Transnational Organised Criminal Groups (OCGs) and their syndicates pose serious threats to global security, financial integrity and overall governance. As defined by the United Nations Convention against Transnational Organised Crimes (TOC), the end purpose of OCGs is to obtain financial or other material benefits. Most of OCGs are primarily motivated by money, in all its forms.
Organised criminal activities generate hundreds of billions out of which a significant amount is laundered or illicitly transacted within or across borders. In 2017, a report by the Global Financial Integrity (GFI) estimated that OCGs and their networks generate between $1.6 and $2.2 trillion, dwarfing earlier estimations.
Proceeds of Organised crimes are also used to fuel conflicts, aggravating political instability and funding other serious criminal activities. The United Nations Conference on Trade and Development (UNCTAD) reported that the global scale of illicit financial flows (IFFs) is significantly high; with Africa losing US$88.6 billion annually[1]. However, it is estimated that only less than 1% of global illicit finance is recovered[2]. This speaks volumes about the lack of effectiveness in tracing, investigating and recovering assets. Criminals are now abusing the crypto-asset platforms, which further call for building capabilities on digital financial investigation.
iWith this drawback, different international organisations appear to agree on the importance of financial investigations (FI), not only to investigate economic crimes, but also to dismantle other organised criminal groups, to trace and confiscate their assets. As clearly underlined by the Financial Action Task Force (FATF) in its provisions of Immediate Outcomes (IOs) 7, 8 and 9, competent national authorities are required to investigate and prosecute money laundering and terrorist financing as well as duly confiscate proceeds and instrumentalities of crime respectively. The FATF has also developed guidelines and good practices related to effective implementation of FI[1]. Similarly, the Council of Europe[2], Organisation for Security and Co-operation in Europe (OSCE)[3], and others have developed guidelines and resource packages related to FI, stressing its critical importance in the fight against forms of organised crimes.
The definition provided by FATF is more comprehensive in its scope and integrative in its purpose in investigating both the predicate offence and the proceeds of crime. Finance or material benefit derived from criminal activities includes all kinds of assets whether movable or immovable, tangible or intangible, physical or virtual and values in documents or other representations.
ffective targeting of illicit financial transactions and proceeds is necessary not only to deprive criminals of their ill-gotten benefits but also to thwart TOC and terrorist activities. One of the most effective ways to disrupt and dismantle TOC criminal networks is to identify, trace, freeze and confiscate the money they get through effective financial investigations.
The EU Council’s training manual underscores the role and benefits of integrated parallel FI including collecting evidence on the perpetrator and the criminal offence (part of the traditional crime investigation), identifying amount and type of illicit properties and instrumentalities that are subject to confiscation, and determination of conditions for temporary measures (asset freezing, seizure and securing). Taking away profits from criminals removes the incentive to commit future crimes and denies the perpetrators the opportunity to infiltrate and corrupt the legal economy. FI is instrumental in realising the very principle of the rule of law and moral principle – that crime should not benefit anyone. FI can also contribute to compensation of victims of crime, witness protection and whistle blowers, using the finances recovered and confiscated assets.
With the growing market share of cryptocurrencies and other forms of virtual assets and risks of abuse by OCGs and their networks, FI remains critical. The share of all cryptocurrency activity associated with illicit activity rose for the first time since 2019, from 0.12% in 2021 to 0.24% in 2022. Chainalisys reported that even though the share of illicit cryptocurrency in percentage of the total transactions is still estimated to be low in terms of volume, it is increasing year on year – hitting an all-time high of $20.1 billion in 2022[1]. The same report claimed that Criminals laundered $8.6bn of cryptocurrency in 2021, up by 30% from the previous year. These assertions clearly show the vital importance of FI to counter TOC and IFFs in an integrated manner.
In general, effective FI can play a critical role in the success of achieving Immediate Outcome 7, 8, and 9 that aim at punishing perpetrators, depriving criminals of their illicit profits and deterring criminals. As underscored by multiple FATF standards and guidelines, investigative authorities are required to undertake parallel financial investigations to successfully prosecute and convict perpetrators as well as recover and confiscate proceeds and instrumentalities of crime.
To sum up, FI has enormous benefits in the fight against corruption, TOC, ML/TF and other serious crimes and to enhance overall effectiveness of national AML/CFT and counter IFFs by:
1. Identifying the extent of criminal networks and/or the scale of criminality
2. Tracing the proceeds of crime, terrorist funds or any other assets that are, or may become, subject to temporary measures and confiscation
3. Developing reliable and admissible evidence that can be used in criminal proceedings; and
4. Revealing undiscovered predicate offences and to identify other extended criminal networks and financiers.
