Transnational Crime and the Developing World

1 1 Transnational Crime 1 Transnational Crime and the Developing WorldDev Kar and Joseph SpanjersJune 2016 Channing MayMarch 2017 Global Financial IntegrityTransnational Crime and the Developing WorldChanning MayMarch 2017 Copyright 2017 by Global Financial Integrity . Some rights report is published under a Creative Commons Attribution license (CC BY).For more information on the license, visit: Financial Integrity and the Global Financial Integrity Logo are registered trademarks of Global Financial Financial Integrityiii Transnational Crime and the Developing WorldGlobal Financial Integrity is pleased to present here its analysis of Transnational Crime and the Developing World .

2 This follows a similarly named report we produced in 2011, which received considerable attention around the World . Unfortunately, Transnational Crime in multiple categories continues to grow in every international community has been aggressively combatting drug trafficking for more than 40 years, yet supplies of drugs are undiminished and prices have not risen. Often utilizing the same channels, human trafficking for forced labor and sexual exploitation has exploded. Counterfeiting and pirating of pharmaceuticals, consumables, luxury goods, and intellectual property is the biggest single Transnational criminal activity, likely exceeding US$1 trillion in retail value. Illegal logging, mining, fishing, wildlife trade, oil theft, and trafficking in cultural property withdraw hundreds of billions of dollars of resources from Developing countries.

3 The illegal organ trade preys upon the poor, while arms trafficking protects the criminals. The global community is failing in efforts to curtail Transnational Crime . Why? Largely because law enforcement is focused on the materials and manifestations of the crimes rather than on the money the crimes generate. Take just one aspect of the Transnational crimes analyzed in the following pages drug trafficking as an example. The United Nations Office of Drugs and Crime estimates that globally 40 percent of cocaine and heroin are interdicted somewhere between production and consumption, but less than one percent of drug money is ever recovered. The United States Drug Enforcement Administration and similar organizations across the globe concentrate heavily on seizing drug products and expend far fewer resources on tracking and blocking drug money.

4 The truth is, drug traffickers can afford to lose not just 40 percent but 60 or 80 percent or even more of their product if they can keep more than 99 percent of the revenues. The fight against Transnational Crime needs to be redirected to combatting the money the crimes generate. This means shutting down the global shadow financial system that facilitates the moving and secreting of illicitly generated funds. The good news is, none of this is technically difficult. It is a matter of political will. Our great appreciation is extended to Channing May and Christine Clough for this thoughtful and comprehensive analysis of Transnational Crime , one of the most serious issues we must address in the 21st BakerPresidentGlobal Financial IntegrityMarch 27, 2017ivGlobal Financial Integrityv Transnational Crime and the Developing ixExecutive xiI.

5 1II. Drug 3 III. Trafficking of small arms and light 13IV. Human 21V. Illegal Organ 29VI. The Illicit Trade in Cultural 35 VII. Counterfeiting and 43 VIII. Illegal Wildlife 53IX. Illegal, Unreported, Unregulated 61X. Illegal 69XI. Illegal 75 XII. Crude Oil 83 XIII. Policy 93 XIV. 99 Appendix: 147viGlobal Financial IntegrityTables and Figures in the Report Table X1. The Retail Value of Transnational xi Table A. Inflation Adjusted Value of Global Drug Market, 2014 (US$).. 3 Table B. Price vs. Distance: Colombian Cocaine (US$, street wholesale).. 5 Box 1. Brief History of Drug Trafficking in 10 Table C.

6 Composition of Illicit arms 13 Table D. The Average of an AK-47 Around the World (US$).. 14 Table E. Price vs. Distance: The Weapon s 15 Table F. Seizure by Location, 17 Figure I. Estimated Annual Profits from Human Trafficking by Region (US$ billion).. 21 Figure II. Profits and 22 Table G. Human Smuggling vs. Human 23 Table H. Regional Trends in Laundering the Proceeds of Human 25 Table I. Retail Prices of Organs (US$).. 29 Table J. Kidney Transplants: Vendors vs. 30 Table K. Prices Paid to Kidney Vendors Around the 30 Table L. Participants in the Illegal Organ 31 Table M. Notable Art 36 Figure III. Trade-Based Money Laundering 40 Table N. Trade in Counterfeit and Pirated Goods, 2013 (US$).

7 43 Table O. Trade in Digitally Pirated Goods, 2015 (US$).. 43 Table P. Top Counterfeited Items and 46 Box 2. Pharmaceutical 47 Figure IV. Terrorist Financing and 49 Table Q. Sample Retail Market Prices (US).. 54 Table R. Poacher vs. Consumer Prices (US$).. 55 Table S. Illegal Wildlife 55 Box 3. Superstition vs. Reality: The Case of Ivory and Rhino 56 Table T. What is IUU Fishing?.. 61 Table U. Flags of 64 Figure V. Trade Misinvoicing to Launder Illegally-Caught 65 Table V. Value Chain for Peruvian Mahogany, per cubic meter (US$).. 69 Table W. Value Chain for West African Rosewood, per 10-ton container (US$).. 70 Figure VI. Division of Value: US$140/m3 of Russian 70 Figure VII.

8 Mining 75 Table Y. Annual Value of Illegal Gold Mining in Latin America (US$ millions).. 76 Figure VIII. Illegal Mining, Trade Misinvoicing, and Tax 81 Table Z. Crude Oil Theft Volume and Value (US$).. 83 Box 4. Oil and 86 Figure IX. Pipelines and Drug Trafficking Organization Territory, 87 Figure X. Cocaine and 88 Table AA. The Retail Value of Transnational 99 Appendix Table A. Global Drug Market Values by Rate of Inflation (US$).. 101 Appendix Table B. Global Drug Market Value by Percent of GDP (current US$).. 102 Appendix Table C. Global Drug Submarket Values by GDP Growth (US$).. 102 Appendix Table D. The Average Cost of an AK-47 Around the World (US$).

9 103 vii Transnational Crime and the Developing World Appendix Table E. Estimated Value of the Illegal Organ 104 Appendix Table F. Prices Paid to Kidney Vendors Around the 104 Appendix Table G. Price Range of Liver Transplants (US$).. 105 Appendix Table H. Price Range of Heart Transplants (US$).. 106 Appendix Table I. Price Range of Lung Transplants (US$).. 107 Appendix Table J. Price Range of Pancreas Transplants (US$).. 107 Appendix Table K. Kidney Transplants: Vendors vs. Recipients (US$).. 108 Appendix Table L.

10 Prices Paid to Kidney Vendors Around the 108 Appendix Table M. Notable Art 110 Appendix Table N. Global Illegal Wildlife Trade Values (US$).. 111 Appendix Table O. Sample Retail Market Prices (US$).. 112 Appendix Table P. Source vs. Market Country Prices (US$).. 113 Appendix Table Q. Summary of Regional Estimates of Illegal Fishing, Averaged Over 2000- 114 Appendix Table R. Estimated Illegal Catch Volume, 115viiiGlobal Financial Integrity Transnational Crime and the Developing WorldixGlossaryACTAnti-Counterfeiting ToolAMLAnti-money launderingATSA mphetamine-type criminals (criminal gangs)BPDB arrels per dayCARC entral African RepublicCFTC ombatting the financing of terrorismCISC ommonwealth of Independent StatesCITESC onvention on International Trade in Endangered Species of Wild Fauna and FloraDTODrug trafficking organizationEEZE xclusive economic zoneELNEj rcito de Liberaci n Nacional (National Liberation Army)ETAE uskadi Ta Askatasuna (Basque Country and Freedom)