Common menu bar links
Selected Socio-economic Effects of Organized Crime in Canada
Canadians across the country continue to be negatively affected by the often subtle yet complex effects of organized crime’s activities. Organized crime has serious and multi-faceted socio-economic repercussions that are present in every region of the country. Lost tax revenue at all levels of government and economic losses to private enterprise results in lost jobs and investment opportunities, as well as higher taxes, prices and insurance premiums. Taxpayers pay for increased law enforcement, judicial and corrections costs, as well as additional costs to health and social services to address such issues as illicit drug and gambling addictions.
CISC has selected key significant issues to highlight how organized crime directly and indirectly affects Canadians’ public safety, economic well-being and sense of community. These issues include: violence, illicit drugs, marihuana grow operations, methamphetamine, contraband, counterfeit goods, human smuggling/trafficking, insurance costs and money laundering.
Violence
Violence or the threat of violence from organized crime groups is a significant threat to public safety. Organized crime groups often use violence to promote and protect their criminal interests, territory and activities. In many instances, this violence is directed toward those within the criminal milieu, but innocent victims are sometimes also injured or killed. This violence can also be intended to intimidate and/or coerce individuals and communities, creating a general sense of insecurity in communities. Increasingly, individuals associated to organized crime are using illegally acquired firearms, particularly automatic handguns, as instruments of this violence.
Illicit drugs
Organized illicit drug activities have a variety of significant effects on individuals and Canadian society. Illicit drug activities fuel violence unlike any other criminal activity. Illicit drugs can involve violence between traffickers over control of territory, from individuals seeking money for drugs and from individuals under the influence of illicit drugs. There are socio-economic costs associated with the illicit drug trade such as property crimes, assaults and homicides. There are also a number of adverse health effects from illicit drug use including the spread of HIV/AIDS and other infectious diseases, drug addiction and prenatal developmental problems. The illegal dumping of toxic by-products from the manufacture of illicit drugs, such as methamphetamine, can result in environmental damage and public health risks.
Illicit drugs, traveling to and through Canada, affect Canada and, in turn, affect organized crime in other countries. The consumer demand for illicit drugs in Canada fuels organized crime activities in source and transit countries, contributing to the corruption and intimidation of government and law enforcement agencies in those foreign countries. This form of corruption obstructs the development of strong governmental and legal institutions essential to prosperity, liberty and international stability. In Canada, though instances have been limited in the past, illicit drug activity can also potentially contribute to the corruption of public and private sector officials and professionals.
Marihuana grow operations
There continue to be a significant number of marihuana grow operations nationally that are controlled by organized crime groups like the outlaw motorcycle gangs or Asian-based networks. As well, many smaller independent organized crime groups, are involved in the cultivation and/or distribution of marihuana. As the market for marihuana domestically and in the U.S. is large enough to be supplied by multiple organized crime groups, no group appears to dominate. Marihuana cultivation is encountered in all types of urban and rural settings but is increasingly present in up-scale residential neighbourhoods. Illicit proceeds from marihuana cultivation are often reinvested in other criminal activities. Some lower-level organized crime groups have been able to expand and diversify their criminal activities using capital from their marihuana cultivation.
Marihuana grow operations pose a number of serious health and safety risks to the occupants of the residences in which the cultivation occurs and to the surrounding community. A significant number of residential operations often use unsafe electrical diversions or bypasses to circumvent utility meters in order to steal electricity. Stolen electricity significantly strains power supplies and increases the prices for legitimate residences and businesses. Marihuana grow operations also often contain numerous fire hazards, including exposed live wires and volatile chemicals. Vapours from a variety of chemicals used to expedite plant growth can also cause respiratory health problems. High levels of moulds and pollens can cause asthma, respiratory conditions and allergies in the individuals who live or work in the damaged residences, as well as to law enforcement, rescue workers and municipal officials. Competition between crime groups that engage in marihuana cultivation and the threat of crop theft continue to result in home invasions, assaults, homicides and booby trap-related injuries.
Methamphetamine
The amount of methamphetamine manufactured and trafficked in Canada is increasing. Organized crime groups are involved in the illegal importation of precursor chemicals needed to manufacture methamphetamine, financing and manufacture of the drug in clandestine laboratories, as well as its distribution. Depending on future demand for methamphetamine within Canada and in the U.S. there may be a conflict between criminal groups involved in manufacturing and/or trafficking methamphetamine.
Methamphetamine is highly addictive and physically destructive to users. The drug can make users very aggressive, often resulting in violent behaviour. Although easily manufactured, the chemicals during production are highly toxic, corrosive and combustible. The drug can be produced in small amounts in kitchens or garages and large amounts in self-contained “laboratories.” Clandestine laboratory fires and explosions have occurred, causing serious public safety concerns. Chemical vapours from the manufacturing process can cause injury and death, as well as permeate the walls and carpets of buildings, making them uninhabitable. Additionally, discarded toxic chemicals can cause environmental damage and pose a threat to public health and safety. As a result, residences or businesses located near either the manufacturing or dumping sites can decline in property value.
Contraband
A contraband market that illegally distributes a legal commodity, such as tobacco, often exists due to some degree of societal acceptance. However, these markets can significantly affect society, particularly through the loss of potential tax revenue that could be directed toward health and social programs. The business community is also affected as businesses that operate honestly are at a serious disadvantage in relation to those who sell contraband products at significantly lower prices. There are potentially major health concerns over the content and quality of contraband products, such as illicit alcohol, as serious health problems or death could result from its consumption. Illicit markets often target vulnerable groups, such as youth, as consumers for these products. Organized contraband activities can significantly affect communities, particularly smaller communities. For example, the involvement of criminal groups in contraband smuggling on Aboriginal reserves in southern Ontario and Quebec creates tensions within these communities and between governments, Aboriginal communities and surrounding non-Aboriginal communities. Organized criminals can exploit the tight kinship networks in small communities, often dividing families that both benefit from and are adversely affected by the criminality.
Counterfeit goods
Counterfeit goods, many from southeast Asia, have a number of significant economic and social effects in Canada. The products, for example movies and music recordings, directly undermine government tax revenue and legitimate industries. Poorly made or defective counterfeits may also cause consumers to blame the manufacturers of genuine products. Some counterfeit products can cause serious health and safety risks as the products have incorrect or non-existent legal labelling or regulations. The United States Food and Drug Administration and the World Health Organization have recently observed an increase in sophisticated pharmaceutical counterfeiting investigations with an estimated 10 per cent of pharmaceuticals globally being counterfeit. Internationally, organized crime is involved in producing and/or trafficking drug products that may closely resemble legitimate drugs yet may contain inactive ingredients, incorrect ingredients, improper dosages, sub-potent or super-potent ingredients or be contaminated. Currently, there is little evidence regarding organized crime distributing counterfeit pharmaceuticals in Canada.
Organized crime in Canada, in particular Asian-based organized crime, will continue to be extensively involved in importing, producing and distributing a wide variety of counterfeit goods to and within Canada, including computer software, music/video recordings, brand-name clothing and Canadian-brand tobacco products. Advancements in technology mean that counterfeits will continue to be easier to produce, difficult to detect and thus easier to mix into legitimate trade channels with genuine goods, increasing the likelihood of consumers buying counterfeit goods.
Human smuggling/trafficking
Organized crime groups are involved in transporting smuggled and trafficked individuals to Canada with some individuals destined for the U.S. Persons trafficked into prostitution, and to a lesser extent into forced labour, in Canada come primarily from southeast Asia and eastern Europe. Asian-based organized crime groups in particular are involved in human smuggling/ trafficking in Canada.
Trafficked women are often forced into the sex trade to work off debts or fees (e.g., for being smuggled and for housing) typically in the tens of thousands of dollars. The victims suffer physical and mental abuse including sexual assault, torture, starvation, imprisonment and death threats. There can also be significant health and social effects on Canadian society as victims often acquire, and can transmit, sexually transmitted and infectious diseases while working in the sex trade. Organized crime has been known to produce counterfeit work documents for smuggled/trafficked victims. Once individuals pay their smuggling/trafficking fees, many disappear into major urban communities. As some individuals smuggled/trafficked into Canada may have serious criminal records there may be a threat to public safety.
Insurance costs and fraud
Most vehicles are stolen for thrill-seeking, transportation or to commit another crime. They are generally abandoned once they have served their purpose. Vehicles stolen by organized crime groups, like outlaw motorcycle gangs and Eastern European-based organized crime groups, tend not to be recovered as they are often exported overseas, transported for inter provincial resale or stripped for the sale of parts. Organized crime has been involved in stealing luxury vehicles, changing the serial numbers and selling the vehicles in Canada, Europe and southeast Asia.
According to a 2004 Statistics Canada report, about 20 per cent of vehicle thefts in 2002 were believed to have been committed by organized crime groups. The Insurance Bureau of Canada states that insurance fraud costs Canadians more than a billion dollars annually through insurance premiums, with $600 million annually in vehicle theft-related insurance costs. Additionally, there are significant related costs for law enforcement, health-care, judicial and corrections expenses.
Money laundering
Money laundering is the process of transforming the illicit profits from criminal activities to disguise their origin and make them appear as if they were obtained through legitimate means. Criminals launder illicit proceeds in an attempt to avoid confiscation and forfeiture of their profits by law enforcement, conceal criminal activities and reinvest the funds in further criminal activities or legitimate ventures. Laundering and reinvestment of criminal proceeds in legitimate companies can undermine the legitimate economy, giving illegitimate businesses unfair advantages.
As money laundering typically involves the use of multiple financial services — deposit-taking institutions, currency exchanges, securities traders, insurance companies and “shell” corporations — specialized expertise is often necessary. As a result, individuals in key professions, such as lawyers, accountants and investment brokers, may knowingly or unknowingly assist the laundering process. When organized criminals manipulate financial systems and institutions and corrupt key public and private sector officials to facilitate money laundering, the integrity of the financial institutions could be compromised resulting in the loss of investor and public confidence.
