COVID-19 and Illicit Trade: When Organized Crime and Terrorists Profit from the Pandemic

The glob­al COVID-19 pan­dem­ic has trag­i­cal­ly impact­ed the lives, health and well­be­ing of many around the world. It has led to deep eco­nom­ic reces­sions, com­pound­ed busi­ness loss­es, increased unem­ploy­ment and reduced con­sumer incomes. Often over­looked is the fact that the dire impacts of COVID are being wors­ened by illic­it­ly trad­ed goods such as fraud­u­lent per­son­al pro­tec­tive equip­ment (PPE). Transna­tion­al crim­i­nal orga­ni­za­tions and glob­al ter­ror groups use illic­it trade to facil­i­tate crimes in local com­mu­ni­ties, dis­rupt­ing civ­il soci­ety, and cul­ti­vat­ing cor­rup­tion. The pan­dem­ic is a new busi­ness oppor­tu­ni­ty to finance their nefar­i­ous activ­i­ties.

Crim­i­nal Net­works Quick­ly Adapt to Prof­it Dur­ing the Pan­dem­ic

With or with­out a pan­dem­ic, the ille­gal glob­al trade con­tin­ues to grow. Accord­ing to the World Eco­nom­ic Forum, $2.2 tril­lion will be lost due to diver­sions of illic­it trade funds in 2020. The illic­it trade econ­o­my is equiv­a­lent to the economies of Mex­i­co and Indone­sia com­bined and dwarfs those of Brazil, Italy, and Cana­da.

COVID-19 lock­down restric­tions have boost­ed the key dri­vers of illic­it trade:

• Scarci­ty of goods, main­ly PPE, med­i­cines, and hand san­i­tiz­er;
• Loss of rev­enues due to over­all reduced sales;
• Eco­nom­ic pres­sure from loss of income;
• Depen­dence on orga­nized crime as a lender of last resort; and
• Lim­it­ed capac­i­ty for enforce­ment as state resources are real­lo­cat­ed to address the pan­dem­ic

Crim­i­nals have been quick to cap­i­tal­ize on these oppor­tu­ni­ties, per­pet­u­at­ing illic­it activ­i­ty when gov­ern­ments, indus­try, and the gen­er­al pub­lic are most vul­ner­a­ble.

Astound­ing Growth in eCom­merce

Glob­al­ly, the shift to eCom­merce over the past decade has been immense and COVID-19 has great­ly accel­er­at­ed the shift from brick and mor­tar stores. Accord­ing to eMar­keter, glob­al eCom­merce sales grew from $1.3 tril­lion in 2014 to over $4.2 tril­lion in 2020. eCom­merce is pro­ject­ed to accel­er­ate with sales expect­ed to sur­pass $6.5 tril­lion by 2023.

As peo­ple are spend­ing more time online, the attack vec­tors have increased and var­i­ous types of cyber-attacks, fraud schemes and oth­er activ­i­ties are being launched by these crim­i­nals. A lot of these goods are offered on online mar­ket­places we use every day, which have made it eas­i­er and cheap­er for coun­ter­feit­ers and oth­er crim­i­nals to access a broad cus­tomer base. Cre­at­ing vir­tu­al and obscur­ing real iden­ti­ties is eas­i­er online than in offline inter­ac­tions, which sig­nif­i­cant­ly aids crim­i­nals using alias­es and cre­at­ing front com­pa­nies on the web.

Recent­ly, the U.S. Depart­ment of Jus­tice (DOJ) seized $2 mil­lion worth of cryp­tocur­ren­cy from mem­bers of ISIS. This net­work sold coun­ter­feit masks and oth­er PPE, with the goal of turn­ing their prof­its into cryp­tocur­ren­cy to buy weapons. This is anoth­er clear exam­ple of how crim­i­nals and ter­ror­ist groups are tak­ing advan­tage of the pan­dem­ic with coun­ter­feit goods and using online mar­ket­places to con­ceal nefar­i­ous sell­ers. They were quick to adapt after years of trad­ing in oth­er illic­it forms.

“The com­plaint high­lights a scheme by Murat Cakar, an ISIS facil­i­ta­tor who is respon­si­ble for man­ag­ing select ISIS hack­ing oper­a­tions, to sell fake per­son­al pro­tec­tive equip­ment via FaceMaskCenter.com,” said the Jus­tice Depart­ment announce­ment.

The sta­tis­tics are stag­ger­ing: Accord­ing to the Fed­er­al Trade Com­mis­sion, over 173,000 con­sumers have report­ed fraud cas­es relat­ed to the pur­chase of prod­ucts or ser­vices relat­ed to COVID-19. The Depart­ment of Home­land Secu­ri­ty reports $7.9 mil­lion seized in illic­it pro­ceeds and close to 1,000 seizures asso­ci­at­ed with pro­hib­it­ed COVID-19 test kits, pro­hib­it­ed phar­ma­ceu­ti­cals, and coun­ter­feit masks.

Look­ing Ahead — Col­lab­o­ra­tion is Key

The pan­dem­ic has already had far-reach­ing con­se­quences on soci­ety, gov­ern­ments and busi­ness­es. When there is a mar­ket and a big prof­it, orga­nized crime and ter­ror­ist net­works will seize on prof­itable oppor­tu­ni­ties and that is exact­ly what has hap­pened. Illic­it trade activ­i­ties have increased vir­tu­al­ly across every indus­try.

And, while COVID-19 has been a cat­a­lyst to dri­ve new and increased illic­it trade, it’s also brought more atten­tion to the issue and fur­thered col­lab­o­ra­tion — a crit­i­cal ele­ment in dis­man­tling the net­works that facil­i­tate this trade. There are already good exam­ples of col­lab­o­ra­tion between the pub­lic and pri­vate sec­tors. In May, Home­land Secu­ri­ty Inves­ti­ga­tions part­nered with Pfiz­er, 3M, Citi, Mer­ck and oth­ers to pro­tect con­sumers from COVID-19-relat­ed fraud. In July, a coali­tion of 11 pri­vate-sec­tor part­ners launched a pub­lic ser­vice aware­ness cam­paign to spot­light resources avail­able to help con­sumers com­bat the trade in fraud­u­lent goods. Indeed, more needs to be done, but the part­ner­ships and infra­struc­ture to com­bat illic­it trade are grow­ing.

Pri­vate and pub­lic part­ner­ships are essen­tial to com­bat illic­it trade and to bring all rel­e­vant stake­hold­ers togeth­er to address key issues. It is more impor­tant than ever for NGOs, law enforce­ment agen­cies, gov­ern­ments, acad­e­mia, media and oth­er sec­tors of civ­il soci­ety to con­tin­ue com­ing togeth­er and exchang­ing exper­tise, ideas and opin­ions around our com­mon goal: win­ning the fight against illic­it trade and relat­ed crimes.