Threat, risk
(organised) crime and
Crime-money (laundering)
Past, present and “OC threat/risks”
 2001: European Multidisciplinary Group
declared:
“We looked back; we must look forward!”
 Therefore: “Future oriented” reporting: the
future of OC = the future of its threat/risk
 What is threat or risk?
 And what is an ‘organised crime risk’?
The simple risk formula
 Risk = p = ∑xi/N (per time unit) = threat =
 the likelihood that an event x of a certain class
Y will occur given the total set of events.
 Could policy makers please substitute the x
and Y?
 Y is a closed definition of a class of events
 x = single event of class Y
 ∑xi-time = time series of events
 Apply that to organised crime assessment
Finding an insurance policy against
“organised crime”
 Basic thesis: every determinable harm can be
insured if a likelihood can be determined.
 What does an insurance firm do with a new
risk?
(a) it determines the meaning of the class of
events Y, then its total N
(b) it designs a time series = past events x
(c) the costs of events (classified harm) and
fills the formula
Finding an insurance policy against
organises crime: continued
 What did the EU policy makers do?
 (a) they formulated a fuzzy definition and
(b) threw away the past.
Just try to make a time series.
 What can an insurance firm do?
The desperate insurance firm
 What can an insurance firm do?
 It cannot sell an OC insurance policy because
there is no determinable risk! (Or serious
crime): no x and no Y
 On what basis to assess OC crime risk?
 If no proper definition, no OC insurance risk
 Only con men can sell such policies!
The desperate insurance firm (continued)
 Are policy makers con men?
They sold you multi-million policies
 EUROPOL
 Organised Crime Threat Assessments
 Transnational Organised Crime
Convention
 Anti-money laundering regime
All to make us feel secure!
The insurance firm perseveres!!
 Continue with our insurance man. What can he
do?
 He must keep the OC banner: excellent
commercial label
 never abandon a winning formula!
 Next: some correlation with a criterion
variable.
The insurance firm perseveres!!
(continued)
For example:
 Breakdown of social-economic or criminal
variables against criterion variable = “Foreign
direct investment”
(Daniele and Marani; Italy)
 OC and investment: negative correlation but
≠ causal relation, because
 Underlying variable: mal governance and
corruption.
The unmarketable exception clause
 The underlying variable: mal governance and
corruption.
 The ‘Berlusconi exception clause’!
How to sell such an insurance product?
 Determining the threat of mal governance and
sell corruption risk policies.
 Commercial challenge for Transparency
International,
but otherwise unsalable.
The threat of crime money
 The global threat since the 1980s.
 Basic concern: threat to the financial system
 integrity
 Which criminal is going to cut the branch on
which he is sitting?
 Grubby banks are dangerous . . . . for
launderers:
The threat of crime money (continued)
 Calvi: hanging from Black Friars Bridge
 Sindona (poison) + lawyer shot
 Russian bankers (a too long series for a
slide)
 Nugan Hand Bank (Australia, suspicious
suicide)
 European Union Bank ($ 10 million lost)
 Most recent launderers’ risk: unreliable bank
employees selling CDs with names to the
fiscal authorities!
The criminal risk industry
 Instead of “threat thinking”:
The real question: What is the role of crime
money within the financial system?
 Again: no data, but an abundance of threat
images benefiting the compliance industry.
 Lot of juggling with trillions by IMF, OEDC,
World Bank, FATF: mutually copy-pasting
figures and threats
 A (financial) risk industry
Copy-pasting threats
 ‘Affects currency movements’
 ‘Destabilises banks by sudden withdrawals’
 ‘Influences interest rate’.
 ‘Distorts the GDP’.
 ‘No optimal investment’
(remarked by “Ponzi-bankers”!)
The risk of laundered and unlaundered money
 What is the harm of laundered money?
 Part of the GDP: where is the danger?
 Taxable
 But there is moral harm: crime should not pay
+  corrosion of morals
The risk of crime-money and corruption
More corruption?
 All big corruption scandals in EU concerned
white money!
Unlaundered money  What is the threat?
 Luxury lifestyle? What is the difference with
our greedy irresponsible Ponzi-bankers?
 If laundered properly, no longer a threat!
The role of crime money
on-going research
 The Dutch confiscation database: statistical mud track since
1994
 “Threatened” sector real estate: skewed division but:
Mean € 182.000 / median € 150.000
 mean value bank account: € 263.000 / median € 20.000
 € 100.000 + : 90
 € 1.000.000 + 11
 94 % Dutch bank accounts < € 100.000
The role of crime money:
less prominent, certainly not threatening, unless falsified by
better data!
Do what you are (hopefully)
paid for
 Falsify, falsify, falsify, until the hypothesis do
not crack.
 Identify your ‘risk’ counting unit: no risk
assessment without : ∑xi-n/time
 Get to your database owners and hold them
accountable:
 they are your (democratic) knowledge source.
Thou should not hide knowledge
 “We are the people”, researchers too,
 And have the right to know.
 If no data access: sue them under your
Freedom of Information Act
 If you don’t dare, just join the collective risk
assessment ritual dance of the conferences.