Tag Archives: AML/CFT

Criminal Facilitators and Financial Intermediaries  

This is part three in a series on business practices of transnational organized crime and drug trafficking organizations.

An analysis of criminal cases (involving crimes such as fraud, terror finance, money laundering) indicates that facilitators and financial intermediaries were instrumental to the operation and sustainability of the transnational criminal organizationCriminal facilitators played a role in the sustainability of the supply chain and the financial intermediaries created legal structures that encouraged and enabled illicit activity.

Both the facilitators and financial intermediaries contributed to illicit business activities in a way that is akin to professional networking; they were relied upon to bridge knowledge gaps and make connections.

In almost all of the cases studied the most successful financial intermediaries operated separate from the criminal activity, in a manner akin to the way a corporate parent organization interacts with a subsidiary.  The criminal facilitator remained ambiguous and appeared to be quite adept at blending in where and when needed.   Both the facilitators and intermediaries gave instructions and set up policies and procedures in a way that is consistent with one who has had long term involvement in criminal activity.  The contributions of the criminal facilitator and financial intermediary were similar to what one might expect from a subject matter expert or consultant- one who has spent time studying and honing their expertise over a long period of time.

These findings, supported by prior work of Scott Decker and Michael Kenney, are disturbing because they continue to show a consistent level of commitment on the part of the criminal to refine and advance their criminal profession in order to sustain the criminal business enterprise.

In light of these realizations, what then can law enforcement and the private sector do?

I will explore innovative ideas and answers to this question in upcoming posts.

Please feel free to share your comments and suggestions below!


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The Business of Crime

The Business of Crime

This is part one in a series on business practices of transnational organized crime and drug trafficking organizations.

In order to better understand the business practices of transnational organized crime, it’s important to review several aspects of a successful legitimate business model that may translate over into the criminal underworld.

A winning legitimate business model, according to Casadesus-Mansanell and Ricart, consists of a set of managerial choices with regard to policies (how its run), assets (use of tangible resources such as cell phones) and governance (assignment of decision-making responsibilities) of the organization and the consequences of those choices.  A good business model creates a prosperous cycle that, over time, results in competitive advantage.

Consider the following attributes of successful business models and high performing companies during analysis of a criminal business:

  • Products and services are clearly differentiated from competitors.  This means that logos, colors, symbols, taglines separate the brand and distinguish its products from other market providers.  Gangs may use tagging to mark territory and drug traffickers may use a label or symbol to give production credit.
  • Replication of a product or service in a new geographic location.   Drug traffickers and counterfeiters frequently expand into new markets or offer a new product in an existing market.
  • The business model is aligned with company goals.  All the choices made should enable the company to reach its desired goal; for a drug trafficker this would mean products are sold and money is earned.
  • The business model is self-reinforcing.  Internal decisions made by leaders and executives must complement one another.  In the case of Rafael Cardenas Vela, accounting responsibilities were required at various levels of the drug trafficking organization to ensure accurate financial management; had Cardenas Vela demanded each distribution hub communicate with him in addition to the accountant, the model would have been in direct contradiction of itself.
  • The model must be robust and be able to withstand threats from imitators, delay, employee complacency and substitution.  This may be the most highly refined attribute of the transnational organized crime business model; they withstand pressure from law enforcement, outside competitors offering the same service, stay in business despite delivery and supply delays and employee complacency and can still function if a leader is removed or product is substituted based on availability.

Part two will examine the role supply chain analysis can play in a criminal business enterprise.  This type of analysis is a critical piece of a business plan, particularly for those enterprises that require products to be extracted or manufactured.   Evaluation of the supply chain is also a key component of a security assessment and risk management plan for those businesses that choose to operate in high risk regions or need to evade detection by law enforcement.

Casadesus-Masanell, Ramon and Joan E. Ricart.  How to Design a Winning Business Model, Harvard Business Review, January–February 2011.

Goodman, Marc.  What Business Can Learn From Organized Crime, Harvard Business Review, November 2011.



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A blog update


You may have noticed I have not written a blog post in a while and I apologize for not checking in sooner.  I took a break in order to devote time to several research projects related to money laundering and terror finance.

Here’s a brief list of some of the projects I’ve been working while I’ve been away:

  • The role of shell companies in money laundering networks
  • A money laundering and terror finance case study library
  • Assessment of the current state of collaboration and innovation within and across the criminal justice enterprise.

I also decided to update the core guiding principles and purpose of the Analysts Compass blog.

Innovation and research need to play a larger role in the way that we examine money laundering and terror finance and ask our analysts to think about these problems and others in both law enforcement and the private sector.   We need to collaborate more on ways to bring innovation and research to the forefront of these discussions.

As a result the updated core guiding principles are as follows:

  • Innovation: the action or process of innovating; a new method, idea or product; the act or process of introducing new ideas, devices or methods.
  • Collaboration: the action of working with someone to produce or create something.
  • Research: the systematic investigation into and study of materials and sources in order to establish facts and reach new conclusions.

And the purpose of the Analysts Compass blog is to challenge conventional wisdom on money laundering, terror finance and the role of the analyst in the law enforcement and security sector.

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