Global Financial Integrity

Central American Ports: Security Vulnerabilities Threaten Trade

BY NELSON LEONOR Central American ports have long been vulnerable to organized crime and narcotics trafficking, and despite billions of dollars spent attempting to combat the drug trade, a number of recent cases from Guatemala and Honduras...

Cryptocurrency and the Rise of New Illicit Financial Flows

By Ben Iorio With the rise of Bitcoin and cryptocurrency, the norms for currency have changed. Cryptocurrencies allow transactions to take place with a currency not regulated by any country. In essence, cryptocurrencies are currencies existing completely...

Anonymous Companies and Transnational Crime

Transnational crimes generate US$1.6 trillion to US$2.2 trillion annually In 2017, Global Financial Integrity (GFI) did a study on transnational crime and found that the combined annual value of 11 different transnational criminal markets was between US$1.6...

The Serious Impacts of Fisheries Crime

Read Channing Mavrellis’ remarks from the Impacts Panel at the 4th Annual FishCRIME Convention, held in Copenhagen on October 15 and 16, 2018. Channing discusses the impacts of three major crimes that fall under the fisheries crime umbrella, and the need to treat illegal fishing as a serious transnational organized crime.

The Illegal Wildlife Trade: Sample Retail Market Prices

In the illegal wildlife trade, like all transnational crime, the majority of participants are involved for financial gain. Retailers generally face little enforcement risk while realizing strong profits, as the value of a particular commodity, be it a wild African grey parrot or grams of bear bile, increases dramatically as it makes its way from source to market country.

The Business of Transnational Crime

The groups engaged in transnational organized crime—from criminal networks to insurgent groups to terrorist organizations—are united by a common thread: money. All of the crimes covered in Global Financial Integrity’s new report Transnational Crime and the Developing World are overwhelmingly profit-motivated. Globally, transnational crime has an average annual retail value of $1.6 billion to $2.2 billion, based on 11 “industries”: counterfeiting and piracy, drug trafficking, illegal logging, human trafficking, illegal mining, illegal fishing, the illegal wildlife trade, crude oil theft, the trafficking of small arms and light weapons, the illegal organ trade, and the trafficking of cultural property.

Good as Gold? South Africa’s Problem with Illegal Gold Mining Is Severe and Growing

Whether South Africa’s Illegal Gold Mining Problem Is Measured in Revenue, Security Risks, or Human Lives—in the End, Everyone Loses

South Africa is the world’s fifth largest producer of gold, with the gold mining sector representing approximately two percent of South Africa’s GDP. Yet the country’s mineral wealth has proved to be a growing source of illegal activity and conflict.

There are approximately 14,000 illegal gold miners in South Africa, many of whom are illegal immigrants from Lesotho, Mozambique, and Zimbabwe. Illegal gold miners are known locally as “zama zamas,” which is variously translated as “We are trying” or “He who seizes the opportunity” or “Take a chance.” They operate in the estimated 4,000 to 6,000 abandoned mines in the Witwatersrand basin, but will also bribe security guards, policemen, or mine employees to gain access to active mines and/or to steal equipment. Credible estimates of the value of the illegal gold mining industry vary widely, ranging from US$500 million to US$2 billion annually.

Not included in these figures is the tax fraud involved in these activities. According to Naomi Fowler, criminal syndicates exploit the fact that value added tax (VAT) is not charged on mined gold whereas it is on processed gold. These syndicates then use techniques like trade misinvoicing to fraudulently certify illegally mined gold as legitimate second-hand scrap gold, which enables them to claim back VAT that they never paid.

Checking up on the Banks: Yet More of the Same

Until Global Financial Crime Punishments include Individual Prosecutions, Rogue Banks Will Continue to Do as They Please, Writes GFI’s Joshua Simmons

After the recent spate of massive money-laundering, sanctions-busting, and tax-evasion scandals involving large international banks, sometimes it seems more difficult to name a single bank that has not been exposed for wrongdoing than list all those that have. One might think that, having worked their way through so many financial institutions, investigators and prosecutors would be at a loss for what to do next. The banks, though, seem more than willing to provide more work, with many either failing to meet their ends of their settlement agreements, continuing to move money for criminals and tax-evaders, or both.

Standard Chartered, which settled charges in mid-2012 related to its widespread activities violating U.S. sanctions on Iran, Burma, Libya, and Sudan, paid an additional fine this summer for failing to uphold its obligations under the settlement. The bank may now be in line for even more punishment, after new information seems to indicate additional transactions with Iranian entities that weren’t disclosed or admitted in the original settlement. It’s not presently clear whether Standard Chartered retained a relationship with Iranian customers after its settlement in 2012, but it certainly continued to take their money after the initial investigation began.