Transnational Criminal Activity

November 1998

"Organized crime is the federal government's Number One law enforcement priority.... In a recent poll, 91 per cent of Canadians identified organized crime as a serious problem.... That's why the government has been working in close cooperation with the police and the provinces over the last four years, taking a number of steps to strengthen the fight against organized crime."

The Hon. Andy Scott, former Solicitor General, Statement to the Canadian Association of Chiefs of Police, 93rd Annual Conference, 24 August 1998


Improvements in transportation, computer and communications technology have made the world today much smaller than it was 50 years ago. Intercontinental travel which used to require days or weeks now takes place in hours. The formerly daunting notion of conversing or conducting business with someone halfway around the globe is now a mouse-click or a telephone call away. This globalization has created a world virtually devoid of national borders. Unfortunately, these changes have also made it easier for members of highly sophisticated and organized criminal syndicates to pursue a complex web of lucrative legal and illegal activities worldwide.

UN estimates place the cost of this transnational criminal activity in developed states at two per cent of annual gross national product (GNP). The potential transnational crime-related losses for Canada in 1995 would have been about $14.8 billion, based on a GNP of $742 billion. Figures like this led the 1998 G8 summit in the UK to label transnational criminal activity one of the three major challenges facing the world today.

Transnational crime threatens various aspects of Canadian national security, law and order, the integrity of government programs and institutions, and the economy. Accordingly, the Canadian Security Intelligence Service monitors such activity under its mandate to investigate foreign- influenced activities detrimental to Canadian interests, as set out in Sections 12 and 2 (b) of the CSIS Act, in order to provide strategic advice to government on how to deal with this immense problem. Given the global nature of transnational crime, the Service's work in this area includes a great deal of cooperation with law enforcement agencies and other intelligence services.

The New Brand of Organized Crime

In the past, crime syndicates were traditionally involved in illegal activities such as drug trafficking, prostitution, illegal gambling, loan-sharking and extortion. These organizations generally controlled specific territories, did not usually attempt to operate outside their spheres of influence and only rarely cooperated with other syndicates. In the 1950s for instance, a Sicilian mafia family in Palermo would require permission to operate, however briefly, in another family's zone even if that zone were only a block away.

Today, organized crime is no longer limited to street-level activity. Contemporary organizations are adaptable, sophisticated, extremely opportunistic and immersed in a full range of illegal and legal activities. While still involved at the lower level with drug trafficking, prostitution, loan- sharking, illegal gambling and extortion, they have expanded their activities to a quasi-corporate level where they are active in large-scale insurance fraud, the depletion of natural resources, environmental crime, migrant smuggling, bank fraud, gasoline tax fraud and corruption. In addition, their frequent use of money earned from their illegal ventures to fund legitimate ones allows them to launder money and earn even more profits. They apply many of their criminal tactics in these legal business operations, never hesitating to use violence or murder to get ahead. By way of illustration, the media have taken note of the deaths of a "surprising number" of people who opposed a campaign by a company—believed to be affiliated with a Russian/Eastern European transnational criminal organization—to gain control of 40 per cent of Russia's aluminum trade. Transnational criminal syndicates are not afraid to work globally in any country where legal or bureaucratic loopholes allow them to take advantage of the system. As with international corporations, these organizations are quite willing to work together, often bartering for the use of each other's unique talents to accomplish specific tasks, or to make longer-term arrangements when it suits their needs.

The Major Players

There are approximately 18 active transnational criminal organizations represented in Canada, including Asian triads, Colombian cartels, Japanese yakuza, Jamaican posses, Mafia groups from the USA, Calabria and Sicily, Russian/Eastern European mafiyas, Nigerian crime groups and major outlaw motorcycle gangs. Since 1990, a great deal of media attention has been paid to Asian-based and Russian/Eastern European based organizations.

Asian-Based Transnational Crime

The Chinese triads, the Big Circle Boys and the Japanese yakuza are the most prominent types of groups involved in Asian-based transnational crime. Numerous books and media articles have described these groups' intriguing histories and wide range of legal and illegal ventures.

Legend has it that the triads date back to the reign of Manchu emperor Yung Ch'eng in the 17th century. Five warrior monks are believed to have escaped the destruction of the Shao Lin monastery, a rallying point for anti-Manchu rebels, and started the first secret societies, now known as triads. Initially patriotic groups, the triads increasingly turned to smuggling, extortion and piracy to survive. Eventually, criminal activities took precedence over political goals.

The largest triad in Hong Kong, the principal center for the triads, is the Sun Yee On (also known as The Yee On Commercial and Industrial Guild), with anywhere from 47,000 to 60,000 members carrying out activities worldwide. The second largest, the 14K triad, has an estimated membership of over 20,000 operating internationally.

The triads are extremely sophisticated and are involved in a variety of activities, all of which are very lucrative. These include: drug trafficking; money laundering; corruption; computer software piracy; credit card forgery and fraud; counterfeit currency and identification operations; and migrant smuggling. They will often provide direction to Chinese gangs in exchange for the "muscle" needed in some triad operations.

Another Chinese transnational crime syndicate of interest is the Big Circle Boys (Dai Huen Jai or BCB). This is less a single, centrally led organization than a loosely affiliated group of gangs operating independently and cooperating only when needed. Several BCB gangs often operate in the same large city. The BCB's roots can be traced to the late 1960s. The original members were mostly former Red Guards who had been purged from the Peoples' Liberation Army and sent to prison camps in Guangzhou (Canton), known as the "Big City." The prison camps were outlined with big circles on Chinese maps of the time, leading to the name "Big Circle Boys." The ex-Red Guards were treated harshly in prison and, upon their release or escape between 1969 and 1975, turned to crime as a way of life.

While the BCB organization is not a triad, its operations are nearly as sophisticated as those of the triads. BCB members are active in drug trafficking, migrant smuggling and large-scale credit card forgery and fraud. The triads and the BCB are also believed to be working with a variety of transnational crime syndicates, including the Russian/Eastern European mafiya, and outlaw motorcycle gangs.

Like the triads, the Japanese yakuza (or boryokudan) have a long criminal history, with origins at least as far back as the 18th century when Japanese gamblers and street peddlers organized themselves into "families." Unlike most transnational criminal organizations, yakuza syndicates are relatively open criminal societies, some of whose members have been known to have their own business cards, complete with yakuza emblem. Some organizations have even published newsletters and magazines.

Estimates of yakuza membership in Japan run as high as 80,000. Their activities are believed to generate an annual income of between US$10 and $50 billion. The Yamaguchi-gumi, based in Kobe, is the largest yakuza organization with an estimated 26,000 members in more than 944 affiliated gangs. Its estimated revenue in 1994 was in the range of US$25 to $38 billion.

Organized Crime in Russia and Eastern Europe

Organized crime in Russia and Eastern Europe began in the 17th century—the days of the select group of criminals known as the vory v zakone, the Thieves in Law, who controlled the criminal underworld. The vory existed only to steal and rejected legitimate society entirely. Most of the Thieves in Law were imprisoned in the gulags during the Soviet era, but they came back to thrive in the chaotic atmosphere that followed the lifting of the Iron Curtain in 1991. Today, these older criminal fraternities are joined by the new and younger "bandit" organizations which are concerned only with profit, and not the thieves' code.

Although estimates vary widely, it is generally accepted that 5,000 to 8,000 criminal organizations with as many as 100,000 members control between 25 and 40 per cent of Russia's GNP. The Russian Interior Ministry (MVD) estimates that these organizations control 40 per cent of private businesses, 60 per cent of state-owned enterprises and between 50 and 80 per cent of banks in Russia. According to the MVD, approximately 300 Russian and Eastern European organized crime groups operate transnationally in various areas, including extortion, fraud, murder, illegal gambling, loan sharking and alien smuggling. Four key areas, however, form the foundation of their global criminal power: narcotics trafficking, illegal arms dealing, money laundering and the export of Russian natural resources.

The Threat

Given that they attack the very fabric of life in a democratic, law-based society like Canada, the illegal actions of transnational crime organizations threaten law and order, directly affecting people's sense of security, trust, order and community—the very underpinnings of Canadian society. They regularly attempt to corrupt public officials with large amounts of money, thereby jeopardizing the integrity of government programs and institutions and forcing governments to spend more of their shrinking budgets on enforcement. Adding to the increased enforcement expenditures and the burden on the criminal justice system is the fact these activities often result in social costs with long-term effects, e.g. drug dependency and a rise in violent crime.

Transnational crime also poses a serious threat to the economic security of the nation in that its basic activities could undermine the workings of the free market economy. Due to their illegal activities, transnational crime groups have access to huge sums of money, which needs to be "washed." This large-scale money laundering has an impact on the operations of legitimate financial institutions that, in the long term, can go beyond the business sector with negative effects on the investment climate, tax revenues and consumer confidence. Moreover, these large amounts of money, combined with a willingness to use violence, enables transnational crime organizations to bribe, extort or coerce employees of financial institutions and governments.

International and Canadian Efforts

At their Summit in Birmingham, England in 1998, the G-8 leaders vowed to continue the fight against the world-wide problem of transnational crime which, they declared, threatens "to sap (economic) growth, undermine the rule of law and damage the lives of individuals in all countries of the world."

In May 1998, the Solicitor General of Canada stated:

"Because of organized crime's many manifestations and because it transcends our borders, it... calls for innovative, international co-operation.... No single person, no single country can stop the daunting flow of transnational crime."

In August 1998, he reiterated the government's commitment to combat these activities, stating:

"To fight the menace of organized crime, we need nothing short of a strategic partnership between the federal government, the provinces, the territories, and the police community, so that we can bring our combined weight to bear. If we succeed, we will have forged a partnership unprecedented in Canada, and will take the fight against organized crime to an entirely new level."

Cooperation at the interdepartmental, intergovernmental and international levels is needed to fight these transnational crime organizations which work outside the rules, can be ruthless in carrying out their policies and are not democratically accountable for their behaviour.

The Role of CSIS

Law enforcement agencies in Canada have the lead role in the fight against transnational crime. For this purpose, they collect both tactical and strategic intelligence. Tactical intelligence is a primary concern of law enforcement as it is operational in nature and is geared towards action in the field, leading to arrests and prosecutions. The collection of strategic intelligence, however, is also important for Canada’s police agencies. This type of intelligence is long-term in nature, provides a comprehensive view of a threat environment, assesses the extent of the threat and points out which areas are at risk—all of which allows law enforcement to advise government and to be pro-active in its efforts against transnational crime.

It is in the area of strategic intelligence that CSIS has a role to play. Many criminal groups with transnational capabilities pose a threat to Canadian national security, undermining many of Canada’s strategic interests. If undeterred, these threats can manifest themselves in higher health and welfare costs associated with the consumption and trade in illegal drugs, the erosion of the Canadian tax base through lost revenues due to non-reported, illegal business activities, the undermining of Canadian law and sovereignty, and the erosion of public confidence in Canadian government institutions and the Canadian business community. The Service also cooperates with other democratic governments which have tasked their intelligence services to help combat this threat and exchanges information with allied intelligence agencies.

It is through this collection and subsequent analysis that the Service fulfills its mandate to provide the Government of Canada with strategic intelligence on threats to Canada’s national security—in this instance, the extent and nature of transnational crime in Canada. The Service’s collection of strategic intelligence can also have an important benefit for law enforcement agencies, as CSIS is often able to provide them with timely, “spin-off” tactical information.

The Service created a Transnational Criminal Activity unit in January 1996, as part of a government- wide effort to combat this threat. This unit draws on the Service's operational and strategic analysis resources in order to collect intelligence related to transnational crime.

Trends in Transnational Crime

Cyber-crime has already emerged as a proven weapon in the arsenal of transnational criminal organizations and it is expected to play a bigger role in years to come. The growth of global, computerized financial networks has allowed these organizations to launder the profits of their illegal ventures quickly and easily through transactions that are instantaneous and virtually untraceable. The United Nations estimates that at least $200 billion in drug money is laundered every year largely via international electronic bank transfers. An estimated $3 billion to $10 billion is laundered in Canada every year.

It is also believed that transnational criminal organizations have, or soon will have, the capability to use computers for a multitude of other illegal activities: for instance, "hacking" or "cracking" into the computer systems of corporations, accessing valuable information and then extorting the corporation by threatening to destroy the data. More conventional than cyber-extortion, cyber- theft will continue to be a problem.

Legitimization is another trend among transnational criminals. Some are attempting to distance themselves from the illegal aspects of their operations by involving themselves in legitimate business ventures which are funded by the almost bottomless profits acquired through their criminal activities. Others seek civic legitimacy by making donations to community hospitals, charities, universities and political parties. They also try to have their photographs taken with high-ranking government officials or other high-profile personalities.

Cooperation among transnational crime organizations, already a major factor in the new world order of crime, is expected to continue and expand. Partnerships, bartering arrangements and alliances, either short or long term, allow these syndicates to better evade law enforcement agencies, to share existing infrastructure and to improve risk management.

Sophistication, already a quality of transnational crime, is expected to increase. For instance, some members of transnational criminal organizations have university educations in the fields of business, accounting and law, better equipping them for the complex world of transnational crime.


Given their sophistication, adaptability and opportunism, transnational crime organizations will likely continue to pose a threat to Canada's national security. Their wide-ranging activities have far-reaching detrimental effects on Canada's system of government and way of life.

Given their long history of survival and the successful nature of their operations in Canada, it is believed these organizations will continue and likely expand their activities here, further challenging Canadian social, political and economic institutions, as well as those elsewhere in the world.

In order to minimize the threat to Canada's national security from this challenging global threat, the Service will continue to investigate and report on the activities of foreign-based transnational criminal organizations in Canada.

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© CSIS/SCRS 1999