Drugs, human trafficking and counterfeit goods among most lucrative markets for organized crime groups in Europe

Part 1        Part 2

Organized crime groups in Europe – numbering about 3,600 — are increasingly adapting to global economic trends, becoming transnational and multi-ethnic in order to operate simultaneously in multiple markets and trafficking routes.

Traditional Mafia-type groups, such as those dominated by ethnic Italians and Chinese, and other hierarchical syndicates have had to reshape their structures to be more flexible to operate acrossborders. About seventy percent of the groups are multinational in membership in order to penetrate new illicit markets and move out of their former areas of control. Furthermore, about forty percent of organized criminal groups in Europe may be described as “loose criminal networks” that adapt to new market opportunities and work off and on with individual criminals or smaller groups.

That is according to the report, “From Illegal Markets to Legitimate Businesses: The Portfolio of Organized Crime in Europe,” or Project OCP, released in April by the Joint Research Center of Transnational Crime in Trento, Italy. The study broadly estimates that revenues from illicit markets – including activities by organized crime groups and non-affiliated independent criminals — in all of Europe amount to $120 billion a year, based on data from existing research studies. Of the 3,600 OCGs, about thirty percent are involved in drug trafficking. However, the study found that the illegal drug trade is complex with many competitors and few opportunities to monopolize the business.

The report describes ten criminal markets with figures available in Europe as a whole and identifies the organized crime groups, or OCGs, involved in each crime. In this, the third of three parts on the findings of the Project OCP report, we look at each of those illicit markets and the OCGs implicated in them. The markets are illegal drugs (heroin, cocaine, cannabis, amphetamine-type drugs), human trafficking, firearms trafficking, illicit trading in tobacco, counterfeiting, illegal gambling and match-fixing, extortion/racketeering, usury (loan sharking), fraud and organized property crime.

Heroin

Trafficking in heroin may be the most profitable of the four illegal drugs surveyed in Europe, estimated at $7.4 billion to $12.1 billion a year. The United Kingdom was the largest market for heroin ($2 billion to $3.5 billion), followed by Italy, Germany and France. The shortest path for heroin smuggling to Europe is the Balkan route, starting from Afghanistan through Turkey and western and central Europe. Among the actors in heroin are Albanian and Turkish OCGs — owing to being close to the trade routes — both at the retail and wholesale levels. Other distributors are Italian OCGs such as Cosa Nostra and Camorra in France and Italy, African OCGs in France and Denmark, and motorcycle gangs in Germany and Scandinavia.

Cocaine

Revenues from cocaine in Europe are worth $5.6 billion to $8.5 billion, with Italy and the United Kingdom the biggest marketplaces, followed by Spain, France and Germany. Bolivia, Colombia and Peru are the only countries producing the world’s cocaine supply. Half of that supply is from Colombia, and so like the Albanians and Turks in the heroin trade, Colombian OCGs dominate the cocaine racket in Italy, France, the U.K., Spain and the Netherlands. There are nearly 300,000 Colombians living in Spain and that large presence may explain why Spain is a destination county for cocaine shipped from Colombia. Other destination shipping ports for the drug are in the Netherlands where it is distributed by Dutch OCGs. But other players in Europe’s coke trade are African, Albanian, South American, Spanish OCGs and motorcycle gangs. Italy’s Camorra and ‘Ndrangheta remain key players, but Italian Mafias no longer dominate the cocaine trade as they did in the 1990s.

Cannabis

Cannabis is the most consumed and the highest-trafficked illegal drug in Europe, and involvement by OCGs, in selling the drug and growing it indoors, is increasing. Estimates on the value of the cannabis market in Europe vary from $7.5 billion to $11 billion a year, but those figures are likely conservative, according to the OCP report. While cannabis is reportedly produced in at least 172 countries, most of Europe’s supply comes from Morocco, Afghanistan and Lebanon for resin cannabis, or hashish, and Albania and South Africa for herbal cannabis, or marijuana. Chinese OCGs are in the growing and wholesale distribution of marijuana in the U.K. and Ireland. Vietnamese OCGs grow cannabis indoors to produce resin cheaper than Moroccan-made in several European nations. OCGs of Albanian, Dutch, North African and Spanish origin also traffic cannabis in Europe.

Amphetamine-type drugs

Sales of synthetic amphetamine-type drugs, including ecstasy, in Europe are pegged at roughly $6.8 billion a year. Countries with the largest demand for amphetamines are the U.K., Germany and Spain. Ecstasy, often traded in nightclubs, is the most popular in the U.K., Italy, and Spain. Both drugs, prepared in laboratories, can be made nearly anywhere, but in Europe the drugs are mainly produced in Belgium, the Netherlands, Poland and the Baltic nations. British OCGs are involved in supplying these drugs in Italy, Spain and Portugal; Chinese groups to Italy and the Netherlands. Others players are Dutch, Lithuanian and other European OCGs.

Human trafficking      

The trafficking in human beings, or “modern slavery,” for reasons of sexual exploitation, forced labor or even removal of organs, is estimated at $150 billion worldwide and monetary returns in Europe are about $46.9 billion, according to one study cited in the OCP report. Research by the European Union in 2010 valued international trafficking for sexual purposes in Europe at $3 billion a year. Most victims of human trafficking are women and children.

Proceeds from human trafficking were described as “huge” by the report’s authors, who added that “THB undoubtedly plays a crucial role in the organized crime economy” with other loosely connected criminal groups and “specialists” participating as well. Those most involved in human trafficking in Europe are Nigerian, Chinese and Eastern European OCGs but Albanian, Russian, Hungarian and Turkish OCGs also are in the game. Italy is one of the top destination countries for trafficked humans who provided Mafias with revenues estimated at $1.2 billion to $5.6 billion for the sexual exploitation of foreign women — inside and outside of brothels — in 2014.  Nigerian OCGS deal in young Nigerian women for sexual purposes while Chinese OCGs are engaged in both forced labor – such as in shops and illegal clothing factories – as well sexual exploitation in places such as massage parlors.

Firearms

The illegal trafficking of firearms and ammunition provides both profits and essential assets for criminal activities, from intimidating victims of sexual exploitation to protecting illicit goods such as drugs. Europe is considered a transit area for firearms trafficked abroad, especially where there is armed conflict, in places such as North Africa and the Middle East. Guns produced in the Western Balkans (southeastern Europe) are also imported to Europe and sold to criminal groups.

The estimated revenues in Europe’s illegal firearms market – revolvers and pistols, shotguns, rifles, carbines, muzzle-loaders, cartridges and other ammunition and parts – range from $277 million to $553 million per year, or about ten percent to twenty percent of funds earned by legal companies in the firearms business. Most of the OCGs in the illegal firearms trade are from the Balkans, such as Albanian and former Yugoslavian syndicates selling guns in places such as Italy and the Netherlands. Italian Mafias buy weapons from the Balkans and also re-trade them to other countries. For instance ‘Ndrangheta members are known to traffic in guns to Canada. Russian, Turkish and motorcycle gang OCGs are also in the illegal gun trade.

Illicit trade in tobacco products

Authors of the OCP study stated that the illicit trade of cigarettes in Europe reaps “remarkable criminal revenues,” managed mainly by smaller gangs and individual actors but also Italian (such as ‘Ndrangheta, Camorra and Sacra Corona), Eastern European, Chinese and other Asian OCGs. The annual revenue for smuggled tobacco is estimated from $9.4 billion to $11.5 billion. France is the largest market for illicit tobacco at $2.2 billion. Criminals either smuggle legal or counterfeit cigarettes to sell consumers wanting to avoid paying the high taxes that European counties levy on tobacco, which averages about eighty percent of the final retail price.

Counterfeiting

The intensity of international trade in recent years has made it difficult to confirm the authenticity of manufactured goods and so counterfeiting has become a lucrative market for criminals in Europe. Another factor is the high demand among consumers for counterfeit products. For criminals, the phony wares are cheap to produce – such as those involving forced laborers — and distribute. Most OCGs in the counterfeiting trade are in the business of wholesale and retail clothing, clothing accessories, watches and jewelry, perfumes, cosmetics, unlicensed PC software, CDs, DVDs, car parts, medicine and food. Much of the production of these fake items takes place in East Asia but other production centers are based in Italy, Spain and Portugal. Counterfeit product sales also serve as a convenient way for OCGs to launder money.

Estimates of the global market for counterfeit goods range from $250 billion to $650 billion. In Europe, one study, based on consumer surveys on willingness to buy counterfeit instead of authentic goods, has been estimated at more than $42 billion a year in Europe, with Italy having by far the largest illicit market. Since making and selling counterfeit products requires a supply chain and a high degree of organization, OCGs are seen as the dominant culprits. Chinese and other Asian OCGs are frequently involved and sometimes partner with other OCGs such as the Camorra in Italy. Others include Japanese Yakuza, North African, Russian/Georgian and Turkish OCGs.

Illegal gambling and match fixing

Organized crime groups traditionally have been tied to illegal gambling activities but evidence shows that syndicates in Europe also operate licensed casinos and gaming machines as a means to launder money and provide high-interest loans to gamblers. OCGs in recent years have been making money on the fixing of European football matches, obtaining fraudulent profits from bets placed on the games. Interest by OCGs in match-fixing is growing. One study in 2014 estimated that seven percent of 27,000 football games in Europe per year were suspected of being manipulated by bookmakers. In 2008 during the European football championships, $1.1 billion in bets were halted, $13.4 million worth of cash was seized and 1,300 people arrested in a match-fixing investigation by Interpol.

Italian Mafias – the Camorra, ‘Ndrangheta and Cosa Nostra – are active in both legal and illegal gambling. Italy is the center of illegal gambling in Europe, with the entire market taking in about $4.5 billion in annual revenues. Others in the racket include Apulian (southeatern Italy), Chinese, Eastern European and Russian/Georgian syndicates.

Extortion and racketeering

One of the most profitable criminal activities in most European countries is local and transnational extortion racketeering. Criminals in this racket use threats of violence or other intimidation to force one-time payments, known as “predatory” racketeering, or regular payments, called “parasitic” or “symbiotic” racketeering, from businesses owners in exchange for “protection.” Extortionists also target immigrants and victims of human trafficking in Europe for payments. Sometimes smaller groups or single individuals make money through extortion, but usually established OCGs do it in a local territory or economy, particularly in Italy where the OCP report stated that extortion racketeering “plays a pivotal role in the economy of the Italian mafia.”

While difficult to measure in Europe as a whole, revenues from extortion racketeering in Italy alone have been estimated as high at $10.1 billion, much of it from the southern region of Campania dominated by Camorra crime families.

Chinese OCGs involved in extortion racketeering are “persistent and widespread” in much of Europe, centering on Chinese nationals, according to the study. Chinese business owners in France have been compelled to make so-called “tea money” payments of $500 to $2,500 for protection and Chinese OCGs have extorted Chinese immigrants in the U.K.

Russian-speaking OC groups operating in Spain, Finland and other EU nations have forced payments from owners of construction, real estate and entertainment businesses. Russian OCGs also run private protection operations in Eastern European countries. Turkish-speaking OCGs are also in extortion rackets in France, the Netherlands and the U.K.

Usury (loan sharking)

The share of organized crime syndicates in usury, also known as “loan sharking,” once avoided by some OCGs, is increasing. Usury is the illegal lending of money at high interest rates, often to people having economic problems and who are threatened with violence if they fail to pay. It serves as a method of laundering profits from other illegal activities and to take over a business whose owner is unable to erase the debt. While not a core business for OCGs, usury is becoming important for some, such as the Italian Mafias Camorra, ‘Ndrangheta and Cosa Nostra. One study found usury in Italy generated from $3.4 to nearly $7 billion from loans to about 320,000 companies in 2012, when OCGs took advantage of the limited availability of credit due to the 2009 economic crisis.

Fraud

Various types of fraud schemes have also become a lucrative source of illicit funds for organized syndicates in Europe. One of the most widespread frauds is avoiding payment of Europe’s Value Added Tax, or VAT, whereby a company buys a product free of the tax, resells it including the tax in the price and then fails to pay the tax to the government. Losses due to VAT fraud alone are estimated at $67 billion a year. Other frauds involve unauthorized withdrawals with bank cards; misuse of public funds through false documents and corrupting public officials; insurance and public benefits scams; cybercrime, including online identify theft; bribery of local officials and embezzlement of public funds; money laundering, often through mortgage fraud; fuel frauds and mass marketing schemes. The total losses from government funds fraud costs the EU government as much as $280 billion per year.

The OCP report listed eighteen different OCGs involved in fraud activities, including African, Balkan, British, Chinese, Dutch, Irish, Italian, Russian/Georgian, Romanian, Spanish and Turkish.

Organized Property Crime

Syndicates also like to target valuable products, with broad and stable demand for sale at a large profit, for thefts and robberies. Those products usually include cars, metals (such as aluminum, brass, lead and copper), pharmaceutical medicines, works of fine art, and cargos from trucks, including electronics and clothing. Cargo theft is a major problem in itself — losses throughout Europe amounted to $9.2 billion according to one survey in 2007.

Albanian and Apulian OCGs operate in stolen vehicles and medicines in Italy. Romanian, Albanian and Georgian OCGs specialize in burglaries and thefts from residential homes in Italy. Russian/Georgian groups steal medicines, cars and artworks in Poland, Italy and Sweden. Bulgarian OCGs swipe and sell cars and medicines in Italy, Bulgaria and Spain while Romanian OCGs do the same in Italy and France. The Camorra and ‘Ndrangheta commit robberies in Italy. Many OCGs also work with locals of shared ethnicities to perpetrate organized property crimes in Europe, such as Bulgarian communities in Spain, north-Africans in France and Chinese in the U.K.