Operating at the boundary between legitimate business and criminality, and keeping a low profile, its power and influence far exceeds the ‘mobs’ of earlier times. Gone are the guns and fedoras, and in are social media networks, AI and crypto. Today the ramifications of organised crime are global and insidious, its malignant tentacles reaching into the politics of everyday life.
A US allegory and an offer you can’t refuse
Criminal gangs first established themselves in cities like New York, Chicago and Boston in the late 1800s and early 1900s, fuelled by urbanisation, mass immigration, economic problems, unemployment and weak law enforcement. Easy money was to be made by providing the protection, illegal services and employment that the state failed to offer.
In the 1920s, the manufacture, sale, importation, and distribution of alcoholic beverages were prohibited across the United States. The 13 years of prohibition that followed created enormous illegal markets, allowing criminal groups to make vast profits through bootlegging, smuggling, speakeasies and bribery. This was the era of Al Capone and ‘the mob’: highly organised Italian-American, Irish and Jewish organised crime. They were overtly violent and relatively public in their activities.
After prohibition ended in 1933, organised crime diversified into gambling, prostitution, narcotics, labour racketeering, loansharking and later, fraud. Groups became more structured and business-like. The Italian-American Mafia created a board of directors, ‘The Commission’, to oversee all Mafia activities in the United States, reducing internal conflict and allowing nationwide co-operation.
The struggle to survive
In the 1950s and 1960s, law enforcement became increasingly effective in tackling organised crime. Leading this effort was the FBI, under the direction of J Edgar Hoover. The passing of the Racketeer Influenced and Corrupt Organizations (RICO) Act in 1970, financial regulation, and declining tolerance of overt corruption made it increasingly difficult for organised crime to continue in their current form. They had to adapt to survive.
The vast profits from prohibition, drugs, gambling and extortion could no longer easily be hidden. To appear legitimate, these illegal funds were invested in real estate: property development, hotels, apartment buildings and nightclubs. This ‘money laundering’, usually executed through a front organisation, enabled criminals to create the appearance of respectability and to even pay taxes. It also allowed criminals to largely avoid prosecution under extant laws for tax evasion, the same laws used for the successful prosecution of Al Capone in 1931. Dedicated anti-money laundering legislation wasn’t implemented until the 1980s.
Restaurants, bars, casinos, construction firms and hotels were often used as front businesses for money laundering and as cover for illegal activity while generating real income.
Organised crime, particularly in cities like New York and Las Vegas, could control construction by infiltrating building unions and construction companies in order to rig bids, inflate costs, extort developers and dictate who could build where.
Transformation from ‘Don’ to ‘Director’
To survive and expand, organised crime relied heavily on political corruption. Bribery of police officers, judges, city councillors and mayors was essential to avoid prosecution, receive advance warning of raids and to have legal cases dismissed. In some cities, crime gangs worked with powerful political organisations (such as Tammany Hall in New York), exchanging votes and intimidation for protection and influence.
Infiltration and control of labour unions enabled organised crime to influence elections, pressure politicians and control key industries, including transport, docks and construction.
Corrupt officials helped to shape laws, planning and licensing decisions to favour the crime organisations and block investigations.
The Mafia ‘Don’ of the early 20th century had not disappeared, just transformed, and is today more likely to be a senior executive or powerful politician. Organised crime now operates at the intersection of the legal and illegal, with the majority of criminal networks using legitimate firms to facilitate their activities.
The dark web, crypto and social media now do the dirty work
A century on from the protection rackets and violent coercion of ‘the mob’, the now ‘corporate’ criminals found new methods of influence and control.
Towards the end of the 20th century, the creation of the World Wide Web delivered new opportunities for cross-border co-operation and trade, opportunities organised crime was quick to adopt. And when, in the early 21st century, Tor servers led to the creation of the dark web, its encryption and anonymity were a gift to the criminal fraternity. Entire criminal marketplaces were created, hidden from law enforcement.
At the same time Bitcoin, the first ever cryptocurrency, was launched, creating an entirely new crypto industry and gifting criminals a method of moving funds, paying for illicit goods and services, and hiding the proceeds of organised crime in ways previously unheard of.
The first and most notorious dark web marketplace to use Bitcoin for all transactions was Silk Road. With thousands of products for sale, 70% of which were drug-related, it generated revenues of over a billion dollars, with buyers and sellers assured of anonymity.
Social media provided mechanisms for global influence and political power. Early experiments in seeding misinformation and targeting groups of voters were so successful that dirty money poured into the early social media companies and created new ones. For the criminal fraternity, the next logical step, creating their own social media platforms, quickly followed. By controlling the algorithms that drive social media, they were now able to target millions of people, particularly voters, with whatever messages met their criminal and political goals at any particular point in time.
The massive proceeds from corporate crime, laundered through their front businesses, poured into Political Action Committees (PACs) and targeted social media campaigns to directly influence candidate selection and election results and to pressure those in authority to align with their criminal objectives. All of this effectively bypassed limits on political spending and transparency requirements.
The unexpectedly rapid developments in artificial intelligence (AI) wrong-footed legislators but were quickly adopted by corporate criminals. AI was used to create new tools for use in cyber extortion, fraud and hacking, tools that could now be developed much quicker than law enforcement could keep up with. The creation of deepfake images, videos and audio of such high quality that they are difficult to differentiate from the genuine provided huge new opportunities for fraud and political influence, particularly when combined with the global reach of the criminals’ social media networks.
From mob territories to hemispheres
The boundary between state interests and criminal organisations has blurred, with transnational groups often acting as proxies for governments, exploiting political instability and placing ‘puppets’ in positions of power. Financial profit is now possible through deals driven by extortion at the level of nation states, with law enforcement largely silenced through corruption and the placing of compliant individuals in all key positions in the judiciary and law enforcement agencies.
The dangers of nation states falling into organised crime control have never been so formidable. The mobs’ territories are now measured in hemispheres.
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