoms guaranteed under the European Convention for the Protection of Human Rights and Fundamental Freedoms by enacting the Human Rights Act in 1998 and the Regulation of Investigatory Powers Act in 2000. However, the intrusive and disruptive nature of the new powers introduced under the Proceeds of Crime Act 2002 has raised concerns of breaches in human rights and civil liberties. The obligation of confidentiality and the duty of disclosure under the new financial services regulatory regime also attract concerns among professionals, banks and financial institutions. Chapter 8 considers the implications and consequences of ‘disruption strategies’ in law and the tensions that are thrown up through the increasing use of non-traditional mechanisms. The apprehension of the compatibility of the new provisions with the requirements of domestic and international human rights law is discussed. The efficacy of the new regimes under the Proceeds of Crime Act 2002 and the adequacy of the risk-based anti-money laundering strategy are also evaluated.

Chapter 9 reviews the lessons learnt from the asset recovery strategy under the Proceeds of Crime Act 2002 and examines the rationale behind the concept of the Serious Organised Crime Agency. This chapter includes some of the recent developments in the criminal justice system for tackling serious organised crime. It also highlights the policy implications for devising effective national strategies in the context of international concern in combating serious organised crime.

1 For the purpose of analysis in this book, globalisation refers to the increasing global connectivity, integration and interdependence in the financial, economic and technological spheres where there is the emergence of worldwide financial markets, increasing freedom of exchange of goods and capital as well as rapid advances of information technology and increasing information flows around the world.

2 Serious Organised Crime Agency, The United Kingdom Threat Assessment of Serious Organised Crime 2006/7 (SOCA London 2006 July).

3 Legal mechanisms are those mandated by the legislation and have legal authority whereas non-legal mechanisms are not mandatory by law.

4 For the purpose of analysis in this book, ‘traditional’ refers to the Pre-POCA era when the controlling of organised crime in the United Kingdom is mainly dealt with under the criminal law.

Chapter 2

Organised Crime: Definitional and Theoretical Analysis

We need to know what it is that we are fighting against before any useful discussion or appropriate instruments can be derived. This chapter analyses the definitions of organised crime and explores the problem and confusion in defining this phenomenon. The different definitions also yield different theories and analysis of the fundamental structure of the phenomenon, which results in varied policy recommendations for governments and international organisations. The question of how ‘organised’ is organised crime is considered and the development of non-traditional disorganised criminal structures is also discussed in this chapter.

Paradigms of Organised Crime

Al Capone, Meyer Lansky and Lucky Luciano are well-known organised crime figures in the United States and have been the subjects of books and films. Though the term ‘organised crime’ is frequently used, it remains controversial because of the definitional debates about the origins, organisations and activities of organised crime, which are often clouded by the Mafia mystique. Various models, such as Cressey’s Cosa Nostra Model,1 Albini’s Patron-Client Model,2 Smith’s Enterprise Model,3 Ianni’s Kinship Network Model,4 Chambliss’s Crime Network Model5 and Haller’s Partnership Model,6 are developed to understand the organised crime phenomenon. Different definitions are offered by politicians, law enforcement officials and scholars.

It is important to distinguish between the structures of activity and the structures of association.7 There are uncertainties between the offence and the offender in defining organised crime, wh...

Table of contents

• Cover Page
• Dedication
• Title Page
• Copyright Page
• Contents
• List of Cases
• List of Statutes and Statutory Instruments
• Foreword – Barry A.K. Rider
• Preface
• List of Abbreviations
• 1 Introduction
• 2 Organised Crime: Definitional and Theoretical Analysis
• 3 Criminal Finance: Money Laundering and Terrorist Financing
• 4 Traditional Law Enforcement Response to Organised Crime
• 5 Traditional Legal Response to Organised Crime
• 6 Controlling Organised Crime: The Traditional Criminal Justice System
• 7 Controlling Organised Crime: The New Perspectives
• 8 Legal Implications and Efficacy of ‘Disruption Strategies’
• 9 Conclusions and Policy Implications: The Way Forward
• Bibliography
• Index