The United Nations Convention against Transnational Organized Crime has provided an internationally shared definition of an Organised Criminal Group as “a group of three or more persons existing over a period of time acting in concert with the aim of committing crimes for financial or material benefit.”
Organised Criminal Groups, or ‘OCGs’ as they are most commonaly referred to, operate in a criminal economy dictated by the laws of supply and demand and are favoured by social tolerance for trade in counterfeit goods.
Most OCGs operate by way of a hierarchic structure, with the head managing overall activity, giving direction to subordinates, and recruiting new members. The leader generally controls financial transactions and decides on potential reinvestment opportunities.
The majority of the identified OCGs are large in size. They typically consist of more than 12 members, with 5-6 core members on average. This may be explained by the number of different tasks within the supply chain that have to be carried out. These groups generally bring together several nationalities; they are highly mobile and are usually active in several countries inside and outside the EU.
Involvement in the illicit trade of counterfeit goods, the leader generally has primary access to the network of contacts, including to corrupt officials collaborating in the activities. In such centrally managed groups, tasks and roles are clearly divided between the members. Typically, different group members are responsible for organising the import, transportation, storage, sales, and distribution of the counterfeit goods. In addition, some group members are explicitly tasked with laundering the profits from the criminal activity.
OCGs are often observed to engage in poly-criminality (a group’s involvement in multiple crime types simultaneously) as a means to fund numerous illegal schemes. Monetary gain derived from one illicit activity will be reinvested to finance another. For example, an OCGs activities in counterfeit crime might be funding their involvment in drug trafficking, excise fraud, human trafficking or money laundering.
In addition, OCGs acting as distribution networks tend to traffic more than one illicit product.
Even OCGs that are exclusively dedicated to IP crime often need to rely on VAT fraud and acts of corruption in order to operate. Money laundering is frequently an indispensable element of IP crime.
The involvement of OCGs in the production and distribution of counterfeit goods has been well documented by both national and international authorities. Groups such as the Mafia and Camorra in Europe and the Americas, and the Triads and Yakuza in Asia have diversified into the illicit trafficking of counterfeit goods, while at the same time being involved in crimes varying from drug and human trafficking, to extortion and money laundering.
Proceeds from other criminal activity also feed into the production and distribution of counterfeit goods. The Neapolitan Camorra, for example, has a history of selling fake designer products made by the same manufacturers who produce the originals. In recent times, the Camorra increasingly sells counterfeit goods manufactured in Asia, using the same marketing channels, while other OCGs, such as the ‘Ndrangheta, have established extensive contacts with Chinese groups to import counterfeit goods.
Whilst counterfeiting impacts most industries, from electronics to sportswear, leather goods to luxury designer fashion, OCGs dominate the illicit trade in tobacco, alcohol and pharmaceuticals. While small-scale activity will always be undertaken by opportunistic individuals, the influence of OCGs in coordinating, conducting and ultimately profiting from large-scale activity in illicit trade will remain.
Compared with other forms of criminality, illicit trade is very much deemed a high profit, low risk business.
Tobacco could be described as a perfect example in this respect: it has low production costs, is lightweight and easy to transport, yet has high sale value and retains consistent consumer demand.
The trading of illicit goods for other illicit product is also another trend which is seemingly on the increase. In the past, illicit commodities were bought with cash, however OCGs are increasingly exchanging goods, such as swapping drugs for counterfeit items and vice-versa. By using counterfeit goods as commodities for full or part payment between criminal networks, these groups reduce the amount of capital they need to transfer thereby reducing their exposure and risk.
Corruption and bribery are inherently linked to the illicit trade in counterfeit goods, particularly when these are shipped internationally. Coercion and racketeering are similarly associated with the OCGs role in counterfeiting.
Small retailers for instance have been forced to sell counterfeit products in amongst their legitimate stock.
An interesting finding of a study by the EU Organised Crime Portfolio is that if you take the large Italian mafia groups out of the equation such as La Cosa Nostra, ‘Ndrangheta, Camorra and others, then the pattern of OCGs in the UK is roughly similar to the rest to Europe. Most studies characterise them as polymorphous, adaptable and fluid multi-commodity criminal networks. While kinship and ethnicity remain important factors for group cohesion, multiple cross-ethnic linkages also play an important role in group formation and such mixed networks may be more viable and successful.
The picture of OCGs operating in the UK leans away from the traditional Mafia model towards conglomerations of career criminals who temporarily join with other groups to commit crimes until they are completed and then reform with others to commit new crimes.