Organized Crime and its Effect on Business

Organized Crime and its Effect on Business

Name

Institution

Organized Crime and its Effect on Business

Organized crime has increasingly become common in many jurisdictions in the world. Interestingly, organized criminal groups carry out their activities and thrive in the same way as legitimate businesses. This is mainly because such businesses can respond to the needs and demands of the people that they serve such as customers, suppliers, competitors, or regulatory authorities (Hagan & Daigle, 2018). Here, it has been established that dirt money can be integrated within the revenues of legitimate business enterprises. Significantly, such acts may lead to laundering of the cash reserves such that it is impossible to tell whether the concerned business entity is genuine or not. This paper examines the legal criminal justice procedures that can be used to stop the money-laundering activities that now occur within systems. Organized crimes negatively affect legitimate businesses and can be adequately interrupted through the application of domestic laws and international conventions that proscribe such criminal activities.

How Organized Crime Use Legitimate Businesses as Financial Fronts

Money laundering occurs when the source of proceeds derived illegally is masked to make them appear legitimate. Organized crime entities use legitimate businesses as financial fronts through different economic fronts. Significantly, it is appreciated that organized crime exists with the sole reason of supporting the involved organization. First, such organizations add dirty money within cash revenues and reserves of authentic business enterprises (Hagan & Daigle, 2018). In most instances, this targets the business enterprises that witness a continuous flow of cash as food and restaurant outlets. Therefore, the extra cash reserves are incorporated within the main books of account to appear as if the business has generated them.

Similarly, the organized criminal groups can manipulate the invoices to wrongly demonstrate a level of legitimacy, especially in the enterprises whose businesses require elaborate documentation. In other instances, these criminal groups may combine the laundered funds with those that are genuinely generated from the company and sell the shares to unsuspecting investors. The implication is that the money laundering goes on unabated, and the organized criminal groups continue to earn as if they were conducting legitimate businesses.

Proposed Legitimate Criminal Justice Procedures

Notably, there are legitimate criminal justice procedures that may now be applied to interrupt the money laundering processes that are described in the above scenarios. The first is to institute federal criminal or civil prosecution against the accused persons under the relevant statutes (The United States Department of Justice, 2015). While this is the case, it also reaffirms the role of the states to enforce the state laws that are applicable within them. In the United States, the prosecution can be instituted under the Racketeer Influenced and Corrupt Organization Act (RICO), which is the relevant law that seeks to eradicate the trail of such criminal activity in the nation (The United States Department of Justice, 2015). During the prosecution, the government will be required to prove beyond a reasonable doubt that a crime may have occurred. Similarly, it has to show that the enterprise exists and the defendant is associated with it. Besides, the court evaluates whether the group engages in racketeering activity that also adopts a particular pattern.

The positive aspect of the prosecution based on the RICO statute is that it adopts a well-known framework that can easily be implemented by the government. It also benefits from the close collaboration between the federal and state authorities in ensuring that the culprits that are engaged in organized crime are apprehended and punished according to a well-defined law (Lord, Elizondo & Spencer, 2017). However, the negative aspect of this method is that it is time-consuming and challenging to establish the case beyond a reasonable doubt. The implication of this is that organized criminal activity may be difficult to detect and go on unchecked to the detriment of legitimate businesses.

Further, there is a need to embrace a coordinated transnational response to deal with the organized crime that occurs in the world. The rationale for this is that such crimes transcend borders, and there is a need to stop them from spreading to nations or regions with fragile criminal justice actions or cooperation (United Nations Office on Drugs and Crime, 2018). Therefore, it is proposed that global cooperation against organized crime should be pursued to interrupt the activities of the perpetrators. Critically, this relies on the application of the universally accepted United Nations Convention against Transnational Organized Crime (UNCTOC) that seeks to stop an organized crime that is transnational (United Nations Office on Drugs and Crime, 2018). The importance of this global convention is that it has supporting protocols that are aimed at preventing, suppressing, and punishing activities associated with organized crime.

The positive side of adopting this concerted and coordinated transnational approach to address the organized crime is that the application of the convention is now widely accepted. Moreover, the protocols under the UNCTOC are internationally recognized by member states that view such crimes as a severe problem to humanity (United Nations Office on Drugs and Crime, 2018). Therefore, there is close international cooperation and willingness by the member nations to tackle the challenges posed by such crimes. Besides, the states that have ratified the instrument have taken measures that have criminalized organized crime within their domestic criminal laws (Obokata, 2017). Its relevance is also supported by the fact that it also supports the extradition of the criminal networks as well as guaranteeing mutual legal assistance between countries (United Nations Office on Drugs and Crime, 2018). However, the negative aspect of this approach is that it relies more on the goodwill of nations to enforce the law. It is also costly in terms of apprehending the criminal groups since it requires training and more technical assistance to actualize.

Conclusion

There are a host of methods that criminals can use to mask the proceeds of their crimes. Mostly, criminals use illicit cash transactions to get their money into the financial systems of various businesses. The layering, separation, and integration of the illicit proceeds make it difficult to trace and track them once they enter the financial system. From the preceding, it is established that the application of domestic laws such as RICO and international conventions can help in interrupting organized crime. Under this, countries are obliged to act whenever they suspect or come across the organized crime. These have proven to be effective in preventing cross-border organized crime. However, they are also costly and difficult to implement.

References

Hagan, F. E., & Daigle, L. E. (2018). Introduction to Criminology: Theories, Methods, and

Criminal Behavior. SAGE Publications.

Lord, N., Flores Elizondo, C. J., & Spencer, J. (2017). The dynamics of food fraud: The interactions between criminal opportunity and market (dys) functionality in legitimate business. Criminology & Criminal Justice, 17(5), 605-623.

Obokata, T. (2017). The value of international law in combating transnational organized crime in

the Asia-Pacific. Asian Journal of International Law, 7(1), 39-60.

The United States Department of Justice. (2015, February 20). 9-110.000 – Organized Crime And

Racketeering. Justice.Gov. https://www.justice.gov/jm/jm-9-110000-organized-crime-and-racketeering

United Nations Office on Drugs and Crime. (2018). United Nations Convention against

Transnational Organized Crime. Unodc.Org. https://www.unodc.org/unodc/en/organized-crime/intro/UNTOC.html