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Organized crime groups are infiltrating the legal economy following COVID-19 crisis, says latest UNODC Research Brief

The health emergency caused by the COVID-19 pandemic has brought about severe human and economic damage across the world. Governments have issued restrictions on economic activity and mobility to stop the spread of the novel coronavirus. With numerous governments forcing closures of non-essential businesses, an economic downturn has been inevitable.

A new Research Brief published by the United Nations Office on Drugs and Crime (UNODC) analyzes the impact of the COVID-19 pandemic on organized crime infiltration in the legal economy and illegal governance.

The pandemic has both reduced certain organized crime activities, while, simultaneously, providing opportunities for new ones. Organized criminal groups (OCGs) are trying to increase their profits not only by infiltrating private companies but also by misusing public funds, as the new Research Brief shows.

These groups are seeking to benefit from the COVID-19 response, just as they have done in the past during other humanitarian crises. OCGs, such as the Sicilian Cosa Nostra, the Calabrian ‘Ndrangheta, as well as the Russian Mafia, the Triads in Hong Kong and Macau, and the Japanese Yakuza, are again looking for opportunities to defraud legal economies and exploit funds made available by governments.

Although no country is completely immune from fraud, countries with a high level of corruption are at a much greater risk of being affected. Also, as seen from past experiences in Japan and Italy, ties between OCGs and government officials are one of the most obvious means by which criminals manage to embezzle public funds.

The global recession sparked by the pandemic and the national lockdowns have brought several businesses to collapse, produced massive layoffs, and placed severe stress on national institutions and public expenditure. Unable to cope with these challenges in such a short time, many states have left gaps in their emergency responses, which, in turn, have provided opportunities for OCGs to take advantage of the situation. The industries at highest risk are businesses experiencing liquidity shortage and those with actual high demand products and services.

The fact that many more business activities are now being conducted online has led to an increase in phishing, credit card fraud, pirated sites for fake donations, and cyberattacks. There have been multiple reports of fake and cloned websites as well as suspicious email addresses. Many of these scams involve coronavirus-related topics, such as the sale of face masks and disinfectants. Moreover, OCGs have begun trafficking in both non-certified and stolen high-demand products such as face masks and disinfectants.

The Brief provides concrete examples of the activities of OCGs which could be observed so far during the COVID-19 pandemic. It builds upon information the authors have collected during the pandemic by conducting a systematic analysis of media sources, official evidence and anecdotal information from additional news outlets and institutional reports, and by reviewing academic literature on organized crime, and other related criminal activities during prior humanitarian crises.

The analysis presented here should therefore be viewed as a preliminary assessment of the impact of the ongoing COVID-19 pandemic on organized crime activities related to both infiltration of the legal economy and illegal governance. Further research is needed to understand the long-term impact of the pandemic on organized crime.