Report Puts Transnational Crime at $2.2tn per Annum

Puts crude oil theft at between $5.2bn and $11.9bn

Globally, the business of transnational crime is valued at an average of $1.6 trillion to $2.2 trillion annually, according to a new report released by Global Financial Integrity (GFI), a Washington DC-based research and advisory organisation.

Titled: ‘Transnational Crime and the Developing World,’ the study highlights that the combination of high profits and low risks for perpetrators of transnational crime and the support of a global shadow financial system perpetuate and drive these abuses.

“The international community has paid too little attention to combating the money in transnational crime, instead preferring to focus on the materials or the manifestations of the crimes,” the report noted.

The study evaluates the overall size of criminal markets in 11 categories: the trafficking of drugs, arms, humans, human organs, and cultural property; counterfeiting, illegal wildlife crime, illegal fishing, illegal logging, illegal mining, and crude oil theft.

The study estimates that counterfeiting is the most valuable transnational crime valued at $923 billion to $1.13 trillion on average per year, followed by drug trafficking at $426 billion to $652 billion.

Also on the scale are illegal logging (between $52 billion to $157 billion), human trafficking ($150.2 billion), illegal mining ($12 billion to $48 billion), and illegal fishing ($15.5 billion to $36.4 billion).

Others are illegal wildlife trade ($5 billion to $23 billion), crude oil theft ($5.2 billion to $11.9 billion), small arms & light weapons trafficking ($1.7 billion to $3.5 billion), and organ trafficking ($840 million to $1.7 billion).

The ranges demonstrate the serious magnitude of and threat posed by global transnational crime.

“Transnational crime is a business, and business is very good,” said Ms. Canning May who authored the report, adding that “money is the primary motivation for these illegal activities.

Linking this array of illegal goods are consistent trends in the organised networks involved in the crimes, the role of the global shadow financial system, and the negative consequences for governments, economies, and societies in developing countries. According to the report, very rarely do the revenues from transnational crime have any long-term benefit to citizens, communities, or economies of developing countries,

Instead, the crimes undermine local and national economies, destroy the environment, and jeopardize the health and wellbeing of the public.”

“The systemic nature of transnational crime calls for a broad approach to combating it,” stated GFI Programme Manager, Christine Clough, who contributed to the report.

He added: “Greater financial transparency has the potential to simultaneously curtail every transnational crime in every part of the world. The networks involved in these illicit markets are akin to major global corporations: they need access to finance and banking to be profitable to continue operating.

“They depend on the secrecy and anonymity of the global shadow financial system to launder their money and run their global enterprises successfully.”

The report recommended several steps governments and other regulatory bodies can take to increase the levels of detection and interdiction of the proceeds of transnational crime.

Among the recommendations is that corporations registering and doing business within a country declare the name(s) of the entity’s true, ultimate beneficial owner(s), flag financial and trade transactions involving individuals and corporations in “secrecy jurisdictions” as high-risk and require extra documentation.

It also recommended that import and export invoices should be scrutinised for signs of misinvoicing, which may indicate technical and/or physical smuggling.

Also recommended is the usage of world market price databases such asGFTradeTM to estimate the risk of misinvoicing for the declared values and investigate suspicious transactions.

The report equally called for the sharing of more information between agencies and departments on the illicit markets and actors that exist within a country’s borders.

The Global Financial Integrity has been in the vanguard of exposing international crimes.

Its recent reports on financial crimes remain instructive.

GFI estimated that in 2013, US$1.1 trillion left developing countries in illicit financial outflows. This estimate is regarded as highly conservative, as it does not pick up movements of bulk cash, the mispricing of services, or many types of money laundering.

The GFI also reported that a total of $530 billion was estimated to have been siphoned from the African region by multinationals bent on engaging in illicit flow of funds, including tax.