Print Version
CISC 2005 Annual Report on Organized Crime in Canada
Report Highlights
Introduction
The CISC Annual Report on Organized Crime in Canada is published to inform the
public about the threat of organized and serious crime and its negative effects on
Canadian society and the economy. It also highlights the characteristics of and
methods used by organized crime groups in Canada as well as the criminal markets in
which they operate.
One of CISC’s goals in publishing the report is to engage the public’s support of law
enforcement efforts in the fight against organized crime, and encourage further
partnerships between the public, law enforcement agencies and policy makers.
In recognition of the changing and increasingly complex dynamics of organized and
crime and its illegal activities, CISC has re-focused the format and content of the report
to provide the public with a better understanding of the direct and indirect negative
effects of criminal activities on the lives of Canadians and their communities.
Organized crime groups are dynamic, adapting to market forces which include
competition from other organized crime groups, technological innovation and action by
law enforcement. Organized crime groups are largely networked and frequently engage
in co-operative ventures, some of which are temporary in nature, based upon mutual
need. Some organized crime groups have the capability to exploit borders to facilitate
the movement of commodities into and out of Canada through various means of
transportation. Overwhelmingly, organized crime groups are opportunistic, exploiting
loopholes in legal markets or selling any illicit good or service that will generate a profit.
They conduct their activities without consideration for the good of individuals or society.
As the voice of Canada’s criminal intelligence community, the CISC network gathers
and shares intelligence with Canadian law enforcement agencies to support effective
responses to the threat of organized and serious crime.
Characteristics and Methods
Structure and Composition
The criminal operations of organized crime groups are determined by opportunity.
They may trade in illicit products and services that generate a profit, or exploit
legitimate businesses and business professionals to assist them in their criminal
ventures.
Criminal markets are dynamic and evolve over time as they react to market forces.
The dynamic nature of their activities requires organized crime groups to network
with each other, usually due to one group’s access to a key product, or ability to
provide a needed service.
Violence and Intimidation
Criminal activities generally involve violence or threats of violence as a means to;
- enforce illicit transactions or resolve disputes;
- assert dominance over other groups or individuals;
- maintain internal order and loyalty to a criminal group; and
- intimidate law enforcement, the judiciary and witnesses to criminal actions.
Street gangs have a high propensity for violence, often using illegally acquired
firearms. Eruptions of violence, particularly in large urban centres, often result in
injury or death to innocent bystanders.
Cross Border Movement
Organized crime groups often carry out operations across wide geographical areas,
crossing provincial and international borders.
The major metropolitan areas of southern Quebec and Ontario, and the B.C. Lower
Mainland form the primary criminal hubs in Canada where the most powerful groups
exert their influence and facilitate the connection between regions and the national,
and international criminal marketplace. The country’s other urban centres act as
secondary criminal hubs in contraband distribution and criminal influence over more
limited spaces.
Illegal drugs and other contraband is the mainstay of the Canadian criminal
marketplace, making the exploitation of borders key in successfully moving these
commodities. Examples of contraband include drugs, tobacco, firearms and
undeclared or counterfeit currency.
Illicit goods are sometimes transported through marine ports, airports, and by land, with the knowledge of some employees, who either willingly or by intimidation
facilitate illicit activities.
Technology and Crime
The growth in the number and type of technology-related crimes, particularly
computer-related crimes, reflects the exponential increase in the number of Internet
users and the expansion of e-commerce globally.
Individuals and businesses that rely on technology, e-commerce, and the on-line
storage of valuable personal, financial and intellectual property are the targets of
organized crime groups.
The borderless nature of technological crime makes it difficult to identify its scope
within Canada or globally. It is also difficult to investigate and prosecute crimes
committed across jurisdictions; a situation exploited by organized crime.
The cost of responding to the threat or potential threat of computer-related crime is
high. Users, including individuals, private business, and government, face degraded
network performance, security risks, and increasing costs for technical support
resources, including time-consuming repairs and upgrades.
Criminal Markets
Not unlike legitimate businesses, organized crime groups trade in goods and
services based on supply and demand.
The trademark of a criminal market is its illegal nature, whether it be the good or
service, or the actors (organized crime group or individuals) involved. Even if the
actors, goods or services are not criminal, the transaction is. Some criminal markets,
such as illicit drugs, are purely criminal, while others are the result of criminal
exploitation of a legitimate process.
Contraband
While there are several types of contraband, this year’s report focuses on tobacco
and firearms, which are legal commodities, but are exploited by organized crime
through illegal diversion and sale of products.
Contraband operations range from small-scale enterprises to large-scale operations
that are often inter-provincial and/or international in scale and scope.
Contraband markets result in lost tax revenues to government, and avoidance of government regulations designed to guarantee a measure of quality control and
public safety.
Canada’s strict firearm controls and regulations have driven criminals to develop
illegal means to acquire firearms either from within Canada from domestic thefts or
smuggled from a foreign country, most often the United States.
Illicit firearms can have a dramatic and direct on individuals through intended and
unintended homicides. They can affect communities by creating fear for personal
and public safety.
The cost of tobacco products reflects the significant government taxes applied to this
product, making the illegal sale of tobacco products without added taxes more
appealing to smokers.
Smuggled tobacco products enter Canada primarily through Ontario and Quebec
through a variety of transportation methods.
The negative effects of contraband tobacco products include lost tax revenues,
violence and intimidation in the theft of products, and potentially the lure of legal
tobacco retailers into the contraband market.
Financial Crime
Financial crimes, including money laundering, intellectual property rights (IPR) crime
and identity theft are largely facilitated by technological advances, specifically in
communication and information technologies. These types of crimes in particular
take advantage of processes and institutions within the legitimate economy.
Organized crime groups in Canada increasingly use casinos, on-line casinos, whitelabel
Automated Teller Machines and money service businesses such as currency
exchanges to launder their money. Foreign-based crime groups are also using
Canada as a place to launder money from activities outside of Canada.
Money laundering undermines the legitimate economy, especially investor
confidence in important Canadian markets, and reducing tax revenues owed to
government.
The nature of intellectual property makes it vulnerable to criminal exploitation. The
rate of these crimes has been increasing, largely due to globalization in the
production of, and consumer demand for, inexpensive brand-name consumer and
luxury products.
IPR crime generally falls under one of three categories:
Violations of copyright such as piracy and counterfeiting of digital media;
Violations of trademark which involves counterfeiting of brand names; and
The theft of trade secrets such as design templates and production schematics.
Technological advances have facilitated the production of high-quality counterfeit
products, making it more difficult to distinguish fraudulent from authentic products.
IPR crime results in substantial financial losses, can undermine consumer
confidence in products, and create hazards to those who purchase counterfeit
goods, particularly medicines, electrical devices and auto parts.
Identity theft refers to the illicit gain and use of another person’s personal and
financial information in order to commit fraud. It can include mail theft, stealing from
residences, misuse of personal data in business transactions, and theft from
company and government databases.
Enhanced technology means that more information is stored and transmitted
electronically, enlarging the market for criminals and providing them with more tools
available for the commission of crimes.
Direct and indirect losses from identify theft in Canada are significant. There are
considerable financial costs to financial institutions, businesses and consumers
alike. Victims are often left with damaged credit ratings and disrupted personal and
financial records.
Human Beings as a Commodity
Migrant smuggling and trafficking in persons are sources of significant profit to
organized crime groups. There is an important distinction between the two;
smuggling implies consent while human trafficking does not.
Migrant smuggling and human trafficking both present health and safety risks to its
victims. Those recovered by law enforcement or border officials require assistance
from government and social services.
The illegal entry of migrants into Canada threatens the integrity of the formal
immigration process, and increases the cost of the legitimate process when
resources are diverted to deportation and immigration hearing.
The sexual exploitation of children (SEOC) is a complex issue that involves children
in Canada and internationally. SEOC is generally recognized as including the
criminal activities of child pornography, child prostitution, child sex tourism, and
trafficking for sexual purposes.
Information and communication technologies have facilitated opportunities to exploit children by fostering connections between like-minded individuals and identifying
potential victims, as well as a way to exchange and store vast amounts of data.
Internationally, the production and dissemination of child pornography is a growing
illicit market in which organized criminals are involved.
Small groups of organized criminals and lower-level organized crime groups are
involved in child prostitution, which is present in many larger urban centres in
Canada.
Illicit Drugs
The illicit drug market affects all communities, whether rural, suburban or urban, in
varying degrees throughout Canada. Illicit drug use often spurs criminal activities
such as robbery, break and enter, fraud, and violence against individuals to support
the habits of users.
The production, distribution and sale of illicit drugs comprise one of the most
lucrative financial criminal endeavors undertaken by organized crime.
The illicit drug market is highly competitive and can also lead to violence between
organized crime groups, or between dealers and users.
The manufacture of illicit drugs, particularly synthetic drugs and marihuana, pose
threats to the environment, public safety, law enforcement and the health services
sector. Marihuana grow operations also pose danger to nearby residences due to
the increased threat of fire from electrical bypasses.
Aside from significant quantities of marihuana and some synthetic chemical drugs,
the bulk of illicit drugs consumed in Canada originates abroad and is smuggled into
the country.
In addition to the negative effects of illicit drug use on the user and its impact on
family and friends, it creates additional burden on the health care system, demands
greater law enforcement resources, and may incite conflict and violence between
users and organized crime groups.
Motor Vehicles
This criminal market is not restricted to automobiles, but includes all types of
motorized vehicles from all terrain vehicles (ATV) and motorcycles, to boats and
farm equipment.
Organized crime is becoming increasingly involved in this type of theft due to the
lucrative nature of this crime. Successful vehicle theft operations require an
extensive network of facilitators and service providers from theft to resale, stripping
the vehicle for parts and resale, and shipping either vehicles or parts overseas on
cargo containers to waiting buyers.
Vehicle theft is not a victimless crime; the Insurance Bureau of Canada estimates
that vehicle theft costs insurers and the public almost $1 billion per year, when all
related costs are included. There are also costs associated with reporting,
processing and settling vehicle insurance claims, which affects policy holders,
insurance companies, law enforcement investigations, court processes, corrections’ services and taxpayers.
Natural Resources
Although the illicit exploitation of natural resources presents an opportunity to
organized crime groups in Canada, this type of crime is more common
internationally than in Canada due to the regulatory oversight of all levels of
government and their agencies.
In Canada, the environmental crime category encompasses a diverse set of
offences such as the trade in endangered species, the illegal, unreported and
unregulated harvesting of flora, fauna and minerals, and dumping of hazardous or
other waste.
Organized crime tends to become involved in environmental crime largely because
there are shortages of a commodity. Their involvement in activities such as
poaching and wildlife tracking threatens the ecological diversity of the country and
the planet, with long-term effects.
Canada’s newly emerging diamond industry is a potential source of criminal activity.
Law enforcement continues to pro-actively monitor the potential exploitation by
organized crime.
Organized crime could potentially infiltrate the diamond industry through co-opted or
wholly owned mining, exploration, and cutting and polishing firms.
Potential threats from organized crime that could impact on the Canadian diamond
industry include misrepresentation of high-quality fake stones as real diamonds, use
of polished stones as a means of currency for transport, investment in jewelry
stores, increase in smuggling of rough stones, and opportunistic theft at mine sites
or while in transit.
The exploitation of the Canadian diamond industry by organized crime could
negatively impact the integrity of Canadian-mined diamonds, resulting in loss of
integrity, and financial loss to consumers and investors.
Conclusion
The economic forces of supply and demand which drive legitimate business are just as
relevant in the illegitimate marketplace. Organized crime groups will continue to focus
on generating profit from the illicit sale of goods and services. Their activities are
diverse and opportunistic, functioning as an illegal model of a market-driven economy.
There are negative social and economic effects associated with each and every type of
organized crime activity.
Whether hidden or apparent, the adverse effects of organized criminal activity touch all
Canadians. This report has sought to highlight only some of the innumerable ways in
which organized crime directly or indirectly affects Canada, its institutions, its citizens
and communities.
A collective response against organized crime includes strategic co-ordination,
commitment to intelligence and timely communication. The Canadian law enforcement
community will continue its coordinated efforts to combat organized and serious crime in
Canada, and to reduce its negative effects on individuals and communities throughout
the country. Intelligence-led policing, guided by the CISC community, is Canada’s best
tool to combat organized crime.
The complete 2005 CISC Annual Report on Organized Crime in Canada is available here.
