Money Laundering and Smuggling: Border Control and National Security - Essay Example

Money Laundering and Smuggling: Border Control and National Security In recent years national security has risen from a governmental concern to an issue that resonates throughout the citizenry. In the wake of terrorist threats and the possibility of the use of weapons of mass destruction, border security has taken on added dimensions of importance. The need for security is further complicated by the smuggling of illicit goods that are used to finance and maintain terrorist organizations. All of these factors combine to present the scenario where organized crime, terrorist groups, and professional smugglers cooperate for profit or political ideology. Drugs are smuggled into the US and the profits are used to finance the purchase of weapons of mass destruction and to engage in human smuggling operations. This situation creates a world where border security is of paramount importance. The ability for undesirable elements to cross our nations borders illegally has placed our national security at risk. The risk is a combination of drug smuggling, money laundering, biological and chemical weapons, and the transport of illegal aliens across our borders. The US has always been concerned about national security, but it has struggled to gain a clear definition. Ullman (1983) defined a national security threat as an "… action or sequence of events that (1) threatens drastically and over a relatively brief span of time to degrade the quality of life for the inhabitants of a state, or (2) threatens significantly to narrow the range of policy choices available to the government…" (p.133). Before the age of terrorism the major threat to national security was framed as an attack from a military action. National security threats could also be in the form of drugs, attacks on the economy, or cyber attacks against the electronic infrastructure. One of the key entry points to the system is our national border. Drugs, currency, and weapons flow across the border and threaten our national security. After September 11, 2001 the threat of terrorism became the number one concern of the nations security. The importation of drugs, money laundering, and the shipment of weapons and terrorists across the border combined to create a new and looming threat. The US has for decades had a policy on money laundering and its association with organized crime. It has been estimated that the total amount of money entering the world economy from drug related sources may be as high as $1 trillion (Van Duyne, Groenhuijsen, & Schudelaro, 2005, p.123). This issue was initially addressed with the Organized Crime Control Act of 1970 and the Racketeer Influenced Corrupt Organizations (RICO) statute (Van Duyne, Groenhuijsen, & Schudelaro, 2005, p.119). Though money laundering was not yet illegal, the Bank Secrecy Act of 1970 placed increased scrutiny on banking transactions that involved more than $10,000 (Van Duyne, Groenhuijsen, & Schudelaro, 2005, p.119). These laws were aimed at organized crime and specifically at combating the drug trade. The subsequent laws against money laundering were primarily aimed at controlling the drug traffic after the crime had been committed. Much of the drug traffic originates in Columbia and Mexico and is smuggled into the US across the Mexican border. The value of this trade has been estimated to be as high as almost $25 billion (Drug money laundering, 2006). As this money is moved through legitimate businesses or used to purchase liquid assets, it becomes cleansed and enters the legitimate economy. The RICO statute attempted to minimize the effect on the economy by a provision that allowed the government to freeze a defendants assets and confiscate any currency and property that had been gained through illegal means. According to the estimates of the Financial Action Task Force (FATF), the $1 trillion of drug money that enters the world economy each year should result in a de-stabilization of the banking system (Van Duyne, Groenhuijsen, & Schudelaro, 2005, p.123). However, Van Duyne, Groenhuijsen, and Schudelaro (2005) report that there had been no noticeable effect on the world economy or the soundness of the banking system. Money laundering laws and bank disclosure legislation were simply tools that law enforcement could use to punish drug traffickers and impede their future smuggling operations. The impact of money laundering prior to September 11, 2001 was negligible and the pursuit of the crime was simply an additional tool for law enforcement to use to reduce the threat of drug trafficking. One of the primary impacts of money laundering is the inaccurate data used to make budgets and generate projections of economic activity. The illegal money is not reported and budgets and projections are based only on the legal component of the economy (Van Duyne, Groenhuijsen, & Schudelaro, 2005, p.125). Outside of this slight impact, money laundering has neither impacted the economy greatly or impeded the flow of drugs across the nations borders as evidenced by the explosion in cocaine use during the 1980s (Van Duyne, Groenhuijsen, & Schudelaro, 2005, p.120). The pre-9/11 environment, and the associated laws, seen little impact on money laundering or drug trafficking. The terrorist attacks on the Twin Towers in 2001 altered the way in which law enforcement viewed money laundering and the purpose of the banking regulations. While prior to 9/11 the laws were used to prosecute crimes, the post 9/11 era has used the laws to identify, predict, and prevent potential terrorist activities. According to Amoore and De Goede (2005), "If undermining crime and amassing evidence were the objectives of pre-9/11 money laundering policy, predicting possible terrorist attacks became the objective after 9/11" (p.152). The Financial Crimes Enforcement Network (FinCen) has been significantly expanded under the Patriot Act and has now "…focused on the collection and analysis of financial data in order to identify suspicious transactions that may indicate terrorist behavior" (Amoore & De Goede, 2005, p.152). In addition, domestic security was tightened at airports, public buildings, and border crossings which came under increased scrutiny as the immigration process was tightened (Chaliand & Blin, 2007, p.417). The government had adopted a policy of pro-active investigation of financial crimes and abandoned the reactive policies of the past. The pro-active target of the governments efforts are terrorists and terrorist activities. One example is the Fuerzas Armadas Revolucionarios de Colombia (FARC) that represents the communist party in Columbia, South America. In the last two decades the organization has been less concerned with ideology and more entrenched in drug trafficking which nets the organization in excess of $700 million per year in the cocaine market (Stone & Stone, 2003, p.233). This is a small portion of the estimated $100 billion spent on illicit drugs in the US (Mandel, 1999, p.72). The money is then transported to the originating country via one of several money laundering schemes that include "… charities, bulk cash smuggling, trade-based schemes, and alternative remittance systems" (Stana, 2004, p.8). This activity is problematic as there is evidence that organizations such as FARC are cooperating with other international terrorist organizations such as the Hezbollah and the Taliban (Pham & Krauss, 2006). In addition, FARC has been known to deal with the Russian Mafia and has attempted to purchase sophisticated anti-aircraft weaponry (Stone & Stone, 2003, p.234). Identifying and eliminating money laundering has been a strategy that is instrumental in the war against terrorism. While cyber attacks against the electronic infrastructure can originate from anywhere, more traditional terrorist attacks require smuggling across international borders. Laundered drug money that finds its way into the hands of terrorists can be used to purchase weapons of mass destruction on the world market. Chemical and biological agents are especially prone to smuggling operations. According to Davis (2001), "The ease with which manufacturers can obtain and produce chemical and biological agents [. . .] makes them ideal for terrorists or guerrilla organizations" (p.153). Currently there are over two dozen countries that have active biological or chemical weapons programs (Davis, 2001, p.152). These agents could be purchased on the black market and easily smuggled into the United States. The amounts of the agents are small and easily hidden as they make their way across an unsecured border. The border crossing becomes the primary focus of the war against terrorist attacks. The modern political era has seen the line between criminal activity and war become less well defined. Actors on the international stage may be greedy entrepreneurs, such as the Russian Mafia, whose only motivation is a financial profit. They are willing to cooperate with known terrorist organizations that are intent on acquiring technology based weapons and smuggling them across the border. The line between the drug cultivators, the traffickers, and the terrorists are blurred. Stone and Stone (2003) contend that, "Organized crime groups often run the trafficking organizations while the terrorists and insurgent groups often control the territory where the drugs are cultivated and transported (p.228). The effort to increase national security requires a multi-faceted approach that targets money laundering, smuggling, organized crime, and terrorist organizations. A key component to a terrorist act against the population of the United States is the physical location of the terrorist. While recent laws have made it possible to identify and detain suspected terrorists, there is always the potential for a terrorist to enter the country unnoticed. There are currently pipelines that carry undocumented aliens into the United States from around the world. According to Chavis (2001), "In the United States, which is a primary destination of many smuggling operations, law enforcement officials have disrupted $1 million rings that attempt to smuggle Indian, Pakistani, Albanian, and Chinese nationals into the country" (p.61). While they are primarily used for transporting undocumented workers and criminals, Torres (2004) states that they "…could just as easily be exploited by terrorist and extremist organizations seeking to gain entry into the United States in order to carry out their own destructive schemes". The fact that the smuggling is done by organized criminal enterprises increases the potential of the threat. According to Mandel (1999) this is because "…these smuggling operations have developed an organized effective system for subverting authority, rather than simply slipping through random holes in a protective security net" (p.21). Once again the presence of organized crime cooperating with international terrorists increases the threat of an illegal terrorist entering the country. It is clear that the key components of a threat to national security are drug trafficking, money laundering, and human smuggling. Though these aspects were nearly inconsequential in the past, they have garnered paramount importance in the modern war on terrorism. It could be argued that the threat to national security is grossly exaggerated and claims of vulnerability are merely made to gain a political advantage and to secure an ever tightening monitoring of the civilian population. Critics contend that a population faced with infectious diseases "…seem to experience greater panic if a transnational terrorist group intentionally spread a lethal biological agent such as anthrax in a major city than if an unintended outbreak of an infectious parasitic disease occurred" (Mandel, 1999, p.22). Likewise, people are far more concerned if there is an information disruption in the electronic infrastructure that was attacked by a terrorist than if the act was the result of an individual hacker (Mandel, 1999, p. 22). Though these may be valid viewpoints, the fact remains that the potential of a large scale terrorist attack is real given the opportunity for financing and the easy access to crossing the border. Increasing our national security by emphasizing the three main components of a terrorist action has come at the cost of tradeoffs of security for individual freedom and liberty. When using Ullmans (1983) definition of a national security threat as anything that degrades our quality of life or limits our policy options, it can be said that the heightened sense of security is itself a threat to national security (p.133). The enhanced powers of the federal government have made personal financial records available to numerous agencies in an effort to identify and eliminate the potential of terrorist financing. The constitutional protections against unwarranted search and seizure has been greatly diluted under current law. Still, these measures are necessary in the quest to disrupt terrorist financing and eliminate the possibility of human and weapons smuggling. The American public has accepted this intrusion on liberty as the cost of waging the war on terror. In conclusion, one of the greatest threats to our national security is terrorism. The potential for a terrorist act is made possible by the criminal acts of money laundering, human smuggling, and weapons smuggling. Prior to 9/11 the banking regulations were used to discourage drug trafficking and reduce the amount of crime money in the economy. These efforts had little effect on the drug trade and the illicit money had only a negligible effect on world banking. The 1970s laws that created greater scrutiny of cash transactions has been bolstered by recent legislation that was enacted in the aftermath of 9/11. This has made money laundering a key focus of law enforcements efforts to eliminate the financing of terrorist organizations. Modern dataveillance techniques have been able to identify suspicious financial activity and has allowed the government to be proactive in recognizing potential terrorist threats. Organized crime and professional smugglers have allied with terrorist organizations to present an increased level of danger. Our national security can be elevated with the sacrifice of individual liberty and the compromise of constitutional guarantees. By isolating and eliminating the opportunity of money laundering the government can severely impede the actions of the terrorists. Closely monitoring and securing our nations borders against smuggling is the other key aspect to eliminating the threats to our national security. By focusing on these key elements, the nation can secure itself against the unwanted intrusion of terrorists, illicit money, and the weapons that it is allowed to purchase. References Amoore, L., & De Goede, M. (2005). Governance, risk, and dataveillance in the war on terror [Electronic version]. Crime, Law, and Social Change, 43, 149-173. from Springer. Chaliand, G., & Blin, A. (2007). History of terrorism : From antiquity to Al Qaeda . Berkley, CA: University of California Press. Chavis, R. (2001). Transnational crime: Its effect and implications for international stability. In K. Magyar (Ed.), Global security concerns : Anticipating the twenty-first century. Maxwell AFB, AL: Alabama Air University Press. Davis, B. (2001). The other weapons of mass destruction chemical and biological. In K. Magyar (Ed.), Global security concerns : Anticipating the twenty-first century. Maxwell AFB, AL: Alabama Air University Press. Drug money laundering (2006, October). Retrieved January 3, 2008, from http://cybersafe.gov/ndic/pubs21/21137/mlaund.htm Mandel, R. (1999). Deadly transfers and the global playground : transnational security threats in a disorderly world . Westport, CT: Greenwood Publishing Group. Money laundering (2004, April). Retrieved January 3, 2008, from http://www.usdoj.gov/ndic/pubs8/8731/money.htm Stana, R. (2004, May 11). Investigating money laundering and terrorist financing, Testimony Before the Subcommittee on Criminal Justice, Drug Policy, and Human Resources, Committee on Government Reform, House of Representatives. Washington DC, Retrieved January 3, 2007, from http://www.gao.gov/new.items/d04710t.pdf Stone, J., & Stone, A. (2003). The drug dilemma : Responding to a growing crisis. New York: International Debate Education Association. Torres, J. (2004, May 18). Alien smuggling: New tools and intelligence initiatives, Statement Before the House Subcommittee on Immigration, Border Security and Claims Committee on the Judiciary. Washington DC, Retrieved January 3, 2008, from http://usinfo.state.gov/eap/Archive/2004/Jul/14-1985.html Ullman, R. (1983). Redefining security [Electronic version]. International Security, 8(1), 129-153. from JSTOR. Van Duyne, P., Groenhuijsen, M., & Schudelaro, A. (2005). Balancing financial threats and legal interests in money laundering policy [Electronic version]. Crime, Law, and Social Change, 43, 117-147. from Springer. Read More