By PATRICK STEPHENSON
BRUSSELS – Earlier this month, Europol released its Serious and Organised Crime Threat Assessment (SOCTA) for 2017. Its conclusions were stark. Technological expertise — particularly in the cyber-domain — is helping organised criminals do more, and do it better.
According to the SOCTA, their profits now rival those of multinational corporations. European authorities are investigating some 5000 groups, with an untold number of these operating undetected.
In addition, organised crime groups have built impressive synergies between their operations and other illegal activities, says Europol. Ominously, it means these groups can ‘plug in’ their services to the needs of violent extremists, for example.
In the wake of the report’s release, security professionals gathered at the British Chamber of Commerce on 22 March to discuss the report and related issues.
“The European Conference on Fighting Organised Crime and Terrorism” convened officials from EU institutions, national authorities, academics and private sector practitioners. One take-away: companies – rather than EU nation-state police and militaries – sometimes see themselves as the main target of an alliance of convenience between violent extremists and organised criminals.
Manuel Navarette, head of Europol’s Counter-Terrorism Centre, opened the event. “The involvement of organised crime in online trading is a fact,” he said, noting that the emergence of the ‘dark net’ now allows for the trade of counterfeit and misdirected goods in unprecedented amounts, including in identity documents.
Once having purchased and finished using their fake IDs, migrants return them to the criminals they purchased them from. The criminals move the IDs back down the supply chain to be re-used by new migrants on different routes. Organised crime even helps terrorist groups develop audio-visual propaganda ‘packages’ that they release with every successful attack.
Later, Vincent Sauvalère, head of unit for tobacco and counterfeit goods at the European Anti-Fraud Office (DG OLAF), explained how widely criminals are casting their counterfeiting net. Seized items include car spare parts, coffee, ball bearings, medicines, semiconductors, perfumes, shampoo, and even Legos. In one case, a million bottles of shampoo were seized.
The private sector offered a powerful perspective when Sven Bergmann, Managing Partner at Venture Global Consulting, took the floor. He described a market environment in which crime groups suck up both fake and legitimately produced industry products and use them to make millions. “Some of that money is then being diverted to organisations that we don’t want to have a million dollars,” he said, speaking of extremist groups.
For private companies, the threat environment means adopting three costly measures. First, higher levels of corporate security mean protecting one’s facilities and employees so they aren’t attacked. Second, cyber security entails protecting one’s networks.
As example, Bergmann noted that a favourite criminal tactic is to break into a corporation’s network to steal its importer IDs, allowing illicit shipping containers to impersonate a corporation like Proctor and Gamble at the border port. The third is supply chain security, or making sure that criminals don’t divert products for illegal sale. The pharmaceutical industry is particularly vulnerable, where protecting its facilities is difficult and expensive.
Bergmann said that while some profess to be happy when their products are counterfeited because it increases their brand exposure, the reality is that product counterfeiting and diversion always devalue the brand. To produce legally, companies are obliged to spend billions establishing legal supply chains with good trading partners. But a parallel universe of illicit trade undermines a brand’s value. For example, in Brazil, P&G faces an epidemic of criminals hawking counterfeit laundry detergents bearing its name. “Think of how much value P&D invested to build up that washing detergent, and now it’s gone,” he said.
One pernicious consequence of criminal activity is a higher regulatory burden that companies must pay for. “When the quick-fix is sought, additional regulations are added on, creating larger regulatory burdens and therefore costs,” he said.
Organised theft is another matter. What is changing is the technical sophistication of organised criminal groups, and their growing ambitions. The migrant crisis and – perhaps – state sponsorship from the likes of Russia in the arena of cybercrime appear to have revolutionised how they work. Organised criminals have taken the best management techniques from the private sector – synergies, economies of scale – and turned them to their own purposes. Now, their activities rival the private sector itself.
One can only hope that Europol – perennially understaffed as it is – proves up to the task of dealing with these problems.