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Using friends for money: the positional importance of money-launderers in organized crime

Abstract

Despite the significant amount of attention and resources invested into the global anti-money laundering (AML) regime, there is a dearth of empirical studies on the role of money-launderers in illicit markets. This research tests two primary justifications of AML policy: 1) most money-launderers would not be detected through criminal investigations of predicate crimes and organized crime groups; and, 2) professional money-launderers play an important role in illicit markets and criminal networks. We extracted information about money-launderers in the drug market from police intelligence reports over a three-year period. Social network analysis was used to assess the positional importance of the launderers. The results show that most individuals are self-laundering, and relative to other market roles, launderers are not particularly central players. Policy implications for AML enforcement are discussed.

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Fig. 1

Notes

  1. The PTA is generated by analysts from EDCAS and Criminal Intelligence Section of British Columbia (CISBC), with assistance and support from law enforcement agencies located within the Pacific Region. The original document was generated following the template of Criminal Intelligence Section of Canada (CISC) national collection plan initially designed by CISBC 2004 using the SLEIPNIR system, for the 5th overall provincial assessment. The information used constitutes the intelligence foundation of the Integrated National Threat Assessment which is prepared by CISBC.

  2. This included mainframe record management systems (PRIME and PIRS) that manage crime reports and ACIS (detailed crime intelligence information maintained by CISIS).

  3. To ensure the information was current and addressed time lags between activities occurring and reports being entered into the mainframe databases, each group narrative was discussed with the Human Source Unit—a special RCMP unit tasked with regularly meeting with all intelligence units to gather information on current organized crime activity—to ensure that all recent activity was included. As a result of this additional search protocol, the 2007 PTA was accurate as of 2006-12-31.

  4. The raw data included information from record management systems detailed in footnote 3 and intelligence reports collected by the RCMP unit detailed in footnote 4.

  5. In a binary matrix, each tie is assigned a value of 1 for the presence of a link and a value of 0 for the absence of a relationship. The ties were symmetrical (or non-directional) because there is nothing to base directionality on.

  6. Parasites feed off the drug market. Parasitic activity involves extortion and robbery of drug production facilities.

  7. For an explanation of SAOM see: Ripley, R., Snijders, T., Preciado Lopez, P. (2011) Manual for RSiena, University of Oxford, Department of Statistics.

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Correspondence to Aili Malm.

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The statements made cannot be construed as representing the opinions of the Royal Canadian Mounted Police or the Government of Canada. This project was undertaken by external, independent researchers to explore, and provide information about, an issue or topic. Opinions expressed are those of the authors.

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Malm, A., Bichler, G. Using friends for money: the positional importance of money-launderers in organized crime. Trends Organ Crim 16, 365–381 (2013). https://doi.org/10.1007/s12117-013-9205-5

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Keywords

  • AML
  • Drug market
  • Money-laundering
  • Organized crime
  • Social network analysis