The Terror-Crime Nexus

• Author: Douglas Farah

The Terror-Crime Nexus Finance & Development, September 2017, Vol. 54, No. 3

Douglas Farah

How international groups of criminals and militants team up to move money around the world

Deep in the jungles of Suriname, miners work a primitive sluice to extract flecks of gold from the tons of red clay soil they dig from the ground, using mercury that poisons nearby waterways. The men, who are unprotected by labor laws and often must bribe local officials to work the mines, earn about $50 a week—a paltry sum compared with the $24,000 middlemen will earn from the gold they mine.

In contrast to the labor-intensive methods employed by the miners, the middlemen who move the gold to the world market use communications encrypted with applications like WhatsApp and Signal. Some of the gold is overinvoiced to launder the proceeds of other illegal activities. Some appears as exported from other countries to hide its origin or mask the movement of cocaine and heroin. And some winds up in the Dubai Gold Souk in the United Arab Emirates, where its value can easily be converted to bitcoins, dollars, or euros.

The illicit gold mines of Suriname, a former Dutch colony north of Brazil, show how criminals are marrying age-old methods with digital-era technology that helps them avoid detection as they move cash and commodities around the world. Wielding sophisticated software, they turn gold on one continent into cryptocurrencies on another in multimillion-dollar transactions that leave no trace in the world’s formal financial system. The growth and global scope of their activities highlight the need to improve cooperation among the world’s regulators and law enforcement agencies.

Logging, miningGold is just one source of illicit revenue, which also includes proceeds from the sale of narcotics, illegal logging, and theft of minerals and cultural property. The sums involved are staggering. A 2017 report from Washington, DC-based Global Financial Integrity estimated the turnover of 11 primary illicit markets at $1.6 trillion to $2.2 trillion annually. The drug trade is the most lucrative, earning $426 billion to $652 billion, while illegal mining is estimated to yield $12 billion to $48 billion. The report states that “transnational crime will continue to grow until the paradigm of high profits and low risks is challenged.”

While law enforcement authorities have scored some successes in stemming such flows, governments, in a reactive mode, are at best capturing a...