Tag Archives: Research

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!


Tagged , , , ,

The Criminal Supply Chain


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

A critical component of the criminal business model is the supply chain and the swift and certain movement of goods from one point to another.  Analysts tasked with understanding crime perpetrated by illicit business networks like drug trafficking, bulk cash and weapons smuggling should use the Supply Chain Analysis (SCA) framework to gain insight into the operations.

The SCA framework asks analysts to set aside the illegality aspect of the transnational criminal organization in order to focus on business sustainability issues.  For example, how can the bulk cash smuggler shift transport routes to evade detection by competitors and law enforcement? Or how might a manufacturer amend a production schedule due to unforeseen circumstances?

Analysts should apply the following framework to these types of scenarios in order to better understand the individual components of the business supply chain and the supply chain in its entirety.  Once an analyst is fully immersed in the business side of the operations they will be better equipped to provide high level anticipatory and estimative analytic products rather than those that are simply descriptive.

The Supply Chain Framework:

Source: Identify the factual circumstances involved in the extraction and handling of the product or natural resource.

  • Is the point of extraction of production located in a high risk area?
  • If so, who retains control of the area in which production and/or extraction occurs?
  • Are contractors involved?

Logistics: Identify the factual circumstances involved in the transport, handling, trading, processing, refining and manufacturing of the natural resource or product.

  • How is the product or resource transported from point of origin to the next stage in the supply chain?
  • Are the products or resources packaged and shipped?
  • If so, by whom?

Operations: Identify the individuals, contractors and entities with a vested interest in the production of the product/natural resources.

  • Are the production and manufacturing practices transparent?

Distribution Logistics: Identify the individuals, contractors and entities with a vested interest in the successful distribution of the product.

  • How are the finished products transported from the manufacturer to consumers?
  • Who is responsible for transport?
  • Where are the critical distribution hubs?

Part three will provide an overview of the role of criminal facilitators and financial intermediaries within the illicit supply chain. Research indicates that both facilitators and financial intermediaries are instrumental to the operation and sustainability of the transnational criminal organization.


The Economics of Drug Trafficking by the Organization of American States

OECD Due Diligence Guidance for Responsible Supply Chains of Minerals from Conflict-Affected or High-Risk Areas

Simulating the Afghanistan-Pakistan Opium Supply Chain


Tagged , , ,

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.



Tagged , , , ,
%d bloggers like this: