Transnational Crime and the Developing World

legitimate work.
Money laundering is one of the most important components of transnational crime, and the laundering
of drug proceeds, particularly through trade-based schemes, has negative effects on economies. TBML
can serve as an informal value transfer system that allows DTOs to repatriate drug proceeds through the
trade of goods rather than movement of money. For example, a Colombian DTO will use drug proceeds
(in US dollars) to purchase goods, such as electronics, toys or appliances, in the United States, which
are then exported to Colombia. Once in Colombia, the imported goods are sold (in Colombian pesos)
and the DTO recoups its proceeds. According to TBML specialist John Cassara, DTOs may sell these
goods at a deep discount in order to hasten the return of their money, yet this distorts market prices,
creating unfair competition by undercutting legitimate businesses. 32
The large volume of dirty money moving through TBML schemes can cause governments to lose
significant tax and customs revenues. Governments collect fewer tax revenues when goods are
intentionally sold below market value, and the underinvoicing of imports likewise results in lost
customs duties. 33 The budgets of developing countries are often heavily dependent on the ability of the
government to collect taxes and customs duties, and tax fraud seriously undermines the government’s
ability to fulfill its obligations.
E. Recent Developments
Africa’s role as a transit point for drug trafficking has been a major contributor to the growth in both drug
production and consumption on the continent over the last decade. Increased drug trafficking will further
destabilize already fragile countries and threaten public health in the region. In addition, global drug
production is moving from fields to laboratories and distribution is moving to the internet.
West Africa—most notably Nigeria, Guinea-Bissau, Sierra Leone, Mali, Guinea, Ghana, and Senegal—
became a hotspot for drug trafficking in the mid-2000s, in particular serving as a transshipment point for
cocaine trafficking between South America and Europe. Nigerian OCGs, following a similar trajectory to
Mexican DTOs (see Box 1), originally provided logistical support in West Africa to South American DTOs.
These groups provided cocaine as payment for the Nigerians’ services, and the Nigerian groups began
to purchase cocaine themselves directly from South American DTOs, both of which allowed the Nigerian
OCGs to transition from smugglers to wholesalers. 34 Drug trafficking has played a role in destabilizing
certain countries in West Africa, and the increased revenues earned by OCGs from realizing a larger
share of the market threaten to do even greater damage. 35
32
John A. Cassara, Trade-Based Money Laundering: The Next Frontier in Money-Laundering Enforcement (Hoboken, NJ: John Wiley & Sons, 2016),
39.
33
U.S. Department of the Treasury, National Money Laundering Risk Assessment 2015 (Washington, DC: U.S. Department of the Treasury, 2015),
29, https://www.treasury.gov/resource-center/terrorist-illicit-finance/Documents/National%20Money%20Laundering%20Risk%20Assessment%20
%E2%80%93%2006-12-2015.pdf.
34
Hamilton, “The Golden Age of Drug Trafficking”; United Nations Office on Drugs and Crime, Transnational Organized Crime in West Africa: A Threat
Assessment (Vienna: United Nations Office on Drugs and Crime, 2013), 10–11, http://www.unodc.org/documents/data-and-analysis/tocta/West_Africa_TOCTA_2013_EN.pdf.
35
Aïssata Maïga and Elizabeth Tompkins, “West Africa’s New Drug of Choice: The Rise of Methamphetamine” (Stockholm: Institute for Security and
Development Policy, June 12, 2014), 1–2, https://www.files.ethz.ch/isn/184910/2014-maiga-tompkins-west-africas-new-drug-of-choice.pdf; United
Nations Office on Drugs and Crime, World Drug Report 2010 (Vienna: United Nations Office on Drugs and Crime, 2010), 242, 244, https://www.
unodc.org/documents/wdr/WDR_2010/World_Drug_Report_2010_lo-res.pdf; Lansana Gberie, “Crime, Violence, and Politics: Drug Trafficking and
Counternarcotics Policies in Mali and Guinea” (Washington, DC: The Brookings Institution, 2016), 2–3, https://www.brookings.edu/wp-content/uploads/2016/07/Gberie-Mali-and-Guinea-final.pdf;
West Africa Commission on Drugs, Not Just in Transit: Drugs, the State and Society in West Africa
(Geneva: West Africa Commission on Drugs, 2014), 9, 20, 23, http://www.wacommissionondrugs.org/WACD_report_June_2014_english.pdf; Davin
O’Regan and Peter Thompson, Advancing Stability and Reconciliation in Guinea-Bissau: Lessons from Africa’s Narco-State, ACSS Special Report No.
2 (Washington, DC: Africa Center for Strategic Studies, 2013), 4, 18, 21, 32, http://africacenter.org/wp-content/uploads/2016/06/ASR02EN-Advancing-Stability-and-Reconciliation-in-Guinea-Bissau-Lessons-from-Africa%E2%80%99s-First-Narco-State.pdf.
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