Organized crime a national security risk for U.S. markets

By REMA RAHMAN, MEDILL NEWS SERVICE, Written for UPI  |  Aug. 4, 2011 at 5:49 PM
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WASHINGTON, Aug. 4 (UPI) -- U.S. President Barack Obama has identified transnational organized crime operations as a threat to national security because of their increasing infiltration of financial institutions.

Obama signed an executive order last month placing economic sanctions on four crime groups -- the Japanese Yakuza, Mexico's Los Zetas, the Italian Camorra and a network of Russian criminal leaders dubbed Brother's Circle.

The order gives the U.S. Department of the Treasury the authority to seize money flowing through the United States traced to members of foreign organized crime groups. It also prohibits U.S. citizens from involvement in property or financial transactions with the groups.

"Addressing transnational organized crime is no longer just a law enforcement issue," U.S. Attorney General Eric Holder said at the White House announcement. "It is a problem that demands the attention and the assistance of a broad spectrum of partners."

Mark Galeotti, a Russian organized crime expert who teaches at New York University, called transnational crime a "force multiplier for all kinds of other security" issues.

"We see U.S. resources being stolen, U.S. assets being plundered and we see U.S. lives being lost from the impact of transnational crime," he said.

Jake Adelstein, an American journalist who has covered the Yakuza for 17 years, said the order already has had an effect as members of the Japanese crime syndicate already have started shutting down their American accounts.

"The response has been amazing," Adelstein said of the order. "I know five Yakuza [members] closed down their American Express accounts and one Yakuza boss … has also been closing down his U.S. accounts as well."

Juan Zarate, a former deputy national security adviser and assistant treasury secretary, said that there is a "strategic concern about the control of particular types of minerals and energy-related assets."

"The impact of this executive order will be longer term and will be felt down the road when legitimate businesses grow more wary and sensitive to their interactions with known … organized crime groups," he said.

The four groups targeted by Obama have long, violent histories.


The nearly 80,000-member Japanese mafia organization has 22 designated subgroups that primarily target the manipulation of Japan's stock markets, in which many U.S. companies are invested. Yakuza members also are involved in loan sharking, real estate construction and the information technology industry.

"The Yakuza went into the financial markets because you can make a hell of a lot more money moving stock prices on a million stocks than you can taking a cut from prostitutes working the street," Adelstein said.

Despite what appears to be a rapid closing of U.S. Yakuza accounts, Adelstein said, it's difficult for the United States to verify that they actually belong to Yakuza members because so many Japanese names are alike.

Adelstein said one plausible reason the United States named this Japanese group is its members' Korean ethnicity and strong ties to their homeland.

"By cracking down on the Yakuza and their financial assets, you do financial damage to North Korea, which is not a friend of the United States," Adelstein said. "One way to put North Korea in a tougher situation is to make sure that they get less help."

Los Zetas

A crime group started by former members of the Mexican army, Los Zetas is "an all-purpose criminal organization," said George W. Grayson, a Latin American politics professor at the College of William and Mary.

Grayson said that one difficulty in tracing crime money from Mexico is the excessive use of pseudonyms, which makes it "extraordinarily difficult to find out who the genuine owner is."

"The U.S. is just so convenient for them," Grayson said of Los Zetas members, making it easy to launder money or peddle drugs across the border.

Grayson said property ownership traced to the Zetas in the United States ranges from pharmacies to nightclubs and resorts sued as fronts "to launder their drug profits."

Known for their beheadings, Grayson said the group is "the most sadistic, cruelest, most diabolical cartel perhaps in the world, certainly in Mexico."

Brother's Circle

Russian organized crime "is much more fluid, networked [and] entrepreneurial" compared with the other groups, Galeotti said.

Its infiltration into the Russian economy was born out of the collapse of the Soviet Union when much of the economy was privatized, which led to a rise of black marketers and corrupt bureaucrats. As a result, crime and business go hand-in-hand there.

For U.S. companies operating in Russia, "it's very hard without playing the game Russian style. [It's] very difficult to operate without paying bribes," Galeotti said.

In the United States "we're continually seeing big Russian money coming in" mostly in the form of real estate on the West Coast as a result of the housing collapse.

"Some people would say, 'What does it matter if it's just investment in the U.S. economy?' but in the process you also get dubious people acquiring significant stakes within certain businesses, which in the future could become a problem," Galeotti said.


Italy, the birthplace of the American Mafia, is home to the feared Camorra.

The 7,000-member Naples organization's primary focus is on drug trafficking and money laundering as well as cigarette smuggling, the FBI says. About 200 Camorra affiliates are believed to live and operate in the United States.

"The Camorra has emerged out of all of the various Italian groups as the most dynamic and active," Galeotti said.

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