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Criminal Markets

Organized crime is a profit-driven activity fuelled by actors who adapt to shifts in supply and demand, competition from other organized crime groups and law enforcement disruption. Across Canada, established and emerging organized crime groups undertake a complex range of criminal activities from local street-level distribution of illicit drugs to international production and distribution of counterfeit goods.

In this report, CISC highlights select key criminal markets that shape organized crime across Canada. The current criminal market landscape in Canada continues to be a fusion of evolving new trends and patterns with several key facets that remain consistent over time.

Canada produces, imports, and serves as a transit country for illicit commodities. Some crime groups utilize international linkages; however, many criminal groups operate locally or within a province. Criminal groups continue to exploit border areas in the movement of illegal commodities.

Successful law enforcement disruptions create temporary voids in criminal markets at local and regional levels, but are often market expansion opportunities for other well-placed crime groups. 

Many organized crime groups are involved in multiple criminal markets with cooperative criminal ventures. Where critical skills necessary to facilitate criminal activities are absent within a criminal group, skilled outsiders are recruited to provide this service. 

The illicit drug market continues to be the primary criminal market in Canada in terms of estimated generated illicit revenue, the number of participating organized crime groups and the number of consumers. As a result, no single organized crime group dominates any specific illicit drug market, either nationally or regionally. Unchanged from 2006, approximately 80% of all crime groups in Canada are involved in this market, particularly as street-level traffickers. A smaller proportion of crime groups are active in more sophisticated operations such as wholesale distribution, importation and domestic production.

Marihuana remains the most produced and abused illicit drug in Canada with a majority of organized crime groups, at all levels of criminal sophistication, involved in its cultivation, distribution and transportation. Large-scale marihuana grows are primarily located in British Columbia (B.C.), Ontario and Quebec. Marihuana exported to the United States, representing a small percentage of the overall U.S. domestic marihuana market, is exchanged in some instances for cocaine and other illicit goods.

The demand for cocaine continues to be significant, particularly in urban centres across the country. Large-scale importation and inter-provincial distribution of cocaine are key activities for several of the most sophisticated organized crime groups. Cocaine enters Canada either directly from source countries in South America, particularly Colombia, or through transit countries such as the United States, Haiti, Jamaica and Mexico. Inter-provincial distribution is coordinated from primary hubs in B.C., Ontario and Quebec via personal and commercial vehicles, rail, post and commercial air.

Extremely addictive, deadly drugs such as crystal meth, heroin and crack cocaine damage individuals, their families and society.

Chief Jim Chu,
Vancouver Police Department

The heroin market is limited with a small number of criminal groups involved in importation from Southern Asia, South-Eastern Asia and Colombia via a variety of smuggling methods. These drugs are distributed across the country by criminal groups operating at all levels of capability to a small, but well-established market.

Canada has become a source country for ecstasy with domestic production primarily centred in B.C. and Ontario.  Canadian-produced ecstasy is exported to markets in the U.S., and to a lesser extent, Australia and Japan.

Drug trafficking is a principal source of revenue for most organized crime groups. A consequence to all individuals in our communities is the resulting physical, emotional, economic and social harms.

RCMP Deputy Commissioner
P.Y. Bourduas,
RCMP Federal Services and Central Region

Canada’s methamphetamine market is predominantly supplied by domestic production with the largest concentration of production in B.C., with only a small number of crime groups exporting to the U.S. Continuing trends are the exportation of mixed shipments of marihuana and ecstasy with methamphetamine into the U.S. Some groups are intentionally or inadvertently lacing marihuana, cocaine and other synthetic drugs with methamphetamine for domestic distribution.

Financial crime is facilitated in some instances by either the theft of personal or financial data or by the fraudulent assumption of another’s identity. This type of information is obtained through a variety of methods, including: simple mail or garbage theft, modification of point-of-sale terminals such as Interac devices, online data mining, compromising corporate data bases or through black market websites that sell stolen data from credit cards and driver’s licenses.

 

Data mining is a technique used to search large-capacity databases that, relative to financial crime, assists in the acquisition of personal and financial information for fraudulent use.  

VoIP and the use of disposable cell phones with chips containing different area codes provide more opportunity for mass marketing-related frauds while eliminating the need for “boiler rooms” with land lines. Criminal groups continue to use Canada as a base for telemarketing schemes and have been known to target countries such as the United States, United Kingdom, Australia, Germany, India, France and Morocco.

A “boiler room” refers to a location that is outfitted with desks and telephones, typically the central location for fraudulent telemarketing schemes.

Organized crime poses a threat to Canadian Forces operations. Whether it is drug dealers eroding the morale and effectiveness of our troops through the sale of illicit drugs, or groups attempting to steal specialized military equipment, the threat posed by organized crime cannot be ignored.

Captain (Navy) Steve Moore,
Department of National Defence

Multiple criminal groups are involved in mortgage fraud, with estimated illicit profits ranging into the hundreds of millions of dollars annually. Mortgage fraud can involve the expertise of financial professionals to facilitate criminality. An emerging trend, crime groups target new Canadians, particularly individuals from their own ethnic community, to act as nominees on fraudulent mortgage loan applications.

 

 

 

Across Canada, illicit offshore investments, fraudulent high-yield investments and illegal market manipulation are commonly observed frauds. Online investor’s brokerage accounts are vulnerable to theft and manipulation due to targeted Internet hijacking.

Fraudulent high-yield investment schemes generally offer or guarantee risk-free and impossibly high returns on investments.

Most criminal groups involved in payment card fraud focus on lower-level aspects of the market, particularly skimming and trafficking financial data or using counterfeit cards to purchase goods.  In 2006, according to the Canadian Bankers Association, credit card fraud losses increased 10% from 2005, totalling $185.45 million, while fraud from debit card skimming increased approximately 34% to $94.6 million.

Profits from criminal activities like drug trafficking are increasingly being funneled into legitimate businesses.

Normand Proulx,
Director General
Sûreté du Québec

The International Monetary Fund estimates that between $22 and $55 billion is laundered annually in Canada. Criminal groups will continue to manipulate Internet financial services, such as online payment systems and e-currencies as they can be highly secure, anonymous and operate outside the regulated banking system. In addition, crime groups will continue to insulate themselves through simpler laundering methods ranging from the use of cash-intensive businesses such as restaurants and casinos, to the purchase of luxury goods.

Domestic criminal groups continue to operate as service providers for the transport and facilitation of human smuggling. A disproportionate number of illegal migrants remain in Canada compared to those that transit to the U.S., though several crime groups use Canada to smuggle migrants to the U.S. In Canada, trafficking in persons is known to exist in the form of sexual exploitation and domestic servitude. Several crime groups are also involved in domestic trafficking in persons: recruiting young women, transporting them throughout Canada and in some instances to the U.S., and exploiting them in the sex trade.

 

 

Counterfeit products, largely entertainment-based software, are estimated to generate multi-billions of dollars in illicit proceeds in Canada. Organized crime groups are using the Internet to purchase and sell counterfeit goods. Nationally, criminal groups active within this market are distributors, while fewer groups are involved in the manufacture or importation of counterfeit goods. Counterfeit goods infiltrate the legitimate supply chain often without the awareness of either the supplier or consumer.

 

Intellectual property theft generally falls under one of three categories:

1) violations of copyright, which includes the piracy and counterfeiting of digital media such as software, music, and movies;

2) violations of trademark, which involves the counterfeiting of brand names; and

3) theft of trade secrets, which includes the theft of proprietary information such as design templates and production schematics.

Montreal and Toronto remain the primary hubs of vehicle theft in Canada, with organized crime involvement in only a small portion of this market, compared to individualistic opportunistic crimes such as joy-riding.

Criminal groups are involved in vehicle-related frauds including insurance write-offs and the sale of damaged vehicles, while some groups with higher capabilities based in B.C. and Ontario export stolen vehicles internationally. Other vehicle theft schemes include the manipulation of vehicle tracking systems and computerized ignition connectors that allow for keyless operation.

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Feature Focus: The Illegal Firearms Market in Canada

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