SOC 3290 Deviance Overheads Lecture 27: Organized Crime: Today we will review two interrelated topics: (1) The Changing Nature of Fraud in Canada:

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SOC 3290 Deviance Overheads Lecture 27: Organized Crime: Today we will review two interrelated topics: (1) The changing nature of fraud in Canada; (2) Organized crime and money laundering (1) The Changing Nature of Fraud in Canada: * Fraud = any attempt through deceit or falsehood to obtain goods, services, or financial gain without legitimate rights. * Includes: a wide array of criminal activities (among other things): - writing bad cheques - credit card theft - electronic money transfer - personal identity scams. - telemarketing scams - insurance fraud - debit card copying - much computer crime. * Fraud statistics: * In 1999 lowest fraud rate in more than 20 years, representing less than 7% of all property crimes (297/100,000 population). *Much driven by a steep decline in cheque frauds since the 1970's. Yet, credit card & other frauds have increased substantially (143%) since 1978 * Highest provincial rate in 1996: Saskatchewan Below average: Quebec, Newfoundland, Ontario and the NWT * Frauds more likely to be solved by the police than other property crimes (in 1996, nearly 2 in 3). * Persons accused of fraud offences older than accused in other property 1

crimes. * Probation =most common sentence for fraud offences, prison terms were short (60 days), and fines small ($200). * Fraud targets: 53% commercial enterprise 28%, bank or financial institution (2) Organized Crime and Money Laundering: * Organized crime indicates a process or method of committing crimes, not a distinct type of crime or criminal. * Common features: - A political organization with the capability to use political corruption and/or the potential for violence; - A structure that allows the individual criminals to be interchangeable without jeopardizing the visibility of the criminal activity; and - Criminal activity committed via continuing criminal conspiracies * Organized crime evolves /does not remain static. Better to focus on common process than the radical changes in crimes and markets. * Keep in mind that the one constant is the pursuit of profit. * Canadian legal framework: - 1988 - Bill C-58 The Mutual Legal Assistance in Criminal Matters Act - 1989 - Bill C-61 The Proceeds of Crime Legislation - 1993 - Bill C-9 The Proceeds of Crime Money Laundering Act - 1993 - Bill C-123 The Seized Property Management Act - 1997 - Bill C- 95 An Act to Amend the Criminal Code (Criminal Organizations) - New Anti-Terrorism Act 2

* To truly understand organized crime, one must understand: - the globalization of financial markets/ criminal activities - political changes opening up opportunities - increasing cooperation/linkages between organized crime groups - marketing analysis * In Canada, organized crime activities involve all of the following - Narcotics - Extortion - Loan sharking - Organized frauds and scams -Smuggling - Illegal immigration - Pornography - Prostitution -Credit card theft/ frauds - Murder/ contract killings - Gambling - Environmental crimes -Motor vehicle theft - Money laundering * Literally all ethnic groups are involved, but some concentrate due to: - Ties of loyalty extending beyond profit - Difficulty in police penetration - Efficiency of controlling seamless operation * Groups operating as organized criminals in Canada: - Traditional Italian organized crime families - Asian Triads/ Vietnamese gangs - Aboriginal organized crime groups - Outlaw motorcycle gangs - Colombian cartels - Russian organized crime groups - Nigerian groups - Eastern European groups - Jamaican organized crime - Japanese Yakuza 3

* Major players: - Usually involved in more than 1 type of activity - Exhibit much overlap/interdependence * Organized crime requires facilitators /accessories in conventional society: - accountants -lawyers - computer specialists - financial advisors - customers * Criminal justice response: follow the money - Seize profits/ assets thereby hurting organization - Money laundering laws * Money laundering = the conversion of illicit cash to another asset, often involving the placement of the funds into a financial institution * Accomplished by: - Concealing the true source or ownership of proceeds - Creating a paper trail that is hard or impossible to follow; and - The creation of the perception of legitimacy of source and ownership * Institutions generally targeted include: - Deposit-taking institutions - Currency exchanges - The securities industry - The insurance industry - Real estate - Casinos - Lawyers and accountants - The travel industry - The gold market - Precious gems/ jewelry stores - Luxury goods industries - The incorporation and operation of companies 4

* Most laundering schemes have a lawyer involved: - Some knowing accomplices/ some not - Many hide behind solicitor-client privilege (controversial) - Services can include: Providing a nominee function Incorporating companies Conducting transactions Managing/ handling illicit cash International coordination Buying and selling real estate * More recently lawyers targeted by law enforcement: - When do they become criminals themselves? - Can their assets be seized under proceeds of crime laws? - Sting operations - New reporting laws being fought * Ultimately: - Organized crime market driven - Socially, politically and economically defined - Hard to tackle, as: interwoven with conventional society different jurisdictions/enforcement priorities 5