Organised Crime Prevention

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ACCEPTED MANUSCRIPT FOR ARTICLE IN CRIME, LAW AND SOCIAL CHANGE, 41 (5), 397-469, JUNE 2004. SPECIAL ISSUE: EVIDENCE-BASED APPROACHES TO REGULATING ORGANISED CRIME.

REDUCING AND PREVENTING ORGANISED CRIME: AN EVIDENCE-BASED CRITIQUE MICHAEL LEVI AND MIKE MAGUIRE Theory and practice in crime prevention – or, as it is now more often called, crime reduction – have developed and changed significantly over the past twenty years. However, attention in this area has been focused largely upon conventional forms of crime (especially street crime) and upon ‘situational’ approaches to their reduction (for overviews, see Hughes 1998; Pease 2002). In this article, we explore the possibilities of developing more effective crime reduction strategies in respect of ‘organized’ crime, an area in which (despite important exceptions, particularly in relation to financial regulation), law enforcement rather than prevention has continued to dominate the thinking and the practical responses of the police and other relevant agencies. The paper draws upon research carried out under the European Union Falcone initiative and based on a combination of questionnaires to, and interviews with, members of key agencies in European states with responsibilities in the area.1 Of course, ‘organized crime’ is a notoriously difficult concept to define and to measure, and relative to the confident claims that are made about it, little is known about ‘its’ operation in practice in many European (and for that matter, nonEuropean) countries. Both of these factors significantly increase the difficulties of designing and evaluating preventive strategies. In the first part of the article, we introduce some of the fundamental questions that confront anyone venturing into this field. These concern (a) definitions and aims, (b) ‘ownership’ of the problem and (c) how to determine the impact of interventions. We also underline the need for more systematic and analytical approaches. We then present and discuss some concrete examples of attempts by agencies and partnerships to apply rigorous analysis and prevention-oriented, ‘problem-solving’ approaches when responding to particular criminal enterprises which come to their notice. In doing so, we explore the use of analytical tools such as the ‘5 IS’ (Ekblom 2003a) as an aid to understanding the genesis and mechanisms of such enterprises. KEY QUESTIONS What or who should be targeted with what aims in mind? The prevention or reduction of organized crime clearly should contain two core elements: 1. the prevention or reduction of particular forms of serious crime (a focus on harmful acts); and

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2. a reduction in the growth and development of organized criminal groups or formations, and in their involvement in the commission of those serious offences (a focus on harmful actors). Although small organizations and even individuals may be socially dangerous, we share the conventional wisdom that larger criminal organizations develop reputational benefits as well as economies of scale, and that they have a greater chance to corrupt the economic and political infrastructure as well as law enforcement2. In this sense, becoming organized is a capacitation issue creating a cumulatively greater social threat, though the stage at which groups or networks become ‘serious threats’ is not always obvious and is not established simply by making the claim that a particular group or ethnicity is a threat. For the purpose of this review, organized crime is taken to accord with the criteria adopted by the National Criminal Intelligence Service (NCIS) in the UK and (with some variations) in the European Union generally and among the United Nations Transnational Organized Crime Convention signatories. These are that: -- two or more people are involved in continuing significant illegal activities, irrespective of national boundaries; -- such a group is capable of defending its members, enterprises or profits and to this end, may use violence, coercion or corruption; and -- more than £1 million of criminal proceeds have been generated by a grouping which has both core and peripheral members3. While acknowledging the degree of international consensus that has been reached concerning its formal definition, it is also important to point out that the term organized crime continues in practice to cause a great deal of confusion. First, there is a tendency in media, political and even policing debates to conflate the risk of, or the opportunities for, organized crime domination with the current levels of organized crime activity. It would be surprising if many crime groups had any serious wish to ‘dominate’ any particular country, let alone the world, and even among those with such lofty ambitions, this aim would arouse competition from rivals and would motivate law enforcement and governments to deal more vigorously with the threat, unless the latter were easy to ‘buy off’. Second, the presence of organized crime groups in some forms of criminal enterprise (e.g. drugs and people trafficking and distribution, prostitution, payment card fraud, car crime) can generate a misleading view that virtually all such activity is carried out by organized criminals, when this is clearly not the case4. Where structures are flatter and offenders team up first with one set and then with another on a project basis, it may be difficult properly to classify the resulting activities as ‘organized crime’, even though the crimes are well organized and the personnel are continuing offenders (cf. Hobbs, 1997)5. Furthermore, even taking the NCIS threshold above, there is a huge difference between the social threat offered by (a) a major ongoing team of wholesale drugs dealers, (b) the sort of syndicated operation exemplified by the Krays and Richardsons in London in the 1960s and by less ‘upfront’ London gangs since, and (c) the Italian Mafia and Mafiatype associations. This has implications for the analysis of effectiveness, since one might regard a reduction in the number of organized crime groups as a positive indicator of policing effectiveness, whereas though this might be true, it might

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alternatively reflect a consolidation of criminal power, with or without assistance from corruption. To use a trivial counter-example, would it be regarded as a policing triumph if only one gang – the Camorra – were to be found in Naples? Because the usual focus of attention is so strongly upon the threat posed by particular – often ethnic or national – organized groups (often using misleadingly collective terms such as ‘Mafia’, ‘Russian Mafiya’, and ‘Triads’), consideration and analysis of the actual forms of crime that they engage in often become submerged. Nevertheless, it is worth briefly setting out their main characteristics. The most common forms involve the supply of illegal goods and services for which there remains a substantial market, much of it among otherwise law-abiding people. These ‘market offences’ (Naylor 2002) include gambling, narcotics, vice and – increasingly – the transportation of illegal immigrants across national borders, often termed ‘people trafficking’. To these core roles should be added the evasion of excise duty by smuggling otherwise legal goods (such as alcohol and tobacco) across borders, and extortion (for which there is no popular demand, though there is sometimes a demand for the private order maintenance which may accompany it).6 A further important function of organized crime groups is the mediation of conflicts between criminals, for which the reputation of Mafia (and, by extension, certain other international groups from Eastern Europe and Latin America whose internal coherence and division of labor is less well-established) is especially well suited (Reuter, 1983; Gambetta, 1994).7 The picture as regards more ‘conventional’ predatory forms of financial or property crime (i.e. activities which, though they may be large-scale and more sophisticated than most offenders aspire to, nonetheless amount essentially to theft or fraud against individuals or corporations) is more complicated. The extent to which organized crime groups engage directly in such offences, or instead extract an illegal ‘licensing fee’ of some kind for permitting them, is less consistent, and the evidence is both harder to find and harder to interpret: our awareness can be as much the product of our intelligence methodologies (and good fortune) as a reflection of underlying trends. Annual reports on organized crime by Europol (the EU police intelligence body) and Council of Europe member states, and intelligence information from North America, suggest a growing involvement in financial fraud, from élite crime to credit card fraud (Levi, 2000; NCIS, 2000, 2003). In the practical sphere, in 2000, this was illustrated also by large-scale FBI raids on Italian-Americans and Russians living in North America, some of whom were subsequently convicted of extensive securities frauds8. A common feature of all the above activities, assuming that they are successful in their fundamental purpose of generating large amounts of money, is the associated need to store and use that money without its illegal source being traceable. This requires, of course, some form of ‘money laundering’, an activity which often brings major criminals into direct contact with legitimate financial and banking markets, and with professionals such as accountants and lawyers, whether or not the latter are aware that they are facilitating crime. Most such identified laundering is fairly basic, in contradiction of the rhetoric that invariably accompanies the laundering statements of police and political leaders (van Duyne, 1998; van Duyne and Miranda, 1999; van Duyne and Levi, forthcoming).

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Devising any strategy to ‘tackle organized crime’ runs a substantial risk of unintended consequences. For example, it is often assumed that successfully disrupting organized crime groups and/or arresting their leaders will reduce overall levels of criminal activity, but this is not self-evident. There may be some types of crime that cannot be committed at all without the involvement of organized crime groups, but others may be committed – perhaps with less efficiency, perhaps with greater efficiency since less ‘bureaucratically’ – by individuals and groups below the modest threshold that qualifies for organized crime. Action against dominant groups may lead to greater levels of violence, at least in the short run, as competitors seek to take advantage of an opportunity which formerly was regulated by an internal criminal market, or a concentrated supply of drugs and illegal migrants may be replaced by larger numbers of small importers and distributors. Clear understanding of differences between types of criminal activity in terms of, for example, their positions and functions within criminal (and legitimate) markets, is therefore crucial to predicting and avoiding such negative consequences. Equally, clear thought is necessary about the extent to which the target of any initiative is the ‘organizedness’ of a specified form of criminal activity, the amount of it, or the level of harm it inflicts on individuals, communities or legitimate businesses, and so on. (These considerations are further complicated by the transnational dimensions of organized crime: for example, even if the core criminal activities are local, their proceeds may be ‘laundered’ internationally.) Finally, given finite resources and the operational/political need for fire-fighting, there may be a tendency to focus on current threats at the expense of future, developing threats such as the potential harms from cyber-crime. Ekblom (1997, 1999) considers the need to ‘gear up against crime’ as an ‘arms race’ in which crime reducers and offenders constantly innovate and exploit new technology and changes in social and business practices (a similar analysis was put forward many years ago by Mary McIntosh (1975) in relation to ‘craft’ crime). Comprehensive threat assessments based around current experiences may risk failing to give sufficient priority to key future risk areas: there is some controversy over the value of retrospective annual organized crime reviews as a guide to future intelligence and operational action, which accounts for the shift of Europol and some national police intelligence analyses towards risk-based approaches (cf Maguire 2000; John and Maguire 2003, 2004). Crude analytical models may fail to examine the conditions under which conceptual risks will materialize. As we shall see, one approach to remedying this deficiency lies in the Ekblom ‘5 IS’ model (Ekblom 2000, 2003, 2003a). However, although it clarifies and systematizes the search for future possibilities, this model does not itself seek to resolve the immense difficulty of judging the probability that given factors – e.g. the breaking of chip card encryption codes; the discovery of safe routes for smuggling persons, cars or drugs; or corruption among customs or police officers will in fact materialize, and in what form in what particular places and times. Risk analysis and prediction therefore needs to proceed at a number of different levels (see also Vander Beken, this volume). Who has ownership of organized crime reduction? The principal burden of organized crime reduction currently falls upon the public sector: on a tactical and strategic basis, the intelligence and operational functions are shouldered by law enforcement agencies (customs as well as police), followed at a more strategic level by individual governments and ‘core departments’, such as the

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Home Office in the UK or Ministries of the Interior and Justice in other European countries. Even at the national public sector level, there are difficulties in extending ownership of the problem to departments dealing with areas such as company law and trade, which do not consider themselves to be in the business of crime control, but whose decisions on banking and corporate secrecy and on information-sharing affect the capacity for intelligence-gathering and crime reduction9. Moreover, transnational criminal activities (smuggling of persons and of both lawful and unlawful products, as well as laundering of the proceeds of crime) are beyond the exclusive scope of any one nation state, and problems of ownership are multiplied still further. Nevertheless, as awareness of interdependence increases, enhanced attention has been paid to crime issues among supranational and international bodies, including Non Governmental Organizations (NGOs) such as Transparency International and official bodies such as the World Bank and International Monetary Fund (at least – in the case of the latter – when the crime/money laundering issues are deemed to be ‘macro-economically relevant’). One can point also to the establishment of Europol and to a variety of international legal and policy instruments by, among others, the Council of Europe, the European Commission, the EU, Financial Action Task Force (FATF), OAS, OECD and UN.10 In addition, by July 2003, 84 members of Egmont (including all EU member states), as well as some non-members, had established financial intelligence units to deal with reports by financial institutions and professionals of suspected money laundering by their customers and clients.11 These national/international level groups and activities supplement existing local law enforcement activities and are shaped by the peculiar national cultures and traditions of member states. In the UK, where there is no tradition of national police organizations, despite the development of the National Intelligence Model (NCIS 2000a; John and Maguire 2003, 2004), there is a substantial gap between the realms of action of some policing organizations such as the National Crime Squad and the more local concerns of divisional CID, as Stelfox (1998, 2003) notes and as our interviews confirm. Even where there are national police forces, local intelligence is seldom well integrated with central intelligence and operations. The general pressures on resources, too, inevitably create tensions between the local, devolved drift of mainstream policing and the often centralized universe of organized crime policing. These tensions can inhibit communications and leave a hiatus where offenders move between areas and require too much intelligence coordination and resource for local Basic Command Units to deal with, but are not considered important enough to attract the attentions of national agencies.12 Nevertheless, it is important to note that some six per cent of UK policing activity is directed against organized crime. To this must be added the constitutionally legitimate work done by the UK Security Service and the Secret Intelligence Service (established under statute with combating organized crime as part of their remit) when tasked to act by other agencies or by ministers. Moreover, though staffing levels are not available historically, looked at over time, there has been a gradual accretion of liaison between UK customs and police, which was not present in the 1970s or even the 1980s (see further, Levi, 2003). This all sums to a considerable total of effort. In addition to the public sector personnel and institutions above, there is a multitude of private individuals, groups and private sector institutions that are engaged in work relevant – or potentially relevant - to the reduction of organized crime. For example, localities become involved in particular measures (especially demand-reduction

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initiatives, but also – as in Italy – sometimes in spontaneous protests or even political parties such as the anti-Mafia La Rete). International bodies such as Transparency International (2003) and Global Witness seek to promote anti-corruption policies world-wide. To the extent that it is successful, this work has potential consequences for organized crime group resilience, inasmuch as it reduces their capacity to launder money or to neutralize weak states. Importantly, too, commercial groups sometimes band together to reduce economic threats, including those from organized criminals: it has, however, been argued that their main concern is with crime reduction to the profit maximizing level dictated by corporate cost-benefit analysis, rather than with social cost-benefit analysis (Levi et al., 2003; Levi and Pithouse, forthcoming).13 Our interviews suggest that the principal stakeholders in this category include: 1. At an international level, the global card schemes – American Express, MasterCard and Visa International; the music and software industries’ International Federation for Phonographic Industries and Federation Against Software Theft and the overarching Washington-based International AntiCounterfeiting Coalition (for product counterfeiting); and the International Maritime Bureau (for marine insurance fraud and piracy). 2. At a national level, a variety of regulatory bodies representing the interests of mainly financial institutions. In the UK, for example, the Association for Payment Clearing Services (APACS) has taken a lead in plastic fraud prevention (as has its French equivalent, Groupement de Cartes Bancaires, which as a consequence of its more monopolistic position, finds it easier to impose prevention measures); the Finance and Leasing Association has the lead for fraud involving motor vehicles and other hired products (and pays for a small number of UK police officers to deal with organized vehicle fraud); CIFAS (formerly known as the Credit Industry Fraud Avoidance System) has an important role in preventing applications frauds in a variety of business and public sector settings, aimed mostly at multiple organized fraudsters; while the British Bankers’ Association (and, to varying extents, its overseas equivalents) has taken a lead in non-plastic banking fraud and money-laundering prevention, including membership of the Joint Money-Laundering Steering Group which draws up Guidance Notes for the industry. All of the above bodies tend to deal with unorganized (in the NCIS/Europol definitional sense) as well as with organized crime, but one of the explicit aims and consequences of aggregate data sharing is to make it easier to pick up patterns of organized criminal behavior which might be hidden if the cases were dealt with individually, as usually happens also with police operations. There are equivalents in many other countries, though within the EU, the UK has probably the most developed network of private sector interveners. To conclude, although there are some specific manifestations of organized crime activity to which the private (and particularly the financial) sector has developed an active response, responsibility for organized crime reduction remains primarily in the hands of public sector law enforcement and regulatory agencies. How can the effects of interventions be evaluated?

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Far more detail is available about inputs and outputs - institutions established and actions taken to combat organized crime - than about their impact (outcomes). Moreover, even in the reporting and analysis of actions, the label of ‘crime prevention’ (or ‘reduction’) has been stretched by practitioners beyond its normal Anglo-Saxon usage to incorporate what are in many cases primarily repressive measures – typically one-off police operations against criminal groups. We are not suggesting that such one-off operations or policing approaches have no deterrent or preventative effect, but rather that none of the evidence presented to us in the course of our research, or from the general literature, has demonstrated any such general effect in accordance with the measurement standards found in some other areas of crime reduction. In short, it remains largely a matter of faith that there is some impact beyond the immediate operational outcomes (such as arrests or seizures of drugs). We do not wish to be or to appear to be negative here: if some of the most serious and important areas of crime control have by their nature some of the greatest difficulties in generating satisfactory data, that makes them no less serious or important – it would be a major analytical mistake for crime policies to focus only on what is readily measurable. However, even if one does not have precise measures, one does at least need to strive for proxy indicators as to whether something is having an effect or not.14 There are a number of key difficulties that bedevil the measurement of organized crime reduction. These include: 1. The nation state as a unit of offender or victim measurement produces double counting or non-counting where crimes or components of crimes are transnational. 2. Some forms of crime are by their nature less susceptible to being counted than are others: an example would be money laundering in general, and a fortiori money-laundering in England and/or in Antigua or New York of a narcotics operation between Colombia and Spain. 3. Separation of the ‘organized’ and ‘unorganized’ components of a particular crime type may prove very problematic. In some respects, this is easier for crimes with specifiable victims. One might be tempted to suggest, for instance, that all cross-border car theft/fraud could reasonably be counted as organized unplanned cross-border crime of this kind is presumably quite rare - but at current prices, any one group would have to get up to, say, 50 Mercedes or BMWs per annum to reach the turnover requirement for the NCIS classification15. 4. Proxies such as drug prices are very unstable, geographically diverse and contestable as a measure of the effect of interventions on consensual activities, including not just drug dealing but also most trafficking in human beings, at least in the initial stage16. 5. Time scales over which the evaluation process should occur are far more difficult to determine than with most crime for gain. This applies especially to operations that involve a build-up of intelligence with previously uncooperative sectors such as legal or underground banking. 6. Any attempt to measure reductions in levels of organization (as opposed to levels of crime) comes up against a host of definitional problems. Moreover,

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even a change from ‘Mafia type’ to large but not so monopolistic groups would not count as a reduction in organized crime on EU, Council of Europe, US or UN definitions17. There is a clear need to couch the stated aims of interventions in terms of specifiable outcomes that are susceptible to some plausible form of measurement: for example, to reduce shootings in Manchester, to reduce deaths from drugs, to make it harder to launder proceeds of drugs trafficking, or to increase the sums confiscated as a proportion of sums ordered to be confiscated. Other possible methodologies that might be developed in order to assess levels of impact on specific desired outcomes include: o Evaluating the moral climate, to test corruption and fear. o Evaluating commercial responses to regulation by ‘mystery shopping’, to see how easy it would be to circumvent money-laundering, toxic waste disposal or any other regulations that seek to regulate organized crime or protect the consumer or the environment18. o Evaluating law enforcement techniques, such as disruption, Sting operations (again, for example, by mystery shopping to check what sorts of transactions would be reported to NCIS) in order to test the operational impact of money-laundering regimes. o Finding ways to define and measure indirect crime reduction outcomes and activities that relate less to specific falls in crime and more to reducing the operational and innovative capacities of criminal organizations, or reducing the number of niches available for organized crime to exploit. o Finding ways to measure improvements in the ‘capacity of organized crime reducers’. These types of outcomes relate to improved support/ infrastructure for organized crime reduction, including improvement in crime reducers’ operational capacity to work through the stages of the preventive process. The capacity to amass, analyze and act on feedback is particularly important where practitioners must track a constantly changing world of criminal opportunity and criminal methods/scripts. In strategic future-oriented terms, evaluators should also be measuring improvements in crime reducers’ innovative capacity because they may have to outinnovate criminals for crime to fall in a sustainable way. The criminological and ‘grey’ policing literature contains very few examples of evaluated efforts to reduce organized crime or, for that matter, to reduce any sophisticated forms of crime for serious economic gain. Indeed, the most common message from the modest literature that does exist, is that such efforts suffer acutely from what is usually referred to in conventional project evaluations as ‘implementation failure’, and underline how difficult it is to get the authorities to act against organized crime in a cross-cutting, inter-agency way (see, for example, Knutsson and Kuhlhorn (1992) on the reduction of check fraud and Eck and Spelman (1992) on thefts from vehicles in shipyard parking lots). Even where such implementation problems have been overcome, evaluators have found it difficult to address issues such as ‘displacement’, which is both more likely to occur and more difficult to measure in the context of organized crime than among

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more spatially bounded offenders. For example, although Levi and Handley (1998) and Levi (2000) illustrate some temporary success in reducing plastic and check fraud through inter-agency co-operation, subsequent substantial rises in plastic fraud are an ample warning of resourceful criminals’ dynamic search for alternative means of generating income by exploiting remaining loopholes more intensively, and taking advantage of the growth of technological opportunities to copy card numbers and use them to purchase goods over the Internet as well as copy them on to counterfeit cards (see also Ekblom, 1987, on sub-post office robberies). In short, despite all the legislative efforts aimed at combating organized crime and money laundering during the 1990s, there have been no major research studies in any key areas that conform to the normal canons of evaluation espoused by, for example, the research arm of the Home Office (Home Office Crime Reduction College 2002). As in law enforcement generally, operational success has typically been measured by the activity indicator of number and quality of arrests and number of organizations disrupted (see NCS, 2002; Department of Justice, 2003 and Appendices A and B), perhaps supplemented by large headline figures such as funds seized and accounts frozen in different countries19. The lack of systematic before-and-after or comparison-based studies makes it hard to conclude or even to plausibly expect there to have been much impact on organized crime levels, however measured. The need for more systematic, analytical and strategic approaches The last twenty years have seen major developments in both the theory and practice of crime prevention. These have included a general shift away from interest in offenders (and their motivations and pathologies) in favor of attention to the circumstances under which crimes of various kinds take place and, in particular, to ways in which the routine activities of victim behavior and technologies can create opportunities for some willing offenders to exploit (Ekblom and Tilley 2000). The focus on situational prevention – as opposed to attempts to change offenders - also reflects a pragmatic approach to changing those risks that are judged to be the most readily manipulable. However, modern crime reduction approaches are not based solely on situational principles: they have tended to mix victim and target protection with interventions aimed at actual and potential offenders, using ‘cocktails’ of multiple techniques and agencies (though this makes it difficult to infer which ingredients of the cocktail produce the strongest effects.) In practice, there tends to be blurring of the boundaries of the traditional categories of primary, secondary or tertiary prevention (Pease, 2002).20 Likewise, the division by Graham and Bennett (1995) into criminality prevention (also called ‘social’ or ‘offender oriented’ crime prevention), situational, and community crime prevention is also less clear-cut than it used to be. A good example of this is the recent Home Office Crime Reduction Programme, in which the guiding principles were simply that policy choices should be ‘evidencebased’ in terms of their proven capacity to reduce crime and should draw in resources from public, private and voluntary sectors through the creation of multi-agency partnerships. There is also a general assumption that coordinated, multiple interventions are more effective than single interventions (Tilley and Laycock 2002; Bullock and Tilley 2003). Again, the introduction of statutory partnerships between police and local authorities under the Crime and Disorder Act 1998 – which includes a duty to undertake systematic ‘crime audits’ and draw up local ‘community safety plans’ - reflects the same holistic (or ‘joined up’) thinking, though it is interesting that

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such models have not been extended hitherto in the UK to the national or transnational level. An important related feature of modern approaches to crime prevention has been an increasing emphasis upon the identification and detailed analysis of specific types of criminal activity. This is encapsulated in ‘problem oriented policing’, whereby local police officers are encouraged to identify and fully understand continuing ‘crime problems’ in their area before devising a plan to achieve as comprehensive and permanent a ‘solution’ to the problem as is feasible (Bullock and Tilley 2003). This will often draw in other agencies as partners, and extend well beyond the traditional police aims of arresting and convicting individual offenders. Forces employing problem oriented policing techniques generally use the ‘SARA’ model to guide their actions: this is a fairly simple set of sequential steps to follow, namely ‘Scanning’, ‘Analysis’, ‘Response’, ‘Assessment’ (Leigh et al 1998). More recently, the Association of Chief Police Officers has committed all forces to the introduction of the National Intelligence Model (NIM) by April 2004. This is a comprehensive ‘business model’ for policing, building on both problem oriented and intelligence led policing, in that it includes structured analytical approaches, prioritization and planning, but going much further, particularly in its attempts to integrate three ‘levels’ of policing – local, national and international (NCIS, 2000a; John and Maguire 2003, 2004). In terms of specific analytical tools which may be used within these new frameworks of policing to gain a more detailed understanding of particular forms of criminal enterprise, one of the most comprehensive currently developed is the Ekblom ‘5 IS’ – model, originally named the Conjunction of Criminal Opportunity (CCO) model (Ekblom 1999, 2003, 2003a). This model (pronounced ‘Five I’s’ – the initial letters of Intelligence, Intervention, Implementation, Involvement and Impact) was developed out of earlier work by Cornish (1994) and later Cornish and Clarke (2000). Ekblom’s approach provides an analytical framework in which criminal enterprises are broken down into a number of component parts, and (ideally) a full understanding is reached of all the facilitating and inhibiting factors which go to make a fairly exhaustive set of casual conditions to be met for each part be achieved. The 5 IS framework focuses on individual events, systematically mapping out the immediate causal preconditions that have to be met for the event to occur, covering both the offender and the crime situation. For offenders to make the event happen, they have to work (though seldom self-consciously) through a characteristic criminal ‘script’ of tactical and logistical actions. Organized crimes often entail complex processes and may involve a number of linked ‘scenes’ (obtain the password, forge the document, steal the vehicle, dispose of it, launder the money etc). The 5 IS analysis can be applied to the culminating event of each of these scenes. Such analysis assists the planning of criminal justice and other responses to the offending in question, by revealing potential ‘weak spots’ in the criminal ‘script’ (the series of actions and conditions necessary for the commission of the offences in question), where interventions can be made to reduce the opportunities and resources open to the offenders and to increase the risks they face. While it needs to be developed to support more strategic levels of analysis - criminal niches, markets,

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careers of organizations etc – the potential value of the events approach lies in the sharp focus it encourages upon key factors in the generation of crime problems. We must note also the growing practice (at both national and European Commission level) of undertaking ‘crime proofing’ assessments to anticipate and design out crime risks when, for example, new legislation is introduced, new products are put on the market, or new buildings are designed, though this requires the advance knowledge and political as well as legal capacity to act against crime.21 Responses to organized crime have until recently made relatively little use of coordinated, analytical, ‘problem oriented’ preventive approaches of the above kinds. The field has been largely dominated by law enforcement agencies, and the most common strategy remains penal incapacitation of individuals, especially of ‘kingpins’, which normally can be done only through the criminal justice process (though attempts have been made achieve the same ends via civil forfeiture independent of prosecution in the US, Ireland and the UK). Sophisticated as many of the law enforcement initiatives have undoubtedly been – including, for example, transnational Sting operations (involving not just drugs but also money laundering), electronic eavesdropping, disruption, and witness protection schemes – they almost inevitably lack the crucial dimension of a focus on longer term outcomes and on the structures and conditions which facilitate organized criminal enterprises. There have so far been relatively few of the multi-level, multi-agency and public-private developments that have been developing elsewhere. In the case of some types of organized crime, partnerships may have to be developed far beyond the boundaries of the nation state, and even where non co-operation is not motivated by corruption, stakeholders may have incompatible economic interests. Nevertheless, as law enforcement agencies and their political heads have increasingly come to appreciate the difficulties of attacking transnational crime through individual policing operations and the criminal justice process,22 they have begun seriously to explore alternative approaches. More strategic and longer term thinking is in evidence in, for example, greater investment in ‘threat assessments’ to rank priorities and identify future threats from new criminal activities or new criminal groups.23 The level of inter-agency cooperation is also clearly growing, not only between police and customs24 but involving a variety of other agencies. Perhaps most importantly, private sector organizations have increasingly come to recognize that they may have both financial interests and social responsibilities in playing a part in the ‘fight’ against organized crime. The next section presents an overview of existing approaches that supplement the dominant law enforcement and criminal justice mode.

NEW APPROACHES: AN OVERVIEW In this part of the article, we present an overview of some of the most significant ‘non-traditional’ approaches to combating organized crime which have been developing in recent years. While these are at present diverse and scattered, they may point cumulatively to a ‘way forward’ that will eventually be followed more consistently on a wider scale.

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Table 1 (which is adapted and extended from Schneider, 2001) represents the three main ‘non-traditional’ approaches to the prevention of organized crime that can be found at present, subdivided into various types of intervention. It should be noted that Schneider’s typology is not analytical in character, but is simply a kind of ‘natural history’ classification of broad intervention methods, each of which may work by several mechanisms (indeed, the same applies to Clarke’s 16 techniques of situational prevention: see Clarke 1997). The three main approaches are discussed in turn. Table 1 Non-traditional approaches to organized crime prevention

Community approaches Regulatory, disruption and nonjustice system approaches

Private sector involvement

1. Community crime prevention 2. Passive citizen participation: giving information about harms and risks, hotlines for reporting 3. Active citizen participation: civic action groups 4. Regulatory policies, programs and agencies (domestic and foreign, including the Council of Europe/EU/FATF/IMF/ OECD/World Bank) 5. Faster customs & other regulatory treatment (e.g. anti-laundering measures, container and customs importation such as US C-TPAT) for firms & countries that have instituted approved internal compliance programs 6. Routine & suspicious activity reports as investigative triggers 7. Tax policy and programs 8. Civil injunctions and other sanctions (RICO, contract vetting) 9. Military interventions 10. Security and secret intelligence services 11. Foreign policy and aid programs (certification, Most Favored Nation, EU accession) 12. 13. 14. 15. 16.

Individual corporate responses Professional and industry associations Special private sector committees Anti-ID fraud and money laundering software Private policing and forensic accounting

(a) Community approaches Traditional situational crime prevention neglects the area of community action, considering it as being too far from the proximal ‘causes’. Nevertheless, in the arena of organized crime, a case can be made for intervening at the community level, in terms of reducing the pool of willing offenders, whether they are positively involved in crime or are simply unwilling testifiers against offenders or passive assistants in the components of crime. Prima facie, organized crime - whether national or transnational in character – seems difficult to fit with criminality prevention, although efforts can be made to reduce the attractiveness of, say, drugs traffickers as role models. Godson and Williams (1998: 34) discuss as an example of criminality prevention some social experiments in Palermo, where 25,000 children annually attend an educational program designed to change the cultural norms that allow the Mafia to flourish,25 though here, in our judgment, the boundary between community and criminality prevention becomes fuzzy. In Sicily, there have also developed local

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active citizen groups, though such anti-Mafia activism remains dangerous to those advocating it openly, and anger is hard to turn to constructive, long-term use. Hicks (1998), in exploring the potential of a greater role for crime prevention strategies in tackling organized crime, stresses the linkages between unorganized property crime and more organized criminality because – especially when unemployed – drug users require cash, and crime is an important source of it.26 A recent trend has also been noted in urban property crime whereby young offenders are organized by adults to commit burglaries and car thefts (though one might counter that this phenomenon is hardly new: it goes back at least to the criminal careers of Jonathan Wilde and also Ikey Solomons - who was the model for Dickens’ Fagin and the Victorian rookeries). According to Hicks (1998: 334) the connection between unorganized and organized crime demands that preventative approaches, traditionally applied to the former, also be conceptualized to support local interventions to address the substructure of organized crime. One might add to this that, insofar as one of the key factors limiting the expansion of criminal organizations is the availability of potential recruits and support services, widespread public sympathy reduces those constraints: the changing of public attitudes – whether they take the form of positive support or merely acceptance because no alternative is envisaged – can be a significant and worthwhile policy objective. However, it is important to note that when applied to, for example, crop substitution for drugs, or employment alternatives to money-laundering, the economic dimensions cannot sensibly be ignored by focusing simply on changing ‘hearts and minds’. The Canadians have established some community-oriented strategies (Schneider, 2001). These include toll-free anonymous tip-off lines - traditionally geared toward unorganized property and violent crimes - to acquire information on organized crimes, such as drug trafficking, fraud, and contraband smuggling. The Royal Canadian Mounted Police (RCMP) Customs and Excise Sections have worked with Crime Stoppers to ask for information on suspected smuggling operations and local contraband suppliers. This was taken a step further by establishing the ‘River Watch Program,’ which involves an intensive campaign by police to encourage residents living along the St. Lawrence Seaway to look for and report suspected cigarette smuggling from the United States into Canada (http://www.rcmpgrc.gc.ca/frames/rcmp-grc1.htm). Public tip-off lines have also been dedicated to specific forms of organized crime, such as the Outlaw Biker Hotline established by the Criminal Intelligence Service Canada (http://www.cisc.gc.ca). In 1999, a Chinese Crime Hotline was established in Australia, targeting immigrant ethnic groups that are at high risk of victimization by criminal gangs, but which are traditionally reluctant to cooperate with police. Unfortunately, there is as yet little or no reliable data on any of these schemes by which to evaluate their impact. It is clear, however, that as a total concept in attacking organized crime, community crime prevention approaches are limited because at some stage of the organized crime process – from financing through to laundering – other jurisdictions are likely to be involved which have less interest in crime suppression, unless they can be persuaded or forced to assist by some international action, including shaming and the threat of economic sanctions (see Blum et al., 1998; Levi, 2002; Godson and Williams, 1998; FATF, 2000, 2003). Insofar as some preventative measures involve imposing costs on private sector interests or even eliminating major chunks of profitability, there may

14

be substantial political resistance, depending on the relative power of such interest groups in the localities concerned27. There thus ensues a global (non)system of regulatory arbitrage – the ability to locate key operations where regulation is lightest, whether this lightness is based on lack of legal powers or based on charisma, corruption or economic power - of which criminals can take advantage if they have the discipline, knowledge and contacts. (b) Regulatory, disruption and non-criminal justice approaches The second category in Table 1 covers a wide range of activities, which have in common the use of the powers of state agencies other than those whose main responsibility concerns law enforcement or criminal justice. One important aspect of this is the use of powers in the financial and fiscal areas, where in essence the focus of the attack is upon the financial assets of organized criminals. A second, rather different, aspect is the use of the regulatory powers of local authorities, environmental and licensing agencies and the like, to disrupt the ‘businesses’ of organized criminals by making it more difficult for them to obtain necessary licenses, find suitable premises, and so on. We examine these two aspects in turn. (i) Fiscal and financial strategies One of the most significant developments in methods of combating organized crime is a growing interest in financial incapacitation through confiscation of the proceeds of crime. At first, this was construed mainly in terms of post-conviction remedies, but it is becoming increasingly seen as an aim to be achieved also through civil or administrative courts, independent of any criminal prosecution (PIU, 2000; Criminal Assets Bureau, 2003; Alldridge, 2003; Levi, 2003a; see Council of Europe, 2001, for a best practice survey of a range of European jurisdictions).28 Although there is institutional cultural resistance in some countries (including the UK), there are now several examples around the world of taxation agencies being integrated into specific units that target organized crime and professional criminals. This approach is most highly developed in the United States, where the Internal Revenue Service (IRS) operates the Organized Crime Unit, a team dedicated to targeting organized crime figures for tax avoidance. Through its involvement in interagency strike forces, the IRS investigates people identified as belonging to the upper echelons of crime groups, receiving substantial income from illegal activities, or having infiltrated legitimate businesses through illegal means. Indeed, our interviews suggest that most of the major US organized crime cases have a revenue investigation component (as in the oft-cited fact that Al Capone was jailed not for homicide or bootlegging offences but for tax evasion). On its own, or as a participant in these strike forces, the IRS has two objectives: to assess and collect the taxes due (on underdeclared income, except where the business is over-declaring for laundering purposes), and to enforce criminal and/or civil sanctions for violations of the Internal Revenue Code or related statutes, including assessing and collecting applicable penalties (http://www.irs.Treas.gov). Similarly, the Canada Customs and Revenue Agency operates the Special Enforcement Program (SEP), which targets the under-reported and unreported illicit wealth of organized criminals, primarily through the enforcement of the Income Tax

15

Act. SEP investigators work with the Royal Canadian Mounted Police (RCMP) and other police forces in Canada and abroad to target persons and entities profiting from crime. Since 1998, SEP investigators have been seconded to the Integrated Proceeds of Crime (IPOC) Units throughout Canada with a mandate to identify profit-oriented criminal cases for assessment and prosecution under taxation legislation. In Europe, such approaches are less common, although the Irish Criminal Assets Bureau has been operating since 1996, and in the Netherlands, serious attempts have been made to integrate tax and criminal intelligence. Once again, however, outcome evaluations of such approaches are lacking.29 (ii) The use of regulatory powers to disrupt ‘criminal business’ A second major development has been a growth in the planned and sustained use of the powers of regulatory agencies, in conjunction with those of criminal justice agencies, to make it much more difficult for organized criminal groups to establish themselves in particular areas, premises or spheres of activity. This may include special legislation to strengthen such powers. In the US, under the Racketeer-Influenced Corrupt Organizations (RICO) legislation 1970 (amended subsequently), civil injunctions can be granted by the Court to take over the management and control of corrupt unions and other mechanisms for attaining extortion against local businesses and workers. Allied with independent enforcement resources and strong political will, this has proven very effective in reducing prices of commercial garbage disposal and wholesale food in New York, which were grossly inflated by restrictive trade practices and union racketeering sustained by the threat of extreme violence (Jacobs, 1994, 1999)30. One interviewee noted that over 100 police from New York City worked with the FBI on a joint localfederal strike force. The effect of this and the RICO legislation that underpinned it was a fall in the cost of waste carting to one twelfth of its original organized-crime inflated amount. Mayor Giuliani promoted Trade Waste Association laws, which required the vetting of firms in the industry for associations with organized crime, later echoed in Amsterdam (see Kleemans, forthcoming, for a history of Dutch responses to organized crime).31 In addition to convictions generated by criminal RICO prosecutions, civil and criminal RICO forfeitures have also generated substantial sums in proceeds of crime (or, at least, in funds and property that defendants were unable or unwilling to defend as the proceeds of legitimate activity). This totaled some $610 million in 1999 in final forfeitures in the US. However, the potential effects on far less structured Western European crime networks are harder to determine, since outside Italy and arguably parts of France, organized crime domination of key labor or commercial sectors has not yet been identified (Levi and Smith, 2002). The Dutch, Italian and Northern Ireland Task Forces have made extensive efforts to check the bona fides of those applying for construction contracts, not least because the construction industry is among those most strongly associated with organized crime and corruption. In Italy, this often involved not just corruption in the obtaining of contracts but also failures to perform construction tasks to adequate standards. In the ongoing Wallen project in the red light district of Amsterdam, for example, which was set up to reduce the ability of organized crime groups to integrate capital into the local property market (thereby establishing some control over the activities in the area), the ownership of all properties is screened by a special harmonized tax/police

16

team, to check if there is any evidence of control by organized criminals (interviews with project team – see also Fijnaut et al, 2002). This screening includes checks on ‘front men’ and on the beneficial owners of corporations who may be the legal owners of property there (as elsewhere in Europe). If the project team and the crime manager of Amsterdam City Council are not satisfied that the owners are ‘clean,’ they have powers to require them to sell the property or to deny them acquisition of property for which they have successfully bid.32 In devising such an approach, it is crucial to ensure that the project administrators themselves are not corrupt: otherwise, the system could serve as the instrument of an organized crime group against others, as well as against the government and city. Given this administrative integrity, and although there are no hard data yet, the scheme looks as if it may contain and reduce organized crime and money-laundering in the property sector. Interviews suggest that there may be some displacement to other regional cities in the Netherlands, but displacement is seldom complete, and Amsterdam – the prime site for international multi-crime activity in the Benelux countries, and therefore not readily substitutable as a ‘crime centre’ – receives substantial protection from criminal ownership risks. At any rate, the project has received wide approval and a process is underway to roll out the system for the whole of the Netherlands (Council of Europe, 2003). It will be interesting to see whether this skill and resource-intensive approach will transfer successfully from a local to a national intelligence level, given traditional reluctance among police officers to entrust sensitive information to large-scale computerized systems. (c) Private sector involvement Finally, at a broader level, there are signs of a gradual erosion of distinctions between the ‘public’ and the ‘private’, and of a gradual diffusion of responsibility for social control and crime control beyond the realm of central governments, to local, private and voluntary organizations, as well as to individual citizens: processes for which terms like the ‘dispersal of governance’ and ‘responsibilisation’ have been coined (see, for example, Garland 1996, 2001; Rose, 2000). In the area of organized crime, this is visible in (i) attempts by the state to compel private organizations to play a part in preventive strategies, if necessary by punishing them for failure to do so (this is particularly prominent in measures against money laundering and corruption, but also in the transportation of illegal immigrants); and (ii) the growth of partnerships between public and private organizations in efforts to combat organized crime – in many cases assisted by a growing recognition on the part of the private sector that such crime adversely affects its own interests. These two trends are examined in turn. (i) Statutory ‘surveillance’ by private organizations There are a growing number of examples of legislation to make private companies responsible for monitoring and reducing organized crime. Most of this takes the form of encouragement or requirement to engage in systematic ‘surveillance’ of normal business activities in order to spot and report signs of illegal activity or suspicious transactions. In the area of immigration, for example, increasingly rigorous checks have been carried out by airlines to ensure that travelers have valid documentation. Although recently accelerated by concerns about terrorism, this development was initially driven by the system of fines (as well as the more marginal cost of repatriation) imposed on them should they carry unentitled persons to the border. A

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similar process is at work in relation to road haulage companies and the transportation of illegal immigrants: the fines raise the level of ‘advertence’ to the risk.33 Money laundering Probably the most important development of statutory ‘surveillance’ responsibilities, however, is to be seen in the field of initiatives against money laundering. In the decade that has elapsed since the early work on forfeiture and money-laundering of Zander (1988) and Levi (1991), it has become taken for granted that bankers and professionals (accountants and lawyers) are, or can be made to be, ‘capable guardians’ of the system of combating laundering by imposing liabilities of various kinds upon them.34 These legal responsibilities relate both to general systems performance (the statutory requirement – only modestly enforced - to have ‘adequate’ anti-laundering mechanisms in place) and to personal performance (stringent criminal penalties for those assisting in disposing of the proceeds of crime).35 It is unlawful to deal in investment services or to take deposits without a license from the regulatory authority, and applicants for such posts are checked against criminal records and national regulatory databases to see if they are ‘fit and proper persons’ (see Levi and Pithouse, forthcoming). However, misconduct subsequent to authorization may not lead to disbarment, and pan-European or extra-European data may escape the regulatory net unless specific effort is made to request and to collect it. In the international sphere, there is a substantial mutual evaluation apparatus for checking the quality of anti-laundering provisions. This involves periodic inspections by experts from neighboring and/or powerful industrial nations, and such inspections have been extended beyond the members of the Financial Action Task Force (FATF) to regional offshoots such as the Caribbean and Asia-Pacific areas, as well as to members of other international organizations such as the Council of Europe in its PCREV Committee. Where national provisions and implementation fail to satisfy these emerging global standards, warnings may be issued world-wide to financial institutions to take special care when dealing with transactions from such jurisdictions: this makes the country’s financial dealings slower and more expensive, reducing some of the benefits for money-launderers and money-hiders36 in keeping their funds there. Such warnings have been issued in relation to many territories including, for example, those on the successive FATF Non-Cooperating Countries and Territories ‘black lists’ and some others (such as Antigua) before those lists were compiled (FATF, 2000, 2003). Since 1999 there has been a sustained drive to increased transparency and mutual legal assistance, under threat of economic sanctions and blacklisting: this has generated a drive for conformity. In practice, the effects of such entry vetting and anti-laundering measures depend not only on the morality and financial circumstances37 of professionals but also on their perceptions of the risk and the results of detection: this in turn depends on the nature of the rules governing behavior, and the loopholes – such as reliance on the due diligence of others further up the line – that exist unintentionally or deliberately, following lobbying or even governmental complicity in reduced compliance. The implications of the Second European Directive, extending liability to report moneylaundering suspicions to accountants, lawyers and others throughout the (extended) EU, have yet to work themselves through, and there remain substantial variations within Europe in the way that lawyers are regulated (Middleton and Levi, 2003; Lankhorst and Nelen, 2003). Levels of visible enforcement of these provisions –

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prosecutions or de-authorizations of financial and professional intermediaries for money-laundering or failing to institute proper measures of regulation – have been extremely modest in Europe, though regulatory fines and publicity in Switzerland and the UK have become significant. The potential of such measures remains to be realized, since it is increasingly being appreciated that substantial extra investigative input needs to be made by those who receive the reports and, both in the UK and elsewhere, these extra resources have not usually been forthcoming (KPMG, 2003). Moreover, even within Europe, there are different systems and approaches. In the Netherlands, there is a two stage process in which financial and other regulated bodies conclude that a transaction is unusual, and civilian investigators in MOT decide whether or not the unusual transaction is suspicious: if they so conclude, then it is turned over to the police CRI for further analysis and investigation. This is done on the theory that financial institutions seldom have access to sufficient data to know whether something they find ‘out-ofplace’ is properly a subject for police investigation: their system respects the privacy of customers. In the UK, on the other hand, reports from institutions and professionals are made direct to NCIS, who make some basic checks against their databases before passing the case on to Customs & Excise or to the Financial Investigation Unit of the police force in whose jurisdiction the customer lives. With the notable exception of the Irish republic, the police in most countries have been reluctant to divert many resources from their existing tasks to such Units (see Gold and Levi, 1994; Levi and Osofsky, 1995; Lampe et al., 1998; Nelen, 1998, this volume; PIU, 2000 and Kilchling, 2002). However, in the aftermath of the Proceeds of Crime Act 2002, the police in England and Wales were given 86 more financial investigators, while police and prosecutors in the German Lander have also become more proactive. In Australia and the US, there is a different approach, with a requirement for all cash deposits, wire transfers and physical cash exports/imports over a legislatively set limit (varying from $5,000 to $10,000) to be reported by financial institutions or travelers to the Treasury and Customs respectively. It is a criminal offence not to report, and this is a regular source of prosecutions. These are routine reporting systems, and the intelligence analysis has to be performed by the government agencies, AUSTRAC (in Australia) and FinCEN (in the US), which seek to review patterns of behavior and to link with other databases such as tax information. More recently, these have been supplemented by Suspicious Activity Reports, which require more subjective judgments by reporting institutions and more urgent responses from law enforcement (see FinCEN, 2003). The impact of such reports on criminal prosecutions, let alone on levels of organization or on crime, remains largely unexplored scientifically (see Gold and Levi, 1994; van Duyne and Miranda, 1999 for exceptions), though assertions of the considerable value of reports are commonplace, and both legal and media pressure is exerted by supranational and national bodies to enhance their number and range.38 More generally, it is extremely difficult to achieve any meaningful quantitative measurement in the money laundering field. One objective of anti-laundering measures might be to reduce the volume of money laundered. However, there is only the haziest of order of magnitude estimation of the volume of money laundering, even at the global level. At the level of the individual nation state, one would need to

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calculate the amount of money generated by and saved from the proceeds of all kinds of crime, and add to it the sums flowing through any given economy that were proceeds of crime overseas. We are nowhere near being able to do that for any country in the world, and the measurement efforts at FATF have not yielded anything remotely precise (Reuter, 2000; Walker, 1995, 2001).39 In short, we have no accurate before-and-after measures of the extent of money laundering in any sphere, whether by type of crime or by place or by method or by organized crime group breakdown. Under such circumstances, it is important to explore less tangible indicators such as the effects on ‘cultures’, groups and individuals, including the behavior of financial services personnel. One of the key aims of interventions is to ‘keep the financial system clean’ by increasing the difficulties and costs of laundering. Our interviews suggest that prior to these measures, especially in private international banking, if the prospective client was rich and had no readily known criminal record or major connections, there was no reason at all to turn the business down. Now, including in the case of members of political elites, this is no longer the case, to the extent that the major Swiss banks will not accept Heads of State from ‘high risk’ countries as their customers, because of the political risk from exposure for money-laundering. Under the Wolfsberg agreement of November 2000, revised subsequently, the major international banks have agreed global standards under which all customer identification and transactions will be treated the same for anti-money-laundering purposes, wherever in the world they take place. Some interviewees expressed skepticism about whether these changes are real or largely window-dressing. Nonetheless, we would consider this best practice in organized crime and corruption prevention, and though it is a private sector initiative taken outside the framework of legal regulation – indeed going well beyond it since, when implemented, it involves imposing tougher processes than are required in many individual member states – it has taken place within the context of the glare of criminal liability and media publicity, which properly should be viewed as part of the best practice requirements. In other words, when we look at the concept of best practice in this area, we should review the political and social preconditions. Anti-corruption measures The sorts of supra-national measures taken in relation to money-laundering have also been extended in the anti-corruption sphere. Thus, the Council of Europe conducts mutual evaluations of measures against corruption under the GRECO umbrella, while the OECD conducts expert evaluations of compliance with the OECD Convention on Combating Bribery of Foreign Public Officials in International Business Transactions 1998, which requires countries inter alia to introduce domestic measures to criminalize the bribery of foreign officials overseas.40 The World Bank operates a blacklist of companies – construction companies, for example – which it has reason to believe have bribed governments to obtain contracts, and these companies normally are disbarred from World Bank contracts. This in turn may have collateral consequences for their profitability and work in other areas. There has been strong ‘Good Governance’ pressure upon Third World countries, from both the World Bank and Transparency International, to develop proper tendering and public procurement policies, reducing the opportunities for corruption and increasing the risks both to domestic public officials and to transnational corporations who offer bribes or have bribes extorted from them. These organizations have also strongly promoted the introduction in Third World countries of Independent Commissions against Corruption (ICAC), believing on the basis of the Hong Kong experience that the

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presence of such Commissions will be effective in changing both public attitudes and actual risks for offenders. They have not, however, always been aware that the cultural preconditions present in Hong Kong for education and institutional autonomy are rare, and that the institutions may require this independence for their effectiveness.41 (For a good example of comprehensive country reviews, see OSI, 2002.) (ii) Partnerships and private sector initiatives In addition to the kinds of statutory obligations discussed above, there has been a growth in (more or less) voluntary partnerships between law enforcement agencies and private sector companies and associations. There are also many initiatives that largely bypass the state and law enforcement agencies, being based on industry data sharing and collective solutions of varying degrees. Here, the police become involved because they press for some role for ‘the public interest’ or because the private sector wants some action taken – like national or international arrest warrants – that requires a public law authority. Where powerful or wealthy victims are involved, they can afford the array of measures that are granted, at least under the common law, to freeze assets and to compel disclosure. It should not be forgotten that even individual multinational corporations have greater resources than most nation states, but counterbalancing this is the fact that they usually require the sort of business case that would lead to the general diminution of policing, including the policing of organized crime.42 The distinction between the voluntary and the compulsory usually rests upon the question whether the investigative efforts are in the interests of profitability or not. Some of these partnerships have an element of tension, especially when private investigative agencies try to turn the case over to the police for some criminal justice intervention to supplement or replace whatever civil measures they may be able – sometimes expensively – to utilize. Thus in the UK and some other European jurisdictions (and even in Canada, where Ericson and Haggerty (1997) suggest there exists a fairly seamless web between private and public enforcement), investigators who work up what they consider to be a good case against, for example, organized credit card fraud or product counterfeiting, often find it difficult to persuade the police to find the resources to complete the investigation and to initiate the criminal justice process.43 An English police initiative to grant the semi-official status of Authorized Investigator to private detective and accounting firms in fraud investigation (at victims’ expense rather than that of the State) has been difficult to put into effect, not least because victim companies may not want the close relationship with the police that such an advertised status entails. However, the principle is there, and there are Service Level Agreements between many police agencies and industry associations such as the Association of British Insurers, the Association for Payment Clearing Services, and the British Bankers Association (Levi and Pithouse, forthcoming). In April 2002, the Home Office introduced a twoyear experimental Dedicated Cheque and Plastic Crime Unit, three quarters funded by the banking industry. At the international level, there have been initiatives deemed highly successful by the London-based International Maritime Bureau to combat piracy on the high seas. This has involved a combination of good intelligence (with undercover operatives and informants paid by the private sector), better ship security, and a willingness of those

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countries – especially in South East Asia – that formerly shielded pirates to ban them, disrupt them, and/or prosecute them. This apparently has reduced the piracy levels substantially. The World Customs Organization (WCO) has created formal partnerships between national customs agencies and private carriers to address narcotics and contraband smuggling, through the creation of Memoranda of Understanding (MOUs) that generally focus on three areas of cooperation: 1. intelligence and the exchange of information by developing information sources within private carriers, 2. enhancing security measures among carriers and other relevant companies, and 3. providing training to relevant employees of carriers. According to the World Customs Organization, by 1999, 35 countries had introduced their own national MOU programs and nearly 5,000 MOUs had been signed by various national Customs agencies (http://www.wcoomd.org/ENF/ACTDIF/Wco1.htm). All of these activities have been given a boost by the focus on eliminating physical risks of terrorism within the US post-’9/11’. In the United States, the Customs Service set up its Carrier Initiative Programme (CIP) in 1984 to prevent drug traffickers from using air and sea communications links. Through their MOUs with U.S. Customs, private carriers agree to step up security systems and advise Customs of suspicious activities. In addition, the Business Anti-Smuggling Coalition (BASC) was initiated by the private sector to serve as an alliance between businesses and U.S. Customs to combat narcotic smuggling via commercial trade. The Commercial Operations Advisory Committee (COAC) was also established to provide the U.S. Treasury and Customs Service with the perspectives and advice of private sector groups affected by Customs operations. Given the legal obligations of financial services businesses and their desire to reduce the risk to them of organized fraud - as well as criminal justice and regulatory punishments for failing to detect or report money-laundering - there has been an explosion in efforts to develop software to detect suspicious transactions ‘in flight’, since outside private international banking (where one of the services that customers pay for is for bankers to get to know them well), only in the cases of (i) large cash deposits over bank counters or (ii) quick large payments into and out of relatively dormant accounts, is any senior risk manager going to see transactions that could easily generate suspicions. There is also a variety of asset tracking and computer imaging software, which greatly improves the chances of spotting irregularities among the trillions of daily transactions. This activity is occurring mainly in the private sector, but it is stimulated by the defensive needs and by organizations’ reluctance to employ large numbers of staff to police on behalf of the State, as our interviews suggest that many of them see it, especially in those jurisdictions that have been pressed to toughen up on anti-laundering measures. Finally, the area which has seen probably the greatest input by private sector organizations against organized crime is that of credit crime, whether through payment cards – charge, credit and debit cards – or through commercial finance. What these initiatives have in common is that they are aimed usually at detecting multiple applicants for credit, most of whom are using some form of false identity or

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the take-over of genuine identities that do not belong to them. Not all of these offenders are organized criminals in the NCIS terms elaborated earlier (though the cumulative profits of the group may reach this figure). However, these offenders are plainly organized and usually part of ongoing teams of offenders. A secondary area of communal activity is in relation to (a) organized vehicle theft, some of which is credit fraud on hired and leased vehicles but much of which is not, and (b) counterfeiting and piracy of commercial products. In all of these schemes, the primary initiative has been taken by the private sector, but some have involved public sector links, as described in the previous section on money-laundering. Illustrative examples will be analyzed in the next section. Summary Notwithstanding all the above instances, organized crime prevention has continued to focus largely on the repression of dangerous people and groups. In many areas, the notion of intervening in opportunities for crime commission remains largely undeveloped. One reason for this may be that the sorts of core activities commonly engaged in by organized crime groups – the supply and distribution of goods and services that are in popular demand – are not seen as preventable in the same way as other crimes which have self-acknowledged victims who wish to reduce the harm that they suffer. For example, Customs or naval interception of a large air or ship cargo of narcotics clearly has some opportunity reductive effects, but its longer-term effects on the availability of drugs in local markets are highly questionable. Indeed, if demand for drugs is inelastic (i.e. largely unaffected by price), a rise in their price might do little more than increase the number and/or seriousness of the crimes committed to pay for them. The politics of supply-side approaches to ‘market offences’ are well enough known not to need rehearsal here. The identification of, and concerted action in relation to, crime ‘hot spots’ may be expected to have greater effects where – as in maritime piracy – groups have less geographical flexibility. There are examples of such initiatives in South East Asia, especially China, which appear to have led to reductions in both attempted and successful attacks on ships in that region (interviews with International Maritime Bureau). It is crucial to realize that such efforts often require changes in the priority granted to reducing the crime in question, and to co-operation with the private sector who employ intelligence staff to promote such interventions: examples include maritime piracy and product counterfeiting. As a matter of practice, some initiatives are purely public sector; others involve the private business sector, whether professional or commercial (as in money-laundering, car crime, and payment card fraud); still others involve the general population (as in some community anti-drugs measures or public protests against the domination of organized crime, as have been witnessed in Sicily and some parts of Eastern Europe). We also need to create a set of outcome criteria for organized crime reduction and we need to define and measure indirect crime reduction outcomes and activities that relate less to specific falls in crime and more to reducing the operational and innovative capacities of criminal organizations, or reducing the number of niches available for organized crime to exploit. These might fruitfully be labeled organized crime indicators rather than ‘measures’, which can give a spuriously objective aura to what may often be an approximation judgment process, though one that must be

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defensible publicly to enhance legitimacy and avoid the impression that organizations are creating their own performance evaluations. Finally, we need to determine ways to measure improvements in the capacity of organized crime reducers. These types of outcomes relate to improved support and infrastructure for organized crime reduction, including improvement in crime reducers’ operational capacity to work through the stages of the preventive process. The capacity to amass, analyze and act on feedback is particularly important where practitioners must track a constantly changing world of criminal opportunity and criminal methods/scripts. In strategic future-oriented terms, evaluators should be measuring improvements in crime reducers’ innovative capacity. As already said, reducers have to out-innovate criminals for crime sustainably to fall. THE WAY FORWARD? SOME EXAMPLES AND CASE STUDIES We now move from a general overview of developments in organized crime prevention, to a closer look at some individual cases. We present (a) an analysis of responses from (mainly European) countries to a questionnaire requesting examples of ‘successful’ and ‘unsuccessful’ initiatives against organized crime, and (b) five individual case studies, to illustrate in more detail how rigorous analytical approaches can usefully be applied in practical attempts to reduce organized crime. Questionnaire analysis In early 2000, a short questionnaire was sent by the Swedish National Council for Crime Prevention to relevant agencies in EU member states and other selected countries, requesting specific examples of both ‘successful’ and ‘unsuccessful’ initiatives that they had undertaken in relation to the reduction of organized crime. To help focus the replies, respondents were asked to select examples pertaining to the specific areas of organized vehicle crime and illegal trafficking in human beings. Later in the year, further questionnaires asked for information on good practice in tackling money laundering and interdiction strategies; however, this paper analyses only the first set of responses. Questionnaires were sent out to 460 organizations. While many sent a reply of some description, most responses were couched in very general terms and there were disappointingly few concrete examples given of initiatives against particular organized criminal activities or groups. Among these - perhaps reflecting the activities of most enforcement agencies, as well as the common belief that prosecution reduces crime - most related to what were primarily law enforcement operations rather than crime reduction strategies. Moreover, few were described in sufficient detail to allow even the most basic analysis, and hardly any contained any evidenced evaluation of their results. With respect to initiatives in which at least some success was claimed against organized vehicle crime or trafficking in human beings, only sixteen responses contained examples of potential value to our discussion here. Between them, these replies provided 11 distinct examples of ‘successful’ initiatives against car theft and six against trafficking in human beings. The 17 relevant examples are briefly summarized in Table 2. As the replies to the questionnaire were provided in confidence, the countries from which the examples

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were provided are not named. We now comment briefly on these examples in terms of (i) the characteristics of the interventions, (ii) assessment of the results achieved, (iii) their value as examples of good practice, and (iv) messages about unsuccessful interventions. It is worth mentioning at this point that it is beyond our scope to examine more complex questions relating to the replicability of such interventions in the same or different contexts with similar effects. There are, however, grounds for cautious skepticism about this.

Table 2 Summary of Examples Provided in Response to Falcone Questionnaire A.

‘Successful’ initiatives against organized vehicle theft

Description of initiative

Agencies involved

Outcome

Checking all vehicles on a key shipping route at busy time of year, using computer link to register of stolen vehicles.

Police and Customs

25 stolen cars recovered

Focus on stolen car parts: X-raying of all containers on ships leaving ports, checking against paperwork on stated contents

Police and Customs

No evaluation

Systematic checking of identity of all vehicles involved in accidents

Police, insurers and registration authority

No evaluation

Targeted operation, surveillance of suspect workshops

Police

New database of stolen vehicles, updated quickly

Police

No evaluation

Community education re car theft

Crime prevention

No evaluation

Register of ‘written off’ vehicles

Police

No evaluation

Stolen vehicles register sent to Interpol

Police

No evaluation

Operation aimed at reducing thefts of cars on trips to a neighbouring country: police stops, stricter registration checks, public education campaign

Police, insurers and registration authority

Targeting of suspected scrapyards, stop checks of motorbikes

Police

28 stolen motorcycles recovered

‘Control of origin’ checks when cars sold

Registration authority

No evaluation

Arrests, workshops closed down

Thefts down, some arrests

25 B.

‘Successful’ initiatives against trafficking in human beings

Description of initiative Agencies involved Focus on Turkish and Chinese gangs Police plus research suspected of smuggling illegal immigrants; organization analysis of financial transactions, phone taps, intelligence, surveillance material, etc.

Outcome Understanding of gangs and their methods. As yet no arrests.

Penalization of trafficking in humans (not previously illegal!)

Legislators

No evaluation

Readmission agreements (to country from which traveling) when illegal immigrants caught

Government

No evaluation

More border controls

Government

No evaluation

International intelligence-led operation, included focus on forgers of false papers as well as organizers of smuggling

Police, Customs, immigration

Arrests of forgers and smugglers, 300 immigrants returned

Anti-trafficking for prostitution: embassy/ Police and embassy visa police checks of suspect visa applications

40% reduction in applications

Characteristics of the interventions Perhaps unsurprisingly, given the fact that nearly all those invited to contribute were law enforcement agencies, many of the examples given by respondents were in essence law enforcement operations. Most, too, were primarily police operations, although they often included assistance from, or partnership with, other agencies. Typically, these involved the use of intelligence gathering methods such as informants, surveillance and financial investigation, followed by a series of planned arrests. A few initiatives were more ‘extra-judicially preventive’ in character, notably those involving systematic checks of identity or validity (usually against police databases or against authorizing documentation) at key points in systems involving the transportation of property or people: for example, checks of shipments of cars or containers, checks of visa applications at embassies, or checks of the identity of vehicles involved in accidents. Few, however, appear to have involved sustained efforts to analyze the structure of the organized crime groups involved and their methods of operation. The major exception is the analysis by a research organization in conjunction with the police, which was aimed primarily at understanding the nature of particular (ethnically based) organizations involved in the trafficking of illegal immigrants, and the methods and routes they used in achieving this. Such an approach comes closest, among all the illustrative cases provided by respondents to the questionnaire, to the ideal, advocated by Ekblom and others (see below), of approaching crime prevention first and foremost through a careful and comprehensive analysis of the nature of the problem to be addressed, and its causes.

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Assessment of results Many stated that no evaluation of the outcomes had been undertaken, and most of the results which were specified consisted of numbers of arrests made and/or items (e.g. vehicles) recovered. Moreover, although a small number of replies indicated that the main outcome had been that of, so to speak, ‘putting a gang out of business’, very few went further to consider whether the initiative had closed specific opportunities for illegal activity which other gangs might exploit in the future or, indeed, had already exploited. Good practice A few particular elements of the initiatives described above – most of which have already been mentioned - seemed to us worthy of recommendation as ‘good practice’ and are listed below. However, it is important to stress that no single ‘practice’ is likely to be effective on its own: one of the most important messages about the reduction of organized crime is surely that initiatives have to be comprehensive, coordinated and carefully thought through. It is also vital to acknowledge that what works in one kind of social, cultural, economic, legal and/or physical context may not do so well in another (cf. Pawson and Tilley 1997). At the very least, the initiative may need to supply the explicit ‘background ingredients’ that are naturally present in other locations.   



Tackling the production of false papers (i.e. forgery operations) at the same time as the smuggling of people per se. Raising of awareness of specific threats among potential victims; a good example is the campaign aimed at travelers to a neighboring country, warning them of the dangers of their vehicle being stolen by organized gangs. Systematic checks of every vehicle at particular key points – or ‘hot spots’ - at particular times (e.g. the checking of every vehicle for one month on a shipping line). This not only leads to the recovery of stolen property, but even where there are corrupt advance tip-offs - can help to disrupt the operations of gangs who may find the risks too great and have to move their operations elsewhere. International sharing of up-to-date databases (e.g. of stolen cars) to be used in the above kinds of checks.

It is also worth noting that, although no specific examples were given, several respondents referring to trafficking in human beings mentioned the problem of persuading victims to cooperate with the authorities in giving information or evidence about the gangs that have arranged their passage. This appears to be very difficult even where the gangs continue to exploit them after their arrival, as many victims fear either reprisals or deportation if they come forward. In this context, ‘good practice’ certainly includes the provision of effective witness protection schemes and possibly offers of immunity from deportation for those who give evidence. In the absence of such measures (which can be expensive), it is unlikely that any significant inroads will be made in host countries.

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‘Unsuccessful’ initiatives Finally, although respondents were asked also to provide examples of ‘unsuccessful’ initiatives against organized crime, relatively few did so. The most often mentioned types of initiative in this context were generalized media campaigns (e.g. about thefts of cars). Otherwise, respondents simply mentioned obstacles encountered in broadly ‘successful’ operations, especially lack of cooperation between countries in sharing information. It is emphasized, however, that evaluations of ‘failed’ initiatives can be as valuable as those of more ‘successful’ interventions, as sources of learning for other countries (or even for the same country at a future date). Some case studies More detailed accounts of interventions to be used as case studies were obtained from a variety of other sources, including follow-up interviews with participants in initiatives which came to light through the questionnaire survey. These cases, which will be used to reinforce some of the general points above about the need to promote more analytical and prevention-focused thinking about organized crime, including the value of thinking of criminal events in terms of ‘scripts’ which can be disrupted through carefully targeted interventions, have been selected as ostensibly the most successful discovered in the course of the research. They will also help to underline the critical point that organized crime and its prevention need to be understood at two levels. First is the level of individual criminal events and the sequences of scenes and scripts of which they are part. Second is a range of higher order entities and processes which are more extended in space and time, for example business niches for making criminal profit; criminal markets; the networks and organizations that occupy the niches and transact in the criminal markets; the careers and life cycles of individual offenders and illegitimate organizations and networks; the system of crime promoters at the periphery of criminal organizations (such as corrupt or inadequate regulatory bodies); and the whole ecosystem, or economy, of legitimate and illegitimate organizations and networks, in which specific niches, markets and business careers for criminal organizations appear. Let us begin, however, with a very simple illustration of how an analytical approach can help to focus attention upon points in the criminal ‘script’ at which preventative interventions can have a significant impact (if only temporary) on the capacity of organized groups to continue with a well-developed ‘scam’: Case study 1 Car theft and credit fraud In this case, a car theft was initially brought to the attention of the UK authorities by German police officers, when a stolen (German owned) Mercedes Benz was located via its satellite tracking device on a dockside on the English south coast. Several additional vehicles inside shipping containers were then located by the UK police. It transpired that these had been stolen by an organized crime group – using both UK and German offenders - and were all destined to be shipped out for sale in Nigeria. The UK and German offenders each had specific roles to play. In the UK, offenders fraudulently applied for American Express credit cards using the true names and addresses of innocent individuals. They then telephoned the Post Office purporting to be these individuals and asking for their mail to be redirected to another address, to

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which they had ready access. Because insufficient identifiers were requested by the Post Office at that time to make this fraudulent activity difficult, the redirected credit cards were delivered directly to the address that was accessible to the criminals. Now, armed with fraudulently obtained credit cards, and false passports to match the names on the cards, some of the UK criminals then presented themselves as tourists at a car rental organization in Germany and hired the vehicles. These ‘couriers’ then passed the vehicles to German ‘drivers’ who delivered them to a ‘fence’ in Germany. The fence then arranged for false number plates to be fixed to the cars and for another set of drivers to take the cars to the docks and by ferry to England, delivering them eventually to a shipping company. The organized crime group included a corrupt shipping clerk who provided the necessary documentation. Innocent parties included the ferry, shipping company, container company and, finally, some truck drivers who were to deliver the cars in containers to the docks for the voyage to Nigeria. The UK and German police were only able to arrest the shipping clerk and the drivers who worked for the German fence. These offenders refused to name (or else they genuinely did not know) any of the other members of their organized crime group. Many individual crime events combined to form this organized ‘scam’, including:           

Criminal conspiracy Forgery Make counterfeit documents Obtain credit card by deception Steal cars - theft - obtaining goods by deception Receiver handles stolen goods Courier handles stolen goods Illegal entry into UK with a false passport Shipper - aiding and abetting a crime Handling stolen goods - courier 2 Handling stolen goods - new ‘owner’

A systematic approach to crime reduction would require each of these events to be fully analyzed in order to understand both how it was generated and how it fitted into the larger picture. Each could then be tackled by devising a preventative strategy to make it much harder for others to repeat the event in the future. Taking one of the above crime events as an example, it required relatively little analysis to understand how the American Express cards had been obtained and to come up with a ‘solution’ which appeared to have a strongly disruptive impact on the criminal ‘script’, both at that point and more broadly. Since the cards were obtained by diverting new and genuine cards into the hands of the criminals by telephoning through a ‘change of address’ to the Post Office, the weak link obvious to all was the ease with which mail could be re-directed. The UK Post Office was subsequently persuaded to change its practice so that people wishing to divert their own mail now have to attend in person with proof of identity. It may remain possible to counterfeit this identity (see Jones and Levi, 2000) – and the controls are not perfectly implemented - but the extra risk of personal rather than remote ‘appearance’ has to be taken by offenders. (UK card interception losses have been rising again 1998-2002, but not from mail redirection.)

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This obvious fix may work for a while, but criminals can be quick to adapt. A more robust and sustainable set of solutions would probably require a much more rigorous analysis of the crime event against each of its causal factors. Such analysis could be done in many ways, but in subsequent case studies we will use the ‘5 IS’ model mentioned above. This will not be followed slavishly: rather, those elements of the model which appear most relevant to the case will be used as a simple framework within which to structure the analysis. Before doing so, a brief outline of the model will be presented. The ‘5 IS’ model The ‘5 IS’ (Ekblom 2003a) is an analytical tool, useful as a heuristic device for breaking down any set of criminal activities into its constituent parts, and examining the environment in which it occurs for elements favorable or unfavorable to the successful commission of crime. The five I’s in its name refer to a recommended sequence for analyzing and responding to crime problems (Intelligence, Intervention, Implementation, Involvement, Impact), similar to the ‘SARA’ sequence in ‘ProblemOriented Policing’ (Scanning Analysis Response, Assessment – see Leigh et al 1998). Building on the earlier ‘Conjunction of Criminal Opportunity’ model (Ekblom 1999, 2003), the ‘5 IS’ also identifies a total of 11 distinct influences upon the commission of criminal acts, which may come together in different combinations to facilitate (or, in other forms, to inhibit) the event. These range from, at one end of the spectrum, offender-related causes and, at the other, situation-related causes. The basic way of using the model is to work systematically through it, considering how each of the elements applies to the particular type of crime problem being addressed. Thus, for example, in analyzing the problem of trafficking in human beings, one might start by looking at what factors help to promote and sustain this kind of activity, and whether these can be changed, then move on to consider whether there are sufficient ‘crime preventers’ to discourage it – and if not, whether existing new ones can be created in theory and in practice, and if so, at what cost - and so on. In other words, it is not just a question of doing more with the same resources, but looking at the overall package of measures and seeing if it requires supplementation. Even if some of the regulatory measures are too expensive in financial or human liberty terms, one must examine what the offenders or sets of offenders require to be able to do in order to accomplish different sorts of crime and volumes of crime efficiently and (for them) safely. This kind of analytical process is sometimes referred to as setting out to understand and reveal ‘crime scripts’ (Tremblay et al 2001; Cornish and Clarke, 2002).44 Ekblom’s 11 ‘generic causes’ are listed below: Criminality (predisposition) Resources to avoid crime Readiness to offend Resources for crime Anticipation of risk, effort and reward Offender presence in situation Target person or property Target enclosure Wider environment Absence of crime preventers Crime promoters

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It should be noted that these ‘causes’ are derived mainly from literature on ‘lower level’ forms of individual or small group criminal activity, especially predatory crimes such as theft and robbery, and for that reason not every one is of immediate relevance to organized crime, where much of the criminal activity is geared towards the rather different aim of supplying illegal goods and services (and sometimes otherwise legal cut price contraband) to large numbers of willing buyers (Naylor, 2002). Moreover, some of the ‘causes’ relate to issues of motivation and predisposition, which can usually be taken as a given among organized criminal groups. As will emerge in the case studies below, resources for crime, crime promoters, crime preventers, the wider environment and anticipation of risk effort and reward, appear to be the most useful analytical categories in this field of crime. Case study 2 Payment card fraud One of the areas in which a great deal of preventative activity has occurred, and where – unlike most forms of organized crime – good data are available to enable evaluation, is payment card fraud. We review here two sorts of intervention: the first relates to the counterfeiting of cards, and the second relates to the assumption of false identities to commit card fraud. The first, in particular, involves extensive privatepublic sector co-operation. (i) Counterfeiting of cards We begin with the establishment at Interpol headquarters of a card counterfeit collation and distribution centre in 1999, funded by sectors of the industry internationally, i.e. American Express, Discovery (a US card issuer), MasterCard International and Visa International. Interpol set up a secure, very high picture resolution Internet site – accessible by password to authorized persons only – into which details of counterfeit cards, counterfeiting equipment and recovered cards are fed. Each item is analyzed, series are grouped together, and if there is one feature that is different (for example, the hologram), then it is given a new identification number even though other features may be common to other detected counterfeits. One can see any other card and search on any particular features for others. Both the industry and the police send information in, and the separate law enforcement database enables the law enforcement bodies (but not the private sector) to review the intelligence that relates to the cards and equipment. This is a quality speedy input and dissemination system that improves the capacity of the authorities to deal with card counterfeiting more effectively: the extent to which it is actually used depends on how much resource individual police forces wish to put into tackling the problems. After a skeptical start, interviews suggest that it is being used more often for crossreferencing cases on a global basis, and for pooling intelligence about card design (though it would be more useful still if it were faster so that more current information was included). This has not only made the collation of criminal evidence easier and more coherent, enabling crimes in different countries to be put together, but also has made preventative intervention quicker, since commonalities can be spotted earlier and – where nation states can be cajoled into action – the evidence can be used to justify operations against counterfeiting plants and other resources for crime. There is a sense in which the industry could do this collectively itself, but the component of police action – and especially multi-national action - would then be missing, so it is in both parties’ interests to operate this system. From 2004, Interpol will continue to

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maintain this system for countries outside the EU, but the EU will have its own system serviced by Europol and funded by financial institutions. (ii) Identity fraud The impact of identity fraud upon business is substantial, and the collection of data on individuals and the counterfeiting of their identities for credit purposes is prima facie evidence of organized crime (though some impersonation fraud is opportunistic). The information presented below has been provided by those organizations that collect reliable statistics on the extent of identity fraud in the UK. Together they represent most commercial victims, though there will always be companies that do not contribute data, so should be viewed as the lowest reliable figure, rather than a true full blown picture on the extent of criminality in this area in the UK. Systems in other European countries are less comprehensive, and there are no corresponding international systems. However, Visa and MasterCard do run international intelligence-gathering systems with which they seek to identify fraudulent Common Purchase Points, especially in relation to fraudulent merchants. This is done by looking for common factors in the place of use among cards subsequently counterfeited or used for Card Not Present transactions, whether for transactions conducted by telephone or over the Internet. The UK umbrella organizations are CIFAS – the Credit Industry Fraud Avoidance System - and APACS – the Association for Payment Clearing Services. The CIFAS system’s database contains information on frauds and attempted frauds, into which member organizations drawn from a variety of credit-granting sources are required to input data once they have identified that the ‘bad debt’ is intentional fraud, so that others checking against the name and address of the same person can avoid becoming victims. In principle, this can be a pure private interest collective, though public sector agencies are invited to join and are allowed to circulate special notices to request information on particular individuals, fulfilling an enforcement as well as a preventative function. The data show the number of addresses where their members have filed CIFAS loadings – which command a high probability of proof of fraud. They clearly support CIFAS’ contention that false identity fraud is increasing dramatically, from 5,000 cases in 1991 to 20,000 in 1999, rising to 75,000 in 2002. Among these 75,000, there were 32,000 individuals who were impersonated to obtain credit. Since then, figures have continued to rise, with 42,210 false identity cases and 31,526 impersonation cases in the first nine months of 2003 alone. With remote account-opening, attempts are easier, but 90 per cent of attempts were prevented by checks on the collective database in 2002. More broadly, there have been considerable changes in types of plastic card fraud in the UK since the early 1990s. As Table 3 shows, there was at first a considerable fall in organized (and unorganized) card interception, as shown by ‘mail non-receipt’ data (lost or stolen in transit), due to targeted direct delivery (registered post) to customers of cards that otherwise would have been sent to high-risk areas, scientifically identified through previous fraud experiences. In other cases, customers are required to collect their cards from the bank. The reasons for the substantial rise of mail non-receipt subsequently are not readily explicable, but are likely to reflect low pay and recruitment difficulties in some parts of the postal services – making employee vetting impractical – and reduction in secure mail supplies. Nevertheless, losses remain much lower than they were and would have been without the interventions.

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TABLE 3. PLASTIC FRAUD LOSSES IN THE UK, 1991-2002, £MILLION

1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002

Card not Present

Identity fraud

Counterfeit

Mail nonreceipt

Lost and stolen

0.4 1.3 1.6 2.5 4.6 6.5 12.5 13.6 29.5 72.9 95.7 110.1

2.0 1.4 0.9 0.7 1.5 6.7 11.9 14.5 16.8 17.4 14.6 20.6

4.6 8.4 9.9 9.6 7.7 13.3 20.3 26.8 50.6 107.1 160.4 148.5

32.9 29.6 18.2 12.6 9.1 10.0 12.5 12.0 14.7 17.7 26.8 37.1

124.1 123.2 98.5 71.1 60.1 60.0 66.2 65.8 80.1 101.9 114.0 108.3

Total

165.6 165.0 129.9 96.9 83.3 97.1 122.0 135.0 189.4 317.0 411.4 424.6

Likewise, the impact of lost and stolen cards in fraud losses has been reduced. This has happened largely through methods to prevent multiple usage of stolen cards: these include electronically transmitted ‘hot card’ files that have changed the percentage of fraud committed before the card is reported stolen from 20 per cent in the early 1990s to 80 per cent in 2002. The profits to organized fraudsters have been further reduced by card issuers developing neural network and other devices for predicting spending patterns, including how long it takes to get from one expenditure area to another, to estimate the chance that a card has been compromised but not yet reported. The chip card is part-replacing the magnetic stripe in most of Europe, thereby eliminating – for the present – counterfeits in situations where cards have to be displayed. This is because the chip prevents the fraudulent re-encoding of numbers to false, but genuinelooking, cards. Combined with the use of a personal identification number (PIN) to replace the signature, substantial further falls are anticipated. Placing the above changes within the framework of the Ekblom ‘5 IS’ (CCO) model, it can be argued that between them, these two initiatives have produced potentially effective responses to all the main dimensions of the crime commission framework: 1. Crime promoters and preventers The projects described above organize collective knowledge of counterfeits, applications for and delivery of payment cards, enabling the victimization experiences of some to be channeled into the prevention of new offences against other victims who normally would be in separate ‘institutional boxes’. Counterfeiting of cards has also been made substantially harder by the introduction of chip smart cards whose functionality can no longer be copied from magnetic strips by means of simple, commonly available card readers. The number of potential crime preventers has been increased by the payment of rewards to retail staff who retrieve payment cards where there has been attempted fraudulent usage. In some high risk areas, higher rewards have been paid, though the effects of this are commercially confidential. The requirement of the PIN in the UK and – eventually – in the rest of Europe, will provide a further technological form of prevention.

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2. Wider environment Commercial pressures have inhibited action in the wider environment, though the existence of data sharing via not-for-profit CIFAS in the UK (though not elsewhere) enables greater care to be exercised in giving credit where another credit grantor has already experienced suspected fraud. Thus pooling data in an atmosphere of mutuality enables effective risk management. 3. Target person/property The characteristics of cards have changed over time, making counterfeiting harder. Post-code analysis has reduced the volume of cards available to steal in the postal system. Likewise, proactive expenditure monitoring has lowered the amount of fraud per stolen card, making more attractive a shift to applications frauds using fictitious or stolen identities. However, target hardening of cards and their distribution does not directly affect the opportunities for mail-order or Internet fraud. Counterfeiting the card is the goal of a preparatory scene for the subsequent, repeated, deception scenes. The card is the target of the crime of counterfeiting; the counterfeit card is a central resource for crimes which involve obtaining money by deception etc. 4. Offender presence in situation Card fraud in which offenders are not physically present have been harder to deal with than those in which they are present – where there is that ‘risky’ moment when the card is actually tendered. However, four fifths of frauds still involve the physical presence of the offender with a genuine or counterfeit card. 5. Risk, effort and reward More effort is required to make the same amount of money from payment card fraud than a decade ago. However, it is doubtful whether the risks of arrest and conviction for organized criminals are higher today. Strictly, this component of the model covers the offender’s perception/anticipation of risk etc. The objective risk, effort and reward are supplied by the other precursors, e.g. the crime preventers and the target enclosure. 6. Resources Identity theft requires more resources than simple card theft, involving for example collaborators inside organizations to obtain personal details. At the same time, Internet programs generating valid card numbers are freely available, and the cost of production for counterfeit cards has plummeted, along with the need for rare craft skills in their manufacture. Summary: outcomes and their interpretation It appears that these initiatives have had a substantial and continuing effect on several aspects of payment card fraud, involving both opportunistic and organized criminals. The fall in plastic fraud costs until the late 1990s was the result of protective measures inhibiting opportunistic and amateur fraudsters, as well as some multiple identity fraudsters: these preventative effects continue. However, there remain sufficient opportunities for more skilled and well-organized fraudsters to make substantial sums, and the fraud figures escalated rapidly, particularly in Card Not Present situations,

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before stabilizing after 2001. As Ekblom (1997) notes, there is a continuous process of mutual adaptation between potential offenders and potential victims: hence the need for continuing reanalysis of payment card crime problems and remodeling of organized crime reduction efforts. At this ‘evolutionary’ level of analysis, the rate of crime is influenced by the difference between the rate of adaptation and innovation by offenders, and its counterpart by preventers. Case study 3: Vehicle Theft and Fraud: Operation Pimpernel and the Vehicle Fraud Unit One example of a promising project in the area of vehicle crime combines the reduction of car theft with that of fraud. The ‘Pimpernel’ concept was conceived at the 1996 police National Stolen Vehicle Conference at Hendon, at which attention was drawn to the growing problem of fraud in the motor finance industry. ‘Operation Pimpernel’ was launched in Merseyside in June 1997 and later extended to London, where the Finance and Leasing Association currently finances the Vehicle Fraud Unit of five police officers. A major aim of Pimpernel – which involves CIFAS working in close cooperation with police forces - was to collect systematic information on vehicle hire frauds, allowing cross-correlation over wide areas of names, addresses and other details used in such frauds, and hence the production of a more strategic picture of how it is done and who is involved. Although there is room for debate about the realized resale value of vehicles recovered, the trade value of vehicles recovered in the Merseyside phase of the operation was dramatic. The outcomes 1997-2000 can be summarized in costeffectiveness terms as:   

Operation commenced August 1997: costs input from F.L.A. totalled £372,000 164 Vehicles recovered by August 2000, with total estimated value £1.4 million 212 cases referred and 146 arrests - Detection Rate 78%.

Subsequent to our research, the FLA-funded Vehicle Fraud Unit operating in the Metropolitan Police District has made 154 arrests from September 2001 to December 2003, and has recovered 313 cars with a combined Bottom Book Value of £4.3 million and total loan amounts on the vehicles of £9.3 million. Interviews with the parties indicate that Pimpernel also brought some wider benefits through the identification of benefit fraud and other serious criminal activity (though falling short of the NCIS value threshold per group) arising from the intelligence gathered from motor finance cases and their investigations. Although there was some displacement to other areas of the UK, the number of hired/leased car fraud cases in the Merseyside area dropped markedly. As is required by the CIFAS rules, members were committed to provide evidence for criminal prosecutions rather than to drop the case once the property had been recovered. Due to the crimes being reported and recorded, the car numbers were entered on the Police National Computer, which substantially improved the recovery rate. CIFAS and the FLA also developed a special system known as PATSY, whereby cars prohibited by contract from leaving the UK as a condition of lease or hire are registered on a database on payment of a fee per vehicle. Vehicles leaving the UK –

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for example, via the Channel Tunnel - are checked electronically against this database, and if they register a ‘hit’, the credit grantor is informed and the authorities (if necessary, those in another jurisdiction) can stop the car from exiting border control at the other end. Thus, a 2002 Range Rover that had been obtained by finance fraud activated the Automatic Number Plate Recognition (ANPR) at the Channel Tunnel. Following the alarm, Police Officers were dispatched and intercepted the vehicle prior to it being loaded onto a Shuttle. The two occupants were arrested but were later released after it was established they had been employed to deliver the vehicle to France. Had it reached France, it was to have been containered to Nigeria. Nevertheless, the £40,000 vehicle was seized and has now been returned to the PATSY Member involved. At the end of 2000, there were 370 vehicles on the database and there had been 28 ‘hits’. This has led to substantial savings - in 2000, £150,000 worth of vehicles were recovered directly, with intelligence providing leads to a further £190,000 in savings and to a shift in the cost-benefit equation for offenders using this particular method. Partly stimulated by anti-terrorist prevention needs, 2004 will see a greater use of mobile ANPR systems with all Police Forces and a far wider use of the static systems that use town centre CCTV as a feed for information. Finally, there are cases that outwit the system. For example, organized thieves rented cars in Germany – especially Mercedes – and they brought them to the UK to transport them from deep water ports to the Middle East and the Far East. These are not of direct interest to the finance industry in the UK, nor directly to the police since they are not their recorded crimes, nor to Customs & Excise since they are not assigned matters under English law which allow Customs intervention. However, they may be of interest to Europol and to a strategic prevention policy, in which case, the difficulty is to motivate performance for cross-border policing, when time spent on one sort of case is at the expense of another that is an efficiency measure for the agency. Using the ‘5 IS’ headings again, the following comments can be made: 1. Crime promoters and preventers While car thieves are the offenders, promoters for the theft scene/crime include those who help thieves to dispose of the stolen cars inside and outside the UK. The promoters are, in turn, offenders in the ‘handling stolen goods’ crime scene – both inside and outside the UK. Preventers could include the police and finance companies, though the former need to be activated in areas that are not core to current performance indicators: hence the motivation supplied by compensation, though even that was not enough for some forces, since (in the absence of recruitment possibilities elsewhere) they judged that their staff time would be better spent on other policing. CIFAS, too, which co-ordinates fraud experiences and disseminates learning from them, could be described as an indirect, strategiclevel preventer which develops and builds preventive capacity in others. 2. Wider environment Commercial pressures to generate new business remain high. These motivating aspects of the wider environment can apply to preventers and promoters as well as

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to offenders. The 5 IS model can be adapted to include the particular influences of the ‘market’ and other aspects of the wider environment in this case. 3. Target person/property It is unknown at present whether particular firms were targeted for this process – or whether offenders were simply targeting property. Convenience suggests that other things being equal, offenders will choose places where they believe that they can ‘pass’ scrutiny most easily, sometimes with insider collaboration. It should be clarified at this point, however, that in most cases it is the goods that are owned/produced by the firm that are the target and that the firm and/or its individual employees are the owner/manager of the target property – and hence they are more usually considered to be crime preventers. However, if they are careless or are embarking on an aggressive outreach programme, they may unwittingly become crime promoters. The physical and procedural structure and character of the firm will constitute target enclosures and wider environments. 4. Offender presence in situation It is rare for the finance company itself to see the offenders, though they (or their ‘front men’) have usually to be seen by someone. It is particularly important to ask ‘how does the offender get access to the target enclosure, and/or the target?’ 5. Risk, effort and reward Normally, in the absence of the new technology and police co-operation, the risk is low and the reward is high. The effort involved is moderate, though clearly some time has to be spent in acquiring and moving the property. 6. Resources Identity documents are readily forged and/or created, using data obtained elsewhere from ‘research’ or from theft/diversion of genuine documents, since offenders know that there will be some credit checks on the person apparently taking out finance. Once obtained, relatively few resources will be needed, since cars can be driven out of the country or shipped in containers quite legitimately (except where they try to do this clandestinely, in which case some absence of documentation has to be found). At the final destination, the offenders need access to some willing ‘ringers’ – often apparently legitimate dealers – though there are jurisdictions where legislation is or was inadequate to protect the original vehicle owners, and/or where police were either unmotivated or corrupt. The car ringers act as crime promoters who supply particular resources and give access to other scenes. Outcomes and their interpretation The risks for offenders have been increased and the rewards to effort reduced, making other crimes relatively more attractive, though for vehicle specialists car theft is also now much tougher. Measurable benefits in cars not stolen and recovered are discernible, and this should continue in the longer term. However, the extent to which these benefits are partly a product of the UK’s extended national borders and the

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greater time taken to arrive at a foreign destination is debatable, and this affects the generalisability of the process. Case Study 4: Money Laundering: Operation Uproar There are varied levels of intention in money-laundering investigations and initiatives. Some of the more general issues have been reviewed earlier, but we report here a case investigated by the National Crime Squad that has wider ramifications. This concerns international funds transfers, whose criminal funds origin even now remains substantially in doubt, but which highlight weaknesses in the international system. The Money-Laundering Investigation Team of the National Crime Squad (NCS) deals with cases that require more than the modest resources of branch teams, though branch interest and commitment has increased very substantially since 1998. However, even the central unit was not at the time of our research tasked to conduct environmental scans to look strategically at where the risks are. If they were to do so, then they would probably need to look at a country – whether the UK or a less developed country – and review where the chief money-making opportunities are, and where the major money flows are, and where they would expect to find the key players, whether they be despotic politicians or launderers (or both). This is the niche level. There should also be some sort of market analysis: major criminals like areas of commerce such as mobile phones or computers where there are good opportunities for cash flows and hiding/re-investing money at the same time. The most vulnerable areas are those that are relatively unpoliced. In the UK, after the bureaux de change and despite a considerable effort by the Law Society’s Money Laundering Task Force, the legal profession is designated as a ‘vulnerable’ profession because of solicitors’ ability to place large amounts of money from clients in client accounts (Middleton and Levi, 2003). This - alongside the centrality of lawyers for creating companies and other legal vehicles such as trusts - is why many of the major operations against laundering involve lawyers as active conspirators or as unwitting intermediaries, and is why NCS has put particular effort into developing good relations with the in-house investigators for the Law Society. This case study arose out of a desire to tackle money-laundering more effectively, not in the sense of eliminating it, but in the sense of closing off a significant number of ready opportunities for particular groups to launder their cash proceeds from drugs sales. In terms of possible intervention tactics, an additional factor was that few of the kingpins of the illegal drugs trade suppliers are ever to be found in the UK connected to trafficking. However, intelligence reports suggest that they like to keep an eye on their money once it has been generated, so there is a better chance of catching and incapacitating them by going after the money than by drugs interdiction or inland operations. The UK Customs group reviewed their anti-laundering efforts, and concluded that all that they had done was to tack on some financial investigation to existing interdiction and prosecution efforts, but by itself, this had no discernible effect on laundering opportunities. One stage of the process for higher level offenders was to collate the funds from wholesaling of drugs in different areas. This was where they anticipated the greatest effects on drugs suppliers, since drugs lost from normal interdiction at points of entry were merely an opportunity cost, whereas funds lost after the whole

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process of drugs sales were psychologically more significant and had involved greater time and capital expenditure by the crime group. After some careful market and intelligence analysis, they concluded that large amounts of sterling were being converted in the UK especially into dollar – preferred by Colombians and many other dealers, since it is the most readily convertible international currency - but also into other high-denomination currencies (such as Dutch guilders and Deutschmarks before those currencies were replaced by the Euro), before being exported, presumably in cash. If this conversion process could be inhibited, then the dealers would have either to export bulkier sterling or to find some other means of transferring funds, even if they did not desist or reduce the scale of their criminal activities. In the late 1990s, UK Customs & Excise shifted towards a focus on standalone money-laundering, having reasoned on the basis of analysis of prior cases that they could have saved substantial investigation time by doing so rather than waiting for drugs and other conspiracy charges. Nevertheless, after some SWAT analysis, they concentrated on what they saw as a weak spot in regulation that was also susceptible to some ‘quick wins’: unregulated bureaux de change in which cash from drugs dealers is laundered. The first case they tried involved a bureau that was being used as little more than a front for a set of major criminals: the owner received a lengthy prison sentence and a large confiscation (though small in relation to his estimated proceeds). This was highly profitable business: in El Kurd, the owner had made over £1 million personally in a short period. HMCE decided to target organizations that appeared to exist principally to launder money and were not part of the mainstream organized crime groups: they were surprised by the high volume of cash that was funneled through such places. Apart from retail banks, which were regulated fairly well for cash deposits under the money laundering legislation, the main area for bulk cash conversion was the multitude of unregulated bureaux de change, which existed mostly in tourist areas of London to service the tourist trade, in areas such as Queensway and Victoria. HMCE examined the most likely sources among the more modest number of wholesale currency traders, using existing informants in the business area, with whom they had tried to build relationships and develop as Covert Human Intelligence Sources. From them, they discovered that some bureaux de change charged 1.5-2% above market rate for large currency swaps with criminals, who thereby purchased the anonymity no longer available in retail banks, due to money-laundering regulations applied there. Reasoning that if the transactions had been legitimate, there would have been no need to pay the premium, they carried out some surveillance, noting Colombians entering with large carrier bags full of sterling, which were left overnight – presumably for counting and checking for counterfeits – and then collecting in less full bags the following day with high denomination foreign currency. HMCE received a voluntary suspicious transaction report (known formally as a ‘disclosure’) from a wholesale-level bureau de change that a Colombian bureau owner had been coming in and changing £100-200,000 regularly, but had now come in with £400,000. A small local newsagent-cum-sweetshop that aroused suspicion was owned by a chartered accountant and his wife: in less than three years, an estimated $30 million was transmitted through this store. The customs monitored people coming in and out, and the wife purchased $750,000 from wholesalers, which was then delivered to

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Colombia. Mobile observations were very difficult because of considerable antisurveillance skills (resources for offending) of Colombians, who would collect bags full of dollars but then lose the surveillance personnel. Meanwhile, surveillance also developed on another bureau in South London, which had a car dealership, cheap telephone and internet café, etcetera attached, and whose owner also ran a precious stones business. Observations led to the identification of an air crew member, who was stopped and found with $170,000 on her, which funds were forfeited. HMCE decided to pay the sweetshop a ‘routine’ second educational visit to warn about money-laundering risks, and the owner signed their form for a copy of the moneylaundering regulations: later the same day, she ordered $750,000 in money, with the funds delivered elsewhere. However, there was still no causal link established with a predicate offence, nor with any group of drugs traffickers. Surveillance eventually identified some major Colombian alleged organized crime figures, when very large amounts of money were being collected: the owner of the bureau conducted those transactions personally. Eventually, they closed down five bureaux de change and made 21 arrests. When the apartment of the lead Colombian was searched, they discovered $750,000 concealed under the bath panels, plus a large suitcase similar to the one noted on surveillance, with a concealment inside containing substantial narcotics traces. The team also found substantial records, which included references to substantial telegraphic transfers totaling $70 million to Colombia and the US. Apart from the 13 convictions in 2001 and 2002 arising from Operation Uproar (and seized cash totaling $1 million) – and a number of Customs operations subsequently ran into evidential problems - intelligence suggests that there was a significant impact on Colombians in London because they could not find sufficient bureaux willing to exchange bulk sterling for dollars, so had to ‘smurf’ in smaller quantities, generating more effort and less reward. Though we were unable to investigate further, there was likely to have been a secondary impact in other European jurisdictions, since London was being used as a clearing centre for other countries. There was also an upsurge in suspicious transaction reports from other bureaux, suggesting an increase in surveillance by them, whether due to enhanced awareness or to fear of consequences such as being prosecuted. There were, however, some disappointments, insofar as letters of request for information to the Colombian authorities did not yield results rapidly enough to satisfy the time limits requirements of the English courts, given that some suspects were in custody. So there were difficulties in getting the money trail information utilizable as evidence in court: a common difficulty in international cases. There are also structural problems because the judiciary are unhappy to see a large number of defendants tried simultaneously, and they require indictments to be split up to make cases manageable. This creates logistical and admissibility complications in the legal process. Of course, many of the direct and indirect indicators of impact of this and other cases are patchy, and it is difficult to attribute any longer term effects to these individual ‘blitzes’ of enforcement activity. Once again, key elements of this case can be summarized using the ‘5 IS’ model: Crime promoters and preventers Clearly, the Colombian or other groups are promoting the benefits of crime commission to their countrypeople, and fear of violent retribution for oneself and family are key inhibitors for potential crime preventers. The anonymity of bureaux de change, the absence (at that time, remedied in June 2001) of ‘fit and proper person’

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criteria for their ownership or management, and the absence of criminal liability for failing to identify customers or reporting suspicions helped to promote the activity, at least until Customers were granted the power to regulate: but the regulatory tasks for such a small business sector remain considerable. Wider environment Large tourism trade serves as a cover for illegal transactions, and economic pressures plus pressure on families in drug source countries make participation in laundering desirable or even necessary. Investigations are taking place into whether the firms would have been viable economically without the laundering activity. Offender presence in situation Laundering is a consensual act normally, and high-level offenders would not need to be present if they could trust their subordinates and the service deliverers. Given the importance of anti-surveillance activity, it is unlikely that innocent neutrals could be persuaded to take the funds. Risk, effort and reward More effort is required to make the same amount of money from laundering or drugs than a decade ago. However, it is doubtful whether the risks of arrest and conviction for organized criminals are significantly higher today. The Proceeds of Crime Act 2002 may have enhanced risks via civil forfeiture as well as post-conviction confiscation, but even skepticism about the proportion of crime proceeds that are laundered is insufficient to come anywhere near bridging the gap between confiscated funds and proceeds. Resources Corruption and/or fear are more important today in neutralizing the financial system. The involvement of professionals such as lawyers and estate agents may also be more important, as a reaction to prohibition. Given that, unlike typical offenders, the couriers and launderers had no previous convictions, this raises questions about the organization of the laundering business and about deterrence that are currently being analyzed. Outcomes and their interpretation It is first worth emphasizing that none of the main UK participants had criminal records or had been in any trouble with the authorities before. They lived disciplined lives from their council flats. This has major implications for our conceptions of risk from different sets of criminal actors: another instance where Godfather imagery fails to match the extended networked reality. In terms of results, it appears that this initiative has had a substantial effect on several aspects of laundering, involving both opportunistic and organized criminals. First of all, enhanced vulnerability of major criminals was noted. More generally, the initiative made it very plain to the authorities that the importance of cash for the drugs trade entails the need to regulate the bureaux de change formally, in terms of licensing and customer identification, at least to strip away excuses from bureaux managers that there was no basis for them to feel suspicious. The Financial Services Authority considered it more appropriate to

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leave to HMCE the task of being the regulating authority of otherwise unregulated bodies to create opportunities for the ‘fit and proper’ vetting of suitability of owners (and perhaps managers). There is also much more awareness of the need for greater efforts to promote economic discipline by creating enhanced risk for failure to implement the rules – in particular, creating higher risk of criminal prosecution among those whose businesses are marginal and therefore may feel they have to launder money to stay afloat, or among those who are pressurized by criminals. Useful methods may include the use of ‘mystery shopping’ integrity checks, as well as more organized Sting operations where appropriate. Presumably, too, fears about civil asset recovery in the UK will lead offenders to export large quantities of sterling from the UK overseas for conversion in foreign institutions. These funds in principle can be seized at exit points or – with less economic benefit for the UK – in other countries at entry points or, elsewhere, at a later date. HMCE and the police have already realized substantial extra sums since the coming into force of the Proceeds of Crime Act 2002. There was no discernible effect of the laundering operations on drugs prices, and any effects on drugs consumption remain unknown. Nevertheless, this represented a strategic approach to the lower segment of the laundering market, seeking to shift offender willingness as well as opportunity. It is too early to tell whether these goals will be realized. Case Study 5: Interdiction: The problem of trafficking in people Interdiction can be used as a strategy to stop events or streams of events (such as major drugs deals) whilst they are underway, by intervening directly in those events, rather than in their prior causes. The interdiction of drugs is one of the most difficult areas of evaluation of effective practice. In one sense, any seizure represents a success, reducing the volume of drugs available; however, in another sense, there are profound questions about what is affected – is it that much harder to get hold of particular drugs in particular places? Is the price affected and if so, is a rise in price likely to reduce effective demand or merely to drive property crime and prostitution upwards, to enable the same amount of drugs to be paid for? What effects do seizures of drugs or even of proceeds have on criminal preferences? Similar questions may be asked of interdiction of people, though there, the chain of communication is less direct and the ‘objects’ trafficked – people – usually exercise some volition, being normally economic migrants whose expected standard of living will rise almost whatever their degree of exploitation in their country of destination. Though they may well have been misled by traffickers and/or by their fellow countrypeople about what benefits they can expect to receive when they immigrate, and some are held in conditions of slavery and abuse far from family, and with an induced expectation of police indifference should they complain. The UK Customs officers interviewed for this study prefer the reduction of specific crimes or at least the reduction in levels of organization and/or extent of particular crimes to the generic prevention/reduction of ‘organized crime’, for similar analytical reasons already rehearsed in this report. As for the specific areas, although UK Customs have the broadest brief of any European Customs authority, they have no

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legal mandate to deal with either vehicle crime or trafficking in people, since these are not ‘assigned matters’. In relation to trafficking in people, they cannot intentionally target any search activities in this direction, but insofar as when they are searching for contraband (drugs or excise evasion), they may come across people rather than drugs, they may act to detain the people before passing the case on to the Immigration and Nationality Service (INS). Given that this issue is an emerging and continuing one, it might be logical to extend their role, since the distinction between legal product excise evasion, illegal product contraband and person contraband is elusive in forensic terms. (Likewise, with their role in relation to documentation required to support this smuggling.) How this might be managed, without cutting across the work of the INS, and how it might be managed in other European countries, is beyond the scope of this review. However, these legal as well as resource constraints are important factors inhibiting potential and willing crime preventers. Among the key elements in the case of people-trafficking we have chosen were a Turkish criminal organization; Turkish and Iraqi migrants; international law enforcement co-operation; suspicious transactions; and rings specializing in offering inter-mediation services. THE CASE: Date Activity Crimes investigated

Investigated people Origin

1999 Clandestine immigration Participation in a criminal organization (art. 416 Italian criminal code); aiding and abetting clandestine immigration (art. 10, cc. 1 and 3, law n. 40/1998) 11 Analysis of information coming from different (also foreign) police forces

Investigations ascertained the existence, within the area of Milan, of members of a Turkish criminal organization responsible for the transit through Italy of migrants (mainly Turkish and Kurd) directed towards other European countries (most of all France, United Kingdom and Germany). In terms of what the 5 IS model would classify as the ‘tracing of resources for crime’, telephone tapping on the mobile phones used by the alleged criminals made it possible to highlight the essential features of the trafficking scheme. These can be summarized as follows and represent the closest scene-by-scene analysis that it was possible to undertake in the study:  the sending of migrants from their own countries to Europe once they had paid the cost of the trafficking services and telephone calls to criminals in Milan in order to inform them about the departure;  intense telephone contacts between the criminal organization in Milan, on one side, and its Turkish counterparts, on the other (there were also many calls between the traffickers and the trafficked people themselves in order to organise the next phases of the journey);  the taking into care of clandestine migrants, at their arrival in Italy, by the criminals and their eventual temporary accommodation in Milanese hotels;

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 the moving towards other European countries with the help of mercenaries (especially trackers) who exploited pre-selected trafficking routes considered as safe;  the crossing of European borders happened, especially in trucks in which migrants were hidden. The analysis of suspicious financial transactions between Istanbul and Milan allowed investigators to discover the transfers of money for the illegal organization operating in Milan. Criminals in Milan recovered the sums sent from Turkey (variable from US$1000 to 1,500 per person) by exploiting some of their nationals (identified during ambushes and shadowing activities). Alternatively, the sums were credited directly to bank accounts in Turkey. Investigators are of the opinion that, between June and November 1998, 681 persons illegally entered Italy with the help of these particular traffickers. Furthermore, through this piece of investigation, law enforcement agents were able to confirm the existence of other similar groups operating in Italy. The following observations might emerge from a ‘5 IS’ analysis: Crime promoters and preventers Clearly, the people in countries of origin wanted to emigrate for a better economic life and perhaps greater physical security. Criminal organizations came into being who would encourage these aspirations. Using the 5 IS model it is important to ‘unpick’ the roles of the players in the various crime schemes. It is particularly important to determine who is the offender for each crime committed, because a single event can be viewed as several different crimes involving a range of people in different, sometimes multiple, roles. The migrants are at one and the same time (a) crime promoters prepared to pay to be part of the crime of trafficking: (b) targets of the crime of trafficking – the human commodities being illegally transported; and (c) offenders themselves of the crime of illegal entry. There are also markets for labor, both in illegal markets – prostitution, for example – and in legal markets – cheap labor without insurance or minimum wage demands. Preventers include customs and private and public sector groups dealing with money laundering. In other cases, they also include transport companies – normally air and road - who because of large fines (and the lost business while the vehicle is off the road during investigations) have a motive to detect illegal migrants. Potential preventers also include inspectorates dealing with health and safety at work and with pay below the minimum wage, who may pick up signs of illegal migrant work, though they may not deal with the organized crime issues. Finally, there is the role of the police in the ‘guest’ environment, who may have a tolerant or corrupt approach to the policing of vice, and who normally would have higher priorities than policing semilicit ‘sauna and massage’ parlors. Where such policing is prioritized at a higher level as part of the struggle against trafficking of women, there may still be conflicts between police actions aimed at getting the women to act as witnesses, with the offer of work and residence permits as an incentive, and the performance indicators of the immigration and nationality service, which often focus more narrowly around deportation and resist ‘incentives’ to women to immigrate in the form of such relaxation of rules.

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Wider environment Hard to defend and survey borders, as well as severe economic conditions in originating countries are crucial here. In this way the wider environment plays a role in criminal motivation where current life circumstances impact upon short-term motivation to offend. Ironically, the collapse of the Cold War has opened up international movement of people, and this provides opportunities for organizers to exploit with suitable logistics and tactics. Target person/property As discussed above, the target is the migrant. Offender presence in situation Ultimate organizers may choose not to appear in various crime scenes, but some organizers must be on hand to escort the migrants, who must themselves of course be present. Risk, effort and reward People trafficking may have become more difficult due to enhanced awareness on the part of controllers. Nevertheless, the basic inequalities of income and life chances between countries of ‘the North’ and those of ‘the South’ are unlikely to alter significantly to reduce the motivation for genuine economic migration. Resources. The availability of trucks constantly crossing borders offers a resource for organizers and migrants to hide inside and features in the wider environment as a source of resources for offending. Outcomes and their interpretation This example does not include a concrete initiative with a clear outcome. Rather, it is given to illustrate the way in which an analytical model can assist in the understanding of a particular – in this case, highly complex – set of criminal activities. The brief outline given above indicates that, at least in the late 1999s, Turkish and other central European/Balkan criminal organizations were playing an important role in trafficking migrants into Europe, while other criminal organizations acted as intermediaries in the trafficking chains. The problem is exacerbated by strong economic and social factors (both ‘push’ and ‘pull’ factors), which provide massive incentives to people to take the risks involved and, in combination with fear of reprisals, make it difficult to obtain information from the objects of the trafficking. The reduction of this activity therefore presents enormous challenges, of which there are as yet few clear indications of the most effective approaches. Ultimately, the problem is unlikely to be solved without major social and political change, but in terms of more conventional approaches, the most promising appear to the monitoring of suspicious financial transactions that could cover the activities of a trafficking ring; better exchanges of information among police forces; and the strengthening of internal governance procedures in source and intermediate countries to increase trafficking risks closer to source.

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DISCUSSION AND CONCLUSIONS Hitherto, law enforcement operations against organized crime have only intermittently been devised as part of a systematic crime or organized crime reduction strategy (Williams and Godson, 2002). The focus typically has been on (a) arrest and conviction of offenders, and (b) interdiction of shipments of illegal and legal taxunpaid commodities and persons. In addition, there have been many attacks on specific crime groups’ control over specific geographic areas. More deeply rooted attempts to reduce organized crime opportunities have been largely restricted to particular activity sectors, notably illegal drugs precursors, payment card fraud, vehicle finance fraud, and the money laundering stage of crime proceeds. (Though attempts to regulate terrorism risks via tighter supervision of imported goods, including those via containers, may be expected as a by-product to inhibit opportunities to smuggle other licit and illicit products: see the US Customs Partnerships Against Terrorism initiative.) All of the latter go well beyond conventional law enforcement response modes (and they all involve active intelligence development and financing by the private sector), but in some cases – such as drugs and people importation – the issues are so global in geographical scope and so vast in scale that it is unlikely that any initiative, however bold, could eliminate the risks: containment is quite difficult enough. In such cases, the total impact from any one set of acts – especially in a political context – may seem so minuscule that the temptation must be to retreat into conventional thinking and action. What might make more sense is to think in terms of stopping these drugs from getting to this set of people, or stopping these trafficked people from being severely exploited in these ways. Of course, the difficulty for evaluators remains that in many areas, the data quality is not good enough to be confident that one is measuring the impact of control measures: qualitative and quantitative research are also necessary to judge whether the level of implementation of the measures approaches what was foreseen in the initiatives. This also makes it very difficult to specify the benefits for cost-benefit analysis purposes. It is important to bear in mind, also, that many users and suppliers of illicit commodities are ‘volunteers’, and that reducing their criminality has a different context from burglary, car theft, or payment card fraud, the more usual venues for crime reduction. Nor is the relationship between would-be money launderers and the financial services world inherently hostile: disincentives have been created for bankers and other regulated persons around the globe by threats of criminal and media sanctions, but under other circumstances, launderers do not pose a risk to the bank assets and profit margins in the same way that fraudsters do – indeed they normally add to that profitability. Left to themselves, except where criminals such as ideological/fundamentalist terrorists pose a systemic risk, only a (variable) moral sensibility - or the desire not to be associated with the ‘wrong kind of client’ - would lead bankers to reject people seeking to deposit ‘their’ apparent wealth. Financial investigation, money-laundering and proceeds of crime confiscation have been subject to a modest amount of analytically rigorous research (though prior to ‘9/11’ not, curiously, in the US). Multi-methods have been used in the past to analyze these issues, combining some quantitative with qualitative interviews and case file analysis (see van Duyne and de Miranda, 1999). Gold and Levi (1994), for example, reviewed a sample of reports to NCIS and examined their fate measured in terms of their enhancement of existing investigations, the creation of new investigations, and

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prosecutions. No sophisticated input/output analysis was possible, but in general terms, the simple ratio of number of analysts/investigators to reports requiring processing showed that in the early 1990’s, most suspicious transaction reports got little more than formal runs through databases; a decade later, this was still the case (KPMG, 2003).45 So apart from raising the risks above zero, the preventative impact of reports of suspicions (as contrasted with clients not taken on because they failed the customer identification tests or ‘didn’t seem right’) would have been small. Initiatives such as those outlined in our case studies have not affected the positive claims made for operations in public settings. An illustration of what one might characterize as ‘the evaluation deficit’ is one of the largest international campaigns mounted against any organized criminal enterprise, Operation Green Ice, which targeted Colombia’s Cali drug ‘cartel’.46 Green Ice, a cooperative effort of law enforcement in some eight countries (led by the U.S. Drug Enforcement Administration, DEA), was extremely successful in targeting the Cali drug producers and distributors, viewed by the DEA as the most powerful criminal organization in the world. More than $50 million was seized, seven top financial managers were arrested, 140 bank accounts were frozen worldwide, and some 177 arrests were made in various countries (http://www.usdoj.gov/dea/pubs/history/deahistory_05.htm). (Green Ice II, a spin-off of the 1992 Green Ice investigation, culminated in April 1995 with the arrest of 109 individuals and the seizure of 13,882 pounds of cocaine, 16 pounds of heroin, and $15.6 million in cash.) Despite the massive scale of the operation, in the context of the Cali ‘cartel’ profits being estimated at $30 billion a year by the United Nations, the seizure of $50 million represents less than 0.2% of this group’s yearly net intake. Even if this annual profit figure was in fact much smaller than UN estimates (say, $3 billion), the percentage forfeited would not have been large, however valuable it was for the enforcement agencies involved, both financially and as a symbolic gain necessary for organizational morale. One would anticipate some effect on financial transfers, savings and investment strategies by associates of the Colombian groups in the light of changing enforcement risks, but the confiscation of a sixtieth (or, on UN data, a six-hundredth) of the organized crime group’s net annual intake might be expected to have only a modest effect on their activities, let alone on the availability of narcotics in the US and other intended markets (measured, for example, by price increases following reduction of drugs supplies). In short, impact on criminal organizations, the organization of crime, and on illegal product availability can be modest even from the most elaborate and expensive, multi-national, inter-agency collaboration.47 Such operations – and the insecurity and distrust that sting and undercover operations, or ‘pentiti’/supergrass strategies generate, compared with their absence - may disrupt the development of crime group activities. It is quite possible that the cumulative effect of a number of such operations may alter the cost-benefit ratio from being an ‘organized crime group’ to a looser, more flexible network or even a cell structure: this was probably the effect of Anti-Mafia pentiti strategies in Italy. Another possible scenario is that crime organizers - trapped in a culture of machismo, power-hungry and paranoid - may not be willing to relax control, and therefore this functionalist model of criminal adaptation may not materialize. Such non-adaptive organized crime groups may suffer the fate of many Italian-American crime syndicates and expire, though this may ultimately not reduce the supply of illegal goods and services.

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It is important also to bear in mind that disrupting organized crime groups may reduce the socio-political threat even if it has little impact on crime levels per se. On some criteria, this might count as success, or at least partial success. This is not to deny that action against organized crime may be retributively important and may inhibit growth that otherwise might have happened – an issue that is very difficult to evaluate – but our efforts here have been devoted to reviewing the evidence for and against crime reduction. In a European context, perhaps a sensible objective would be to espouse a containment model (similar to Cold War political strategy models) with the primary aim of preventing organized crime groups from obtaining too great a socio-economic and political foothold in member states. Success in such a strategy could be assessed by means of a ‘basket’ of organized crime indicators, derived from a mix of victimization surveys, self-report studies, ‘mystery shopping’ (offering laundering and other crime opportunities to test control and reporting mechanisms), customs and excise evasion data, vice data, drug price data, fraud statistics, laundering cost data, and car export data (which need to be improved). While none is reliable individually, such indicators may together give us a composite portrait which reflects the complexity of what enterprise criminals are doing and provides a credible picture of trends. The EU High Level Conference on Crime Prevention in Lisbon (May 2000) concluded that ‘[t]he best approach is to develop a crime prevention policy that is both repressive and preventive, involving closer co-operation and the exchange of experiences and good practices...the effectiveness of these initiatives needs to be systematically evaluated.’ In this article, we have focused upon the opportunities to commit crimes; the opportunities to organize as part of larger groupings; and the added value or even the necessity to form a larger grouping for operational efficiency. It may be helpful to set these in the context of economic rationality generally, since implicit in many of the concerns about organized crime is the assumption that it is rational for crime groups to expand almost indefinitely unless stopped. There is a sense in which colonizing and controlling a weak State is the optimal strategy for a group, provided that the State has some operational utility for laundering, supplying illegal goods and services, or resisting demands for mutual legal assistance. However – except by tautology – none of the EU member States currently would be classified as a weak State, and this may affect what constitutes a hypothetical rational business plan for an organized crime group operating in the West. This is not to say that there are no areas in which controls are poor or where controls have been overridden by corruption: otherwise the problems of organized crime would be purely imaginary. These are the criminal equivalent of traditional economic arguments about the costs and benefits to firms of vertical and horizontal integration (now extended to global business operations): the crucial difference being that illegality confers certain risks to growth and economic power that seldom present difficulties in the world of legitimate corporations48. Whether such commercial expansionism is ‘rational’ is more debatable. Megalomaniac tendencies may be experienced by corporate chief executives and criminals alike, because both may expand beyond the size that is economically optimal (though only the officially licit corporation needs to produce accounts to satisfy shareholders, creditors and regulators). Certainly, the label of ‘rationality’ may seem inappropriate if the expansion of the legal firm leads to management and cash flow problems (or to break-up following monopolistic abuses), or if that of a criminal ‘firm’ attracts greater attention from the police or intelligence

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services, leading to imprisonment and asset confiscation which would not have occurred had the ‘firm’ stayed smaller in scale. Our point here is that the size of the criminal ‘firm’, its choice of activities and the observable harm caused by those activities (plus the social threat posed by size, independent of types of crime engaged in) will affect the social and policing responses to the group.49 Sometimes, those political and policing responses may be accommodating (as happened at some points in history with the Italian Mafia and with the Italian-American Mafia), but at other times they may lead to severe repression or attempted repression, as we may see with the attempts of the Italian authorities to deal with the Mafia and its regional equivalents since the beginning of the 1980s, and also in the attempts to deal with some of the elite underpinnings of the Mafia system, seen vividly in the mani pulite investigations. In other words, as in the corporate world also, sometimes ‘small is beautiful’, whereas at other times ‘large is beautiful’. As Levi (1981) noted, long-firm (bankruptcy) fraudsters were enjoying profitable and low-risk crime proceeds with very low police interest or risk of conviction until London organized crime gangs (the Krays and Richardsons) of the 1960s muscled in and threatened them (and, in some cases, offered them some economies of scale, ease of personnel recruitment, and protection from the police). They were already organized enough for criminal profit, but gangsters’ attempts at profit maximization and their own notoriety led to tougher police responses and to imprisonment for the fraudsters as well as the gangsters. This association with organized crime, then, blighted fraudsters’ later criminal careers by making them look like more ‘dangerous’ individuals than they would otherwise have seemed to be, attracting more police interest and longer sentences. The optimal size of the criminal firm has seldom been subjected to economic analysis in the way that is conventional in economic theory (though see Schelling, 1967; Fiorentini, 1995 for some attempts, at least in the area of supply of illicit goods and services). We stress that, important though illegal drugs and vice markets are, not least in generating (through artificially high prices) volume crime to pay for them and willing or unwilling collusion by financial services staff in exchange for drugs or blackmail, they are not the principal sources of criminal behavior in contemporary European society. Furthermore, the proportion of crimes committed by ‘organized crime’ groups will vary by type of crime: it is likely to be greater in the drugs and car theft (for resale) markets than in credit card fraud markets, though efficient anti-fraud practices can reduce the ease of fraud commission, driving up the entry skills levels and making organized crime a relatively larger percentage of all credit card fraud (Levi, 1998, 2000). In addressing the value of organized crime reduction policies, we seek dispassionately to separate the observable consequences of the variety of measures – alone or in combination – for (a) serious crimes, and (b) organizational strength. Our reading of the literature suggests that such system-wide ‘takes’ have seldom been attempted. Some general measures to reduce crime opportunities may have an effect on organized crime groups also (though often, offender deflection applies most readily to opportunists), but there is no a priori reason to think that eliminating kingpins of organized crime groups will have a severe effect on general availability of narcotics, prostitution, etc, or on property crime to pay for drugs. In this respect, one should maintain the distinction between impacting on crime levels and impacting on criminal organizations, deciding how important or socially threatening the form of

49

organization is compared with the activities. As Ekblom (2003) has argued, it is vital to identify and intervene in crime-promoting positions, though the political process of persuading or forcing those individuals and groups to play a positive role in crime reduction may vary greatly. As part of a ‘responsibilisation’ process, people carrying out key strategic functions that could facilitate or inhibit organized crime can be required to pass varying levels of integrity tests. Traditionally, this has involved positive vetting of sensitive government and law enforcement posts, but the practice has moved increasingly into the commercial sector, largely through government authorization and the requirement to hold such authorization before one is allowed to practice a particular profession. However, such point of entry vetting does not cover ongoing behaviors unless they lead to conviction and employer notification or to professional exclusion for competency reasons. In principle, such interventions could include interdiction of products which are not themselves illegal but which have no clear legitimate purpose, e.g. private ownership of scanners tuned to police radio frequencies, and small portable magnetic stripe skimming machines used by waiters, though legislative time may be hard to find and it is difficult to define the objects to be prohibited with sufficient precision to satisfy courts without leaving open opportunities for rapid circumvention by manufacturers and users. We see organized crime reduction as part of an ongoing permanent process of environmental scanning and risk analysis, reviewing the opportunities for forms of harmful activity to develop and for particular forms of exploitation of those opportunities – i.e. by economically and socially powerful groups – to develop, and working out methods of intervening. Given that we live in societies broadly characterized as enterprise societies, and given that restricting crime externalities often involves restricting profits and business opportunities, this sets up broad political tensions over the respective rights of private commerce and public regulation - witnessed, for example, over e-commerce and powers of communication interception and decryption. To demonstrate that these issues are difficult to resolve satisfactorily to both parties is not, however, to state that they should not be attempted. We have given some case studies and examples where such efforts have made an impact, and it may be desirable to think creatively and to evaluate other potential areas of intervention, to reduce the scale and harm done by organized criminals. It is not surprising that this research study found little evidence of the use of any particularly detailed and systematic analysis in initiatives against organized crime. The examples of ‘good practice’ obtained were predominantly law enforcement operations. Most comprised what may be described as primarily ‘repressive’ police operations relying on standard intelligence gathering methods such as the use of informants, surveillance and/or financial investigation, followed by a series of planned arrests. Few appear to have involved sustained efforts to analyze the structure of the organized crime groups that were targeted, or to look in detail at the dynamics of their operations and markets. Similarly, few appeared to be looking beyond immediate operational goals towards a lasting reduction in organized criminal activity. Perhaps the most promising sounding example of an analysis that involved analytic and preventive components was the collaborative exercise described as Case Study 5. This analysis was aimed primarily at understanding the dynamics of Turkish and Chinese gangs involved in the trafficking of illegal immigrants – particularly the methods and routes used. This approach came closest to the ideal advocated by

50

Ekblom and others, of approaching crime prevention first and foremost through a careful and comprehensive analysis of the nature of the problem to be addressed, including developing a clear understanding of the various crime scenes, actors and their resources. In identifying the broad range of possible intervention points, it allows consideration of the full range of options to frustrate the crime event. Unfortunately, we are not aware of what actual implementation occurred, if any, or of what the effects were. It is clear that the move from a reactive and repressive approach towards longer term preventative strategies is a paradigm shift for law enforcement that is very much a ‘work in progress’. Some aspects have immense implications for sovereign rights, dictating in effect what products countries can grow and what their financial services industries can offer to outsiders. Quite apart from the political and constitutional implications of these controls – which bear heavier upon politically weaker countries – they can aggravate impoverishment and unintentionally enhance support for radical and fundamentalist social movements and terrorism. Others refocus what remains of the ‘due process’ model associated with criminal prosecutions, as serious crime management shifts towards low-visibility disruption; the ever-wider extension of legal responsibility for identifying clients, tracking money movements and reporting ‘suspicions’; and freezing and confiscating assets suspected of being under the control of criminals or intended to finance terrorism, independent of prosecution. While conceptual advances have been made at the local level (e.g. problem oriented policing), the thinking and tools are much less developed in the case of more complex crime. This is illustrated by the language of ‘success’ against individual groups (e.g. how many arrests? what is the value of the commodities seized? was the group disrupted or dismantled?) – reflected in targets for police units such as the UK National Crime Squad - as opposed to consideration of changes in the impact of the crime problem as a whole.50 Finally, it is essential to point out that we need to check that by dissecting organized crime problems into their component parts, we have not lost sight of the organic nature of the problems as a whole. By definition, organized crimes are greater than the sum of their individual crime elements. They are continuing activities, they are planned, and ‘the organization’ (large or small) is prepared to defend, react and adapt to ensure the continuity of their criminal enterprises51. The images of The Godfather that still underlie many depictions of organized crime make it too easy to avoid thinking about what it means to fight ‘networks’ (Dorn, 2003; Klerks, 2003) that are organized enough to supply illegal and contraband goods and services in popular demand, and the conditions under which they – rather than the commodities themselves – represent a serious social threat.

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Walker, John, Estimates of the Extent of Money Laundering in and through Australia. (AUSTRAC/J. Walker Consulting Services: Queanbeyan, N.S.W., 1995). Walker, John, ‘Introduction’, International Journal of Comparative Criminology, 1(2), 2001: 1-7. Walsh, Marilyn, The Fence, (Lexington: Lexington Books, 1976). Williams, Phil, ‘Organizing Transnational Crime: Networks, Markets and Hierarchies’. Paper presented at the International Conference on Responding to the Challenges of Transnational Crime, Courmayeur, Italy, 25-27 September 1998 Williams, Phil and Roy Godson, ‘Anticipating organized and transnational crime’, Crime, Law and Social Change, 37(4): 2002, 311-355.

ENDNOTES 1

The research was commissioned by the Home Office under the Falcone Programme of the European Commission. 2 This is not as self-evident as it may appear. Irrespective of whether or not they appear in lists of ‘failed states’ - a category often shaded by views about political consequences several microstates have been ‘captured’ by charismatic individuals who are not members of organised crime groups as commonly understood. These microstates then are used as the base for major frauds and sometimes for money-laundering, mis-characterised as wealth-building opportunities (Schneider, 2001), without noting that the principal or only wealth-building is that of the scheme promoter. 3 We shall ignore here the issue of whether this sum of £1 million represents turnover or profits: ‘profits’ obviously constitutes a more restrictive test. Further, it is unclear to what extent the group (or network) has to be capable of defending its interests. It is also unclear to what extent the conviction of some, and then which, personnel - and/or the confiscation of ‘significant’ assets - actually signifies a failure to defend interests and subsequent delisting as an ‘organised crime’ group. Taken literally, this would mean that any group’s classification as organised would only be provisional, and that by definition, no organised crime group could be unsuccessful. We have no magic solution to the definitional debate, but we think it important to know whether member countries and particular units within those countries are applying these constructs consistently. This affects not just us but also the annual organised crime situation reports for Europol and for the Council of Europe. 4 Contrariwise, a sustained multinational fraud involving large institutional victims, or hundreds of personal victims, will not be classified as organised crime because its conspirators are not ‘continuing.’ Under such circumstances one should ask: why would they need to be persistent, when they have stolen so much money in one go? Another and arguably more useful distinction is whether these acts can be investigated or prevented by tracking known (or plausibly knowable) offenders. This is because if to be an organised crime group one has to be capable of defending one’s members – and to be continuing etc – then to have key players convicted and/or significant assets confiscated surely implies that they are not capable of defending their members or interests. Implicitly, organised crime definitions assume a ‘continuing business’ model of operations – i.e. a persistent stream of deals and transactions leading to a persistent stream of profits. But even in the world of legitimate business, some companies or consortia are set up to exploit short-term or one-off opportunities.

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5

In practice, it is not obvious who in the police or government rigorously checks the classifications to see that they are adhered to, but if such networks were classified as organised crime, how many ‘groups’ would be constituted by such behaviour? This may not be that relevant to non-European readers, but since the annual reports of Europol and the Council of Europe contain ‘data’ on the number of gangs, fluctuations in recording practices could create artificial changes in apparent dangerousness. 6 Private order maintenance refers to the role of gangsters in adjudicating disputes between criminals and supplying civility to the streets where official police fail to do so. In its more sophisticated form, which enables it to be accounted for as a legitimate activity, extortion involves the purchase of seriously overpriced services without open tendering, rather than simple demands for cash. For offenders, this has the advantage of removing the necessity to launder funds, since they can show the income openly. Although such payments are now illegal, Japanese corporations are notoriously willing to pay off gangsters (termed Sokaiya) in exchange for their agreeing not to disrupt Annual General Meetings with awkward questions that could embarrass the Board and to keep ‘order’. In one operation we were told about, undercover work and informants led to the discovery that Japanese Yakuza had an exclusive contract to supply Japanese airlines with flowers, whose price was far above what would have been paid in the open market: this had the additional advantage that there was no requirement to launder the proceeds illicitly, since the income was official. American interviewees stated that wiretaps and undercover agents, as well as ‘co-operating witnesses’, generated substantial information about overpriced garbage disposal contracts in New York and in other areas of the Northeast. Some criminals may deny themselves the benefits of laundering by greedily evading tax on the income, but organised criminals are variable in their rationality and self-discipline (Levi and Naylor, 2000) 7 The extent to which trust is a prerequisite of this mediation function is uncertain, for it may be simply a tribute to superior power, but presumably, not all organised crime groups can or wish to supply mediation services. Consequently, strategies to engineer distrust may have a variable effect. 8 Although, as the New York Attorney-General’s investigations have revealed in 2000-2003, large Wall Street firms are perfectly able to engage in systematic fraud against the investing public without any assistance from the American Mafia. Most of those corporations’ activities may be legal, but does this make it inappropriate to label them as ‘organized criminals’? 9 For example, and we would be surprised if the UK was unique in this respect, a recent review of company law for the UK Department of Trade and Industry (DTI, 2002) discussed neither money-laundering nor serious fraud as a key concern. The issue of compartmentalisation is discussed later in this review. 10 Illustrations of these developments include the Europe-wide prosecutor proposed to be established under the Corpus Juris to assist with the prosecution of frauds against the financial interests of the European Community when national prosecutors may be reluctant, or may not have the resources, to do so. The Financial Action Task Force was established by G7 and co-located with OECD to review anti-laundering legislation and practice in participating countries. High-level and multi-disciplinary groups have been established by G7, G-8 and the EU to deal with organised crime; and, of course, there are the changes in customs procedures, information sharing and cross-border ‘hot pursuit’ permitted by the now long-standing Schengen Agreement. 11 Such reports themselves are encouraged or compelled by national legislation implementing the first and (amending) second EC Directives (though in the case of the UK, national legislation long preceded the first directive, and in the case of professionals, national obligations to report currently vary enormously within the EU). 12 Interviewees from outside the UK support the proposition that these problems are not merely an artefact of Great Britain not having a national police force: they reflect a more general issue. The more formally demarcated federal/local structures of member states such as Germany, plus data protection legislation, are said by interviewees to inhibit the growth of

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organised crime policing there. National police systems such as those of France make such policing growth less noticeable. Outside Europe, the US agencies were the first to develop, both internally in terms of the federalisation of US law and then externally, especially in the narcotics field (Nadelmann, 1993). However, the Australians developed a National Crime Authority and a federal money transmission analysis agency (AUSTRAC) linking to tax as well as police information systems (ANAO, 2000): this transaction reports/tax link is also present in European countries such as Ireland and the Netherlands, and in North American countries, at least once they have decided to target a person. 13 There are some difficult questions about the extent to which corporate comfort depends on a stable, peaceful society, which elides the distinction between corporate and social costbenefit analysis: if society is allowed to disintegrate, the scope for corporate profits is poor. However, at the level of corporate security and crime risk management, these are too lofty considerations and tend to be left for board-level decision-makers, if to anyone at all. 14

This is true a fortiori where the serious harm is not demonstrably present currently, for measuring the reduction in a hypothetical level and form of criminal organisation is an ambitious task indeed. 15 If a group split up its operations so that fewer than 50 car thefts happened in each country, and if there were no intelligence collation across the difference member states, then in practice, there might be no definition as ‘organised crime’. 16 This plainly is a major area of controversy, but other than political asylum-seekers, there is little a priori reason to believe that many illegal migrants, even sex workers, are other than voluntary economic migrants, though they commonly are mistreated and exploited when they reach their destinations. 17 Partly for this reason, counting the number of organised crime groups seems unilluminating unless one knows what proportion of the varied criminal markets they account for. More criminal organisations could be a positive rather than a negative sign if it indicates less concentrated social and economic power. Other questions relate to the need to establish how to evaluate ‘success’ using business measures such as turnover, profit, growth and investment. 18 It would be a serious mistake to assume that regulations that have an impact on organised crime are intended primarily for that purpose. It is desirable to review what positive and negative impact on crime opportunities a variety of regulations have. 19 Sadly, as the PIU (2000) report indicates, the subsequent confiscations tend to be much smaller, though the attrition between seizure and actual confiscation may be less in the UK than in many parts of continental Europe, where assets are frozen automatically for a short period following the making of a suspicious transaction report (see Kilchling, 2002). This is a large issue in Australia also (see Freiberg and Fox 2001). 20 Primary prevention refers to activities which reduce the opportunities, or increase the risks, for people to commit crime (usually by manipulating the environment in some way), secondary prevention refers to interventions to change (normally young) people who are at risk of embarking upon a criminal career, and tertiary prevention refers to the treatment, punishment or incapacitation of known offenders. 21 An important example is s17 of the Crime and Disorder Act 1998, which places a duty on all local authorities in England and Wales to consider possible impacts on crime levels when developing any major policy or plans in other areas (for example, when planning a new housing estate). 22 This applies both to the difficulties, effort and expense experienced in arresting and convicting major transnational organised criminals, and to increased recognition of the wider problem that convicting some criminals often leads simply to their replacement by others. This means that whatever the benefits in retribution and containing the growth of power of particular individuals (and perhaps, recovering proceeds of crime from them), the impact upon the phenomenon of organised crime can be minimal. 23 In similar vein, Leppa (1999) seeks to adapt for organised crime a methodological tool developed and widely used in environmental planning and policy making: the Environmental

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Impact Assessment (EIA), which seeks to bring to light ‘the impacts of various actions and their options which may significantly affect the natural, built-up and social environment’ (Leskinen et al 1999: vii). This is far from easy, since reliability and validity of organised crime data are much lower, as is the availability of any adequate complete statistics either on the levels of many forms of crime or, a fortiori, on the way that offenders organise themselves to commit them. 24 Customs play a central role in the interdiction process and have a longer history of international liaison than do the police. In many countries, the value of these contacts and experience has been reduced by rivalry or antagonism between the two services, and a reluctance to share information freely. However, joint operations are increasingly common, drawing in other key agencies as well. For example, Schneider (2001) discusses an interagency initiative in the form of the British Columbia Illicit Alcohol Initiative (BCIAI), made up of representatives from agencies enforcing contraband liquor laws in the province, including Canada Customs, the Provincial Liquor Distribution Branch, Liquor Control and Licensing Branch, the Provincial Consumer Taxation Branch, the RCMP, and the Vancouver Police Department. According to its terms of reference, the purpose of the BCIAI is to provide a proactive, multi-faceted approach to address the problems related to contraband alcohol in B.C. The BCIAI is mandated to identify, develop, and implement initiatives that are strategic (for example, legislative amendments); operational (e.g. cooperation with agencies in coordinated joint operations); and intelligence-oriented (e.g. identifying and forming partnerships with essential players involved in illicit alcohol activities, including private sector distillers, distributors, and retailers). 25 Whilst this would seem to be a good thing in itself, its effects in practice remain to be evaluated: these effects might take the form of greater willingness to pass information to the authorities (a shorter-term effect) or lesser willingness to assist or join Mafia-type associations in future (a much longer term effect). 26 In our view, there is a risk factor also not just in the need for cash but also the susceptibility to blackmail of drug or ‘hard porn’ users working in the financial services industry should they fail to assist fraudsters and money launderers. There are plausible anecdotes about such cases, but we have been unable to unearth any concrete examples. Such internal co-operation may also occur voluntarily. 27 In a Small Island Economy, an entrepreneur can exercise almost total domination, through charisma, corruption or prospective economic damage should s/he withdraw. Where leading politicians personally have a large (declared or undeclared) stake in the interests affected, the difficulties of engineering change are most acute. In such cases, there may have to be incapacitation at the international level, as in the economic sanctions imposed by the US in their ‘kingpins’ and other legislation which makes it an offence for particular individuals or even nation states (such as Iraq or Libya) to transact business. 28 Reparation and the political popularity of ensuring that suspected offenders are unable to set a bad example by living well from their crimes are additional factors fuelling confiscation policies. 29 Evaluations of such initiatives fall short of full cost-benefit measurement. For example, the review by the ANAO (2000) of a similar development in Australia is oriented towards the maximisation of the tax yield, and barely discusses the crime reductive effects outside of tax evasion. 30 This is not a general attack on the role of unions in raising prices through better wages, but upon the use of monopolistic threats for the purpose of extorting funds that do not go to the workers but sustain organised crime groups. 31 There have, however, been recent complaints in New York that because of the vetting procedures, there are insufficient firms in the market to service needs. This illustrates the sometimes complex cost-benefit equations in organized crime reduction. 32 It remains possible that at some stage, there could be a successful appeal that this constitutes deprivation of property (profit foregone) contrary to the European Convention on Human Rights, though the Amsterdam authorities have taken a robust view on this risk.

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Given that regulatory information from other member states may not be available to the Dutch, would-be competitors may also complain under the free competition rules of the EC. 33 It is interesting that, in December, 2000, P & O decided to make a major investment in systematic searches (with carbon dioxide detectors) of vehicles entering British ports. This was partly based on a calculation that the costs of such a system would be lower than the total costs of fines levied when stowaways were discovered by customs or immigration authorities. One major UK transport firm operating with soft-sided trucks - which are particularly vulnerable to stowaways - through the Channel tunnel has complained that the fines have rendered its business uneconomic and it may have to close down altogether. It may be that it is only by being ‘unfair’ that one can incentivise some intended or unintended facilitators to place more obstacles in the way of organised crime. 34 Though many European countries are amending their legislation to require accountants, lawyers and others affected by the Second (Amending) Money Laundering Directive 2001, in 2003, the Federal Canadian government agreed not to implement their legislation requiring lawyers to report suspicions, in the face of a constitutional challenge, while the US does not even contemplate such legislation politically, though some aspects are caught by the wideranging USA Patriot Act 2001. 35 There are also hotly disputed European proposals to criminalise negligent money laundering, which violate traditional criminal law constructions of personal culpability. Several European jurisdictions, most notably Germany, find it juridically unacceptable to impose criminal liability on other than natural persons: for this reason, most international conventions encourage but do not mandate corporate criminal liability, and permit functionally equivalent administrative law procedures instead. It is too large an issue for this study to determine whether criminal law measures are more effective than civil and administrative ones against corporations. 36 The term ‘money-laundering’ is much abused, to include people who simply hide the proceeds of crime in financial institutions, rather than transform it into apparently clean capital, as the term originally was intended to signify. However, money-hiding has slipped into legal definitions and common discourse as ‘money laundering’, so it is difficult to do anything about this terminological misconstruction. In essence, doing anything more than putting crime proceeds into a sock to conceal them qualifies as money laundering under English and much other legislation, though Dutch legislation, for example, still treats money laundering as handling stolen ‘goods’. 37 There is evidence, though of a rather anecdotal character, that professionals as well as businesspeople are more willing to engage in criminal behaviour if faced with prospective failure. (See Walsh, 1976; Levi, 1981; and Sutton, 1998.) Most of this evidence relates to individuals and small firms, but it is plausible that it applies to larger companies and to financial institutions such as banks. It also might be encouraged by the growing role of performance-related bonuses and short-term employment, both of which combined form a disincentive for honesty and the refusal of potentially suspicious customers. 38 Hitherto, the pressure on the inter-bank transfer system SWIFT to mandate the completion of the originating account details in every electronic transfer has not been successful, but it is not known what the effects on laundering capacities of such a change would be. Plainly, apart from pure prevention and deflection, the impact of money-laundering reporting depends on enforcement follow-up of those reports, and there are no systems of which our survey has been made aware that measures enforcement inputs in a realistic way and relates them either to outputs or to outcomes. For example, sensitising talks to the private sector aimed at reminding them of their responsibilities and training them in how to spot some forms of money-laundering may raise the level of reports – an intermediate efficiency measure – and even make it impossible for some criminals to launder the proceeds of some crimes altogether. However, to contrast two countries with a relatively low and a relatively high reporting rate, Switzerland and the UK or Netherlands, it is arguable that the Swiss do more with their reports both in efficiency and in effectiveness terms: so the temptation to use high

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suspicious transaction reporting rates as a performance indicator should be resisted unless it is accompanied by some further justification for improved effects. 39 Indeed, to the extent that a literal reading of the laundering legislation would include not just money but also property conversion and concealment, it is hard to know how one might precisely work out the laundering parameters. 40 The OECD, IMF and GRECO publish their reports: the FATF does not. We are not in a position to evaluate the effectiveness of these different approaches to publicity: there is a compromise between generating frankness and generating deterrence and denunciation, though we do not believe that publication unduly enhances regulatory arbitrage, creating a perfect transparency that benefits organised criminals when deciding where laundering is most likely to be effective. 41 Autonomy is not an unambiguous benefit because, as the experience of the Independent Special Prosecutors in the US demonstrates, this can lead to politicised appointments and/or to wasteful, unconstrained expenditure also. 42 Of course the allocation of public goods rightly is determined on different criteria than profit alone, but such business cases do require a concern about evidence and indicators of impact that we have found difficult to match in this study. 43 In some cases, private prosecutions could be mounted, but the private sector organisations take the view that they pay their taxes and the State should pay. 44 Tremblay et al.’s study of co-offender networks in the stolen vehicle business looked at sets of offenders involved in three script variants, or ‘tracks’ of increasing complexity. These were the theft of vehicles for sale of parts (‘chopping’); the local resale of stolen vehicles; and theft of vehicles for export and resale. There were few stages in the ‘chopping’ script: there was some division of labour but it was not strictly necessary -car thieves could dismantle vehicles, and mechanics could steal cars - and offender groups tended to be small and cohesive. Even where cars were resold locally, the replacement of relatively simple forms of disguising the vehicle’s original identity by more elaborate makeovers involving ‘body switching’ - the switching of VINs (vehicle identification numbers) from crashed but legitimate vehicles to the bodies of stolen ones - required more specialised resources, locations and knowledge. This created a division of labour between those stealing the vehicles, those storing and disguising them, and those selling them on to consumers. In the third script - the export resale of stolen vehicles - a variety of transportation and export-import requirements have to be added to the previous resale script, adding further stages, more criminal personnel, and increased complexity. Cornish and Clarke (2002) believe that these offer possible intervention points for reducing organised car crime. 45 Research by Levi and Osofsky (1995) in the UK and Nelen (1998, this volume) in the Netherlands also used mixed methods of analyzing cases and statistics, some observation and interviews in analyzing the attrition between financial investigation and eventual confiscation of proceeds of crime. Less detailed reports on money-laundering and confiscation based on case files and interviews have recently been collated by Kilchling (2002) in a Falcone-funded project. This research itself was, however, limited to some extent by the small funds per country available in multi-national projects under the Falcone scheme. 46 Though serious questions should be asked as to whether this was in fact a cartel (Naylor, 2002). 47 This operation would merit some more serious, detailed evaluation than has been possible here. Note that we are not discrediting the efforts from ‘normal’ retributive law enforcement perspectives: some people do bad things and arguably deserve to have bad things happen to them. 48 Though events at Microsoft in the US and at other major firms raided by the EC anti-cartel division illustrate that they too can be suspected of violating regulatory laws in the interests of enhancing corporate power. 49 Offenders know this, at least in the abstract, and the rational choice model would predict that it would alter their preferences between types of crime as well as the criminal/law abiding choice. Their ability to commit different crimes, of course, depends on their skills and

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resources. 50 Though the co-financed pilot project Dedicated Cheque and Plastic Crime Unit does have values of card numbers and cards recovered as part of its targets, this is only a partial prevention measure. 51

The fact that such claims about flexible criminals may be over-used and overgeneralised does not mean that they are never true.