Globalization and Organized Crime: Markets, Mobility, and Governance

Introduction: Globalization and Organized Crime

Globalization has caused many changes in society. Telecommunications technology such as the internet allows for large amounts of data to be transmitted across vast distances, making information more accessible and long-distance communication virtually instantaneous. Such developments have changed the way companies do business and the way society operates.

The benefits of globalization have not been lost on organized crime groups. These organizations seek any advantage they can find in their competition with other criminal groups as well as with law enforcement. Their flexibility as informal, underground organizations means they are well positioned to capitalize on economic developments.

Globalization has heightened and expanded the already large role that organized crime plays in the global economy. Organized crime organizations operate much like businesses, motivated by the same incentives. Just as legitimate multinational corporations have expanded global operations to capitalize on cheap labor, raw materials, and new markets, organized crime groups have also expanded their operations for these same reasons, among others.

Organized crime groups manage huge, profitable operations in human trafficking, migrant smuggling, heroin trafficking, cocaine trafficking, firearms trafficking, environmental resources trafficking, counterfeit goods trafficking, maritime piracy, and cybercrime (UNODC, 2010, p. vii). Globalization has helped to make these operations more efficient, more profitable, and more expansive.

The economic liberalization accompanying globalization has expanded the field of potential business opportunities for organized crime, opening up new markets, supply lines, and business opportunities. Additionally, advances in telecommunications technology have allowed criminal associations to coordinate operations from a number of different locations. Global governance mechanisms have not kept pace with these increasingly mobile organizations, and the worldwide organized crime problem will likely get worse before it gets better.

New Markets: Extortion, Fraud, and Human Trafficking

Globalization has provided a number of new locations for organized crime (OC) groups to set up familiar operations. It is usually the metropolitan-based groups that are the first to go overseas. In Japan, for example, it was not the largest Yakuza group that set up shop overseas first, but the Yakuza groups of Tokyo — the Inagawa-Kai in Hawaii and the Sumiyoshi-Kai in the Philippines (Kaplan, 2003, p. 98). OC groups from developed countries, such as the Yakuza of Japan, take advantage of their stronger currencies to buy a foothold in new markets.

Extortion and Fraud

Certain illicit activities, such as extortion, can be carried out in almost any location as long as there is a vulnerable victim. For the Japanese Yakuza committing extortion across various Asian countries, the victims were the multinational Japanese corporations that had set up outsourcing operations (Kaplan, 2003, p. 102). For Italian-American Mafia members engaged in construction fraud in Montreal, this element was provided by public construction funds (Cherry, 2011).

Human Trafficking

Globalization has exacerbated the problem of human trafficking by increasing the economic gap between developed and undeveloped countries. Due to increasing global inequalities and restrictive immigration policies in developed countries, many workers from developing countries are desperate to gain access to wealthier nations (UNODC, 2010, p. 4). Many hopefuls turn to criminal networks that offer to smuggle them into a country for a fee. These workers often exhaust their life savings and borrow money in order to pay for the "trip."

Firearms Trafficking

Firearms smuggling has benefited from access to many smaller, politically unstable states. This is immensely helpful to OC groups in Eastern Europe, where the fall of the Soviet Union left many countries with a huge surplus of military-grade firearms. Before globalization, these groups did not know of — or did not have access to — the insurgent and paramilitary groups that would be interested in buying those weapons. Now, Ukraine is shipping these firearms to states and groups in Africa, many of which are rogue states or under arms embargo (UNODC, 2010, pp. 8–9).

Money Laundering

One of the most common activities OC groups engage in is money laundering, exploiting the gap in financial monitoring between different nations. Money laundering is particularly prevalent in weak states with poor financial oversight. The lack of transparency and effective state monitoring in the banking systems of many Latin American and Caribbean nations left them especially vulnerable to penetration by Russian money launderers (Bagley, 2004, p. 35).

OC groups, with their considerable financial resources, also take advantage of investment opportunities overseas. Despite the large cash reserves they hold, these groups often encounter difficulties investing such funds in their own country of origin. They are able to invest this dirty money in the legal economies of foreign countries through dummy corporations.