Layered pandemics: Transnational organized crime rages in the time of COVID

On July 2, the European Union referred Austria, Belgium and the Netherlands to the EU Court of Justice for failing to comply with its money-laundering regulations. The action is a stark reminder that while governments are rightly focused on the COVID-19 pandemic, other pandemics continue to rage on as well. Money-laundering, corruption, illicit trade and transnational organized crime are pandemics.

Let’s be clear: Money-laundering is nothing less than criminals hiding wealth stolen via the  metastasizing plagues of corruption and transnational organized crime. And no vaccine for these pandemics is in sight. Transnational organized crime is one of the few sectors of the global economy that is flourishing during the COVID-19 virus pandemic, as we have seen based on the recent seizures by the Department of Homeland Security, INTERPOL, and EUROPOL. While farmers, manufacturers and the hospitality, entertainment and travel industries struggle to survive, the smugglers, counterfeiters, traders in contraband and others accustomed to operating in invisible, illicit markets have an advantage: They know how to flourish outside the laws and supply chain constraints of legal markets. 

Transnational organized crime groups have a genius for monetizing misery, and they doubtless will find myriad ways to profit from the coronavirus pandemic.

Transnational organized crime is a pandemic in its own right. Having been estimated to handle up to 5 percent of global products as long ago as 1998, it is unimaginable that the markets for illegal drugs, bunkered oil and other contraband have shrunk in the years since. Trafficking in drugs, humans and weapons earns criminals trillions of dollars each year. Moreover, the explosive growth of counterfeit trade — in pharmaceuticals, luxury products, car parts and stolen brands of every kind — endangers consumers and cheats legitimate businesses on a massive scale. 

Such dirty money cheats the public in another, indirect way: It is untaxed and thus does not contribute to the mitigation of evils, such as viral pandemics, or to the provision of public goods, such as research and development of vaccines.

The development and production of a COVID-19 vaccine, along with the pent up demand for it, will create rich opportunities for transnational organized crime. A world desperate to buy the vaccine will be easy prey for counterfeiters, who already play a despicable role in the global pharmaceutical trade. Smugglers will get rich transporting this product and other fakes such as personal protection equipment (PPE), medicines and therapeutics, hand-sanitizers and disinfectants across international borders. Just like fake Viagra and other high-demand drugs, mimicked versions of the future COVID-19 vaccine and medical supplies and equipment will be produced, bought and sold in illicit markets with supply chains stretching from China to the United States and everywhere in between.

Law enforcement and health professionals worldwide are stretched to the limit trying to maintain social order during the pandemic and unrelated social movements. They may be unable to keep up with the morbid flood of added responsibilities resulting from COVID-19 crimes. When they are diverted from routine responsibilities, it opens space for organized crime to exploit. Border and customs officials are burdened with unprecedented requirements to enforce complicated, and sometimes conflicting, requirements on the movement of people between and within countries.

Preoccupied by the global war on terrorism the past 20 years, and now by a pandemic, many world leaders have failed to counter the older, more permanent pandemics of transnational crime and corruption. In the absence of government, the non-governmental sector has stepped up to the challenge. The Global Initiative Against Transnational Organized Crime, a Geneva-based NGO founded in 2015, boasts a network of 500 experts worldwide who are engaged in the fight against transnational organized crime. The initiative has published reports on the exploitation of the world’s misery, including the COVID-19 pandemic, by organized crime. 

Non-governmental initiatives such as this are a start. However, the best efforts of NGOs cannot defeat this pandemic without the commitment, resolve and resources available only to states. Absent a dynamic and robust partnership between governments and private-sector initiatives, this transnational organized crime pandemic will continue to flourish and incubate a pandemic of pandemics. 

Governments must recognize and accept this challenge, and meet it head on. That means acknowledging that they’ve protected loopholes and the anonymous shell companies that allow criminals to hide ill-gotten riches, and have failed to hold criminally accountable the enablers — the lawyers, accountants and bankers who support transnational organized crime. 

Michael Miklaucic is a senior fellow at the Institute for National Strategic Studies at National Defense University. He also is the editor of PRISM, the journal of Complex Operations. The views expressed here are his alone.