Law enforcement and drug trafficking money: recent developments in Australian law and procedure
The New South Wales Royal Commission
Significance of money in the illegal drug trade
Criminal activities involving the iIlegal drug trade
Review of measures
Evidence from other sources
Author: M MOYNIHAN
Pages: 49 to 55
Creation Date: 1983/01/01
The generation and movement of money is an essential element of illicit drug trafficking. Indeed, the interest of those who are often the most influential in this criminal activity is money. Society is increasingly regulated, and this regulation and the enormous sums of money illegal drug activities generate provide an opportunity to identify and follow monies forming part of the illegal drug trade. This will require the development of new investigative resources and laws. Such activities must be integrated and directed where most effective. As money and the accumulation of money, resources and assets underpin the groups of criminals who are engaged in the illegal drug trade, the most effective action against them will be achieved by destroying the financial basis of their activities.
This paper was prepared at the request of the Honourable Sir Edward Williams, K. B. E., the Royal Commissioner of the Australian Royal Commission of inquiry into Drugs (hereinafter referred to as the Australian Royal Commission) and now a member of the international Narcotics Control Board (INCB). The author of this article was one of the Counsel assisting the Australian Royal Commission.
On 21 December l 979, the Australian Royal Commission reported to the Government of the Commonwealth of Australia and to the Governments of those member States of the Commonwealth that had appointed it to inquire into matters relating to the whole spectrum of the problems associated with drugs [ 1] .
The Australian Royal Commission made 246 recommendations covering the areas of law enforcement, controls, treatment and rehabilitation and education [ [ 2] , pp, D89 - D121].
Recommendation 189 [ [ 2] , pp. D 113 - D 114] stated that :
"Continued and increased attention should be given to :
"The financial implications of the illegal importation, production and trafficking in drugs;
"The utilization of existing resources within the Australian Taxation Office and the Foreign Exchange Control Section of the Reserve Bank of Australia in assisting the law enforcement ; and
"Further endeavours to identify and develop new resources in this area." [ [ 3] , p. C 375].
Recommendation 193 [ [ 2] , p. D 114] stated that :
"Law enforcement agencies should pay close attention on a continuing basis to the financial implications of the individual illegal importation, production and trafficking cases they are dealing with.
This requires :
"Increased attention to the financial aspects of the illegal importation, production and trafficking in drugs in the investigation of particular cases ;
"Training investigators in the implications of the financial aspects of transactions and in the means to deal with them in terms of training, expertise and appropriate powers ; and
"Equipping investigators, where the requirement has been demonstrated to exist, with additional resources."
Other recommendations dealt with, inter alia, aspects of the financial implications of illegal trafficking in drugs, For example, recommendations were made involving specific amendments to income tax and exchange control laws with a view to facilitating the use, against criminals, of information held by the authorities responsible for the administration of those laws, The recommendations were made in the context of a series designed to set up interlocking systems for collecting, assessing and disseminating information thus providing more effective functioning of law enforcement with increased powers and adequate controls over those powers, The aim was to leave the country's permanent law enforcement institutions better equipped to deal effectively with drug trafficking and to encourage them to be flexible in their approach by monitoring effectiveness and introducing any changes thus indicated.
It is perhaps noteworthy that at the same time as the Australian Royal Commission was carrying out its inquiries, the New South Wales Royal Commission was carrying out similar inquiries at the request of the Government of the State of New South Wales (4). Those inquiries were directed to specific criminal activities in that state, The New South Wales Royal Commission adopted the technique of concentrating on the financial affairs of individuals to identify those engaged in the drug trade. It proceeded on the basis of identifying persons who were suspected of having connections with illicit trafficking in drugs and seeing whether they manifested the trappings of recently acquired wealth. investigations would then show whether the wealth was acquired by legitimate means. The technique involved the utilization of law enforcement investigators, corporate affairs investigators, land valuers and other experts working together in teams directed at specific targets, That approach was also favoured by the Australian Royal Commission, The New South Wales Royal Commission was successful in dealing with those involved in large-scale cultivation of cannabis plants and particularly those who lived in relatively small communities, The technique is more difficult to apply in large urban areas where the trappings of recently acquired wealth are more easily concealed and plausible explanations for its acquisition easier to make.
Two considerations relevant to this discussion emerged from the report of the Australian Royal Commission and are reflected in the above recommendations, The first is the recognition of the significance of money in the illegal drug trade and indeed in criminal activities generally It is argued in the report that it is money and the accumulation of money, resources and assets that underpin the groups of criminals who are engaged in drug trafficking, Money renders the groups less susceptible to effective law enforcement action.
Money sustains the structure of a group so that its activities may be little affected by the loss of some individuals to law enforcement action, The loss of a particular shipment is not fatal to those who have accumulated sufficient money and assets to finance the acquisition of a replacement shipment A shipment of drugs is split between a number of couriers to minimize the effect of one being caught, A person whose background is unlikely to attract attention from law enforcement authorities can be offered sufficient inducement to become involved, Money facilitates the corruption of authority and gives access to expertise and equipment, This facilitates and sustains criminal activities, It is those who are able to take advantage of the availability of money in these ways who are the most effective drug traffickers and who present the greatest difficulty for law enforcement agencies.
Drug trafficking is a product of human need and human greed, It is the latter that is the prime province of law enforcement, Following the movement of money, a necessary part of illegal drug trafficking, assists in an appreciation of the ramifications of the activities of particular groups. It may lead to the identification and, ultimately, the conviction of those who otherwise remain aloof from criminal activities, but who have a major impact on it - the financiers and organizers, Society is increasingly regulated. Recourse to documentation or other records increasingly and necessarily involved at some stage of large-scale transactions involving money, provides opportunities to intercept, assess and follow the flow of money, The absence of records where records might be legitimately expected, or the falsification of records to give the appearance of legitimacy, may be an indication of the true nature of transactions and of the identity of those involved. In Australia, valuable work has been done by the Customs Department in developing profiles for use in the screening of documentation of commercial transactions to identify attempts to smuggle drugs into the country, The technique can be applied to monetary transactions, Moreover, documents, once obtained by law enforcement, are not susceptible to the pressures or interferences that may be suffered by a human witness, There is no question of a chain of documentation being a willing or unwilling, a reliable or unreliable witness.
It must be remembered that there are other important implications from large cash flows available to criminals, Those who have the greatest impact in the illegal drug trade do not ordinarily restrict their criminal activities to drugs. Apart from the corruption of authority and recourse to violence, which so often forms part of the illegal trade, it is likely that the profits from that trade will be the means of financing illegal betting, gambling, prostitution and other crimes. Monies from those activities complete the cycle by helping to further finance the drug trade.
The argument so far advanced is that the financial implications of drug trafficking ought not to receive attention solely in order to deprive traffickers of their ill-gotten gains (however satisfying that reason might be). The real justification is the prospect of providing relatively effective deployment of resources with effective methods of terminating or disrupting criminal activities, and identifying those most influential in such activities so that they might be charged and convicted, The identification of organizers and financiers and the seizure of the funds and assets accumulated as a consequence of crime are likely to be more effective than apprehension of any number of couriers. The latter involves a concomitant commitment of law enforcement resources, which cannot be directed to the organizers or financiers, leaving them free to continue their activities.
The second consideration that emerged from the report of the Australian Royal Commission was that too few resources were directed to the financial ramifications of criminal activities, and that Australian law was ill equipped to take cognizance of, or deal with, them, Law and law enforcement in Australia have traditionally been more directed towards waiting for the commission of a particular criminal offence, then identifying the person or persons involved in that offence and apprehending them with a view ultimately to obtaining a conviction, The "organization" or the financial implications have not been involved.
If resources are not directed to the financial and organizational implications of crime there will be an absence of the info information necessary for the development of appropriate legislation The deployment and development of resources and the shaping of appropriate legislation must proceed hand in hand. It is for this reason that the recommendations of the Australian Royal Commission within this area, exemplified by those set out above, were tentatively expressed, Knowledge and experience must shape the effort, and knowledge and experience must be acquired.
The present position of the law in Australia should be mentioned, The power to deal with drug trafficking in Australia is divided between the Government of the Commonwealth of Australia and the Government of the several states that are members of the Commonwealth, Commonwealth and state legislation make provisions on what has been justifiably described as a piece-meal basis for a variety of forfeitures and confiscations of drugs and associated goods that are the subject of illegal trafficking. In some cases, under provisions that give rise to some difficulty, funds that can be shown to be directly the product of trafficking may be seized, Because of restriction on Commonwealth legislative power, the Customs Act 1901 (Commonwealth) is restricted in application to drugs illegally imported into Australia. It contains extremely complex provisions intended to deprive proven drug traffickers of the proceeds of their crime, It seems that for these reasons the legislation has been little utilized, A substantial commitment of investigative resources additional to that already involved in apprehending those to whom the provisions are sought to be applied, is essential if the section is to be utilized. What is ultimately needed, however, is a law adaptable to a variety of circumstances with the application of that law an integral part of the law enforcement investigative process, and not simply an afterthought. It needs to apply to a number of activities, Much can be learned from the experience of the United States of America, particularly in respect of the Racketeer Influenced and Corrupt Organization Statute - Title 18 United States Code Sections, l961 - l964 [ 5] . There are, however, difficulties in translating the United States experience to Australia although it is not possible to explore them here. As a first step, the Australian Royal Commission recommended a simplified process involving an order for the payment of a sum of money calculated in reference to the profits derived from the illegal activity, enforced by recourse against the property of the criminal.
The Australian Royal Commission called for a periodical review of recommended measures as provided by Recommendation 200 [ [ 2] , p, Dll6], which reads as follows:
"The implementation of the foregoing recommendations should be periodically reviewed for:
"Assessing the appropriate degree of allocation of resources to the activities in question;
"Developing more appropriate legislation and administrative procedures to achieve the maximum impact of law enforcement on the financial aspects of the illegal importation, production and trafficking of drugs" [ [ 3] , p. C 377].
The following extract from the report on science and technology from the crime commission task force of the President of the United States is apposite to the subject matter of this paper. It is:
"The criminal justice system may be compared to a blind man far down the side of a mountain. If he wants to reach the top he must first move. It matters little whether his first move is up or down because any movement with subsequent evaluation will tell him which way is up. A step by step process of experimenting, evaluating and modifying must be undertaken. Both innovation and subsequent evaluation of its consequences are essential to climbing up."
There is in truth more information available than this metaphor implies. What is needed is the will and direction to assess and utilize the information, to continually reassess its utilization in terms of setting priorities by allocating and deploying resources and reviewing the laws. More attention to the financial implications of criminal transactions, involving the collection, organization and use of information (much of it already there), provides such an opportunity. The development of investigative resources, skill and knowledge, and of laws in this area, can shape more effective action against crime. Moreover, developments in the field of the storage, organization and manipulation of masses of material involving the use of computers give rise to increasing opportunities to acquire, develop and utilize more effective techniques and to be more discriminating in their usage.
Since the Australian Royal Commission made its report, the Royal Commission on the Activities of the Federated Ships Painters and Dockers Union [ 6] has embarked upon an investigation of the activities of that trade union. It has made a number of reports to the Governments of the Commonwealth and the State of Victoria, which appointed it. Those reports show that members of that particular trade union engaged in a wide range of criminal activities that included facilitating fraud on a large scale in the Commonwealth revenue, and involved banks and accountants. Union members also engaged in large-scale fraud against employers, government social services and workers' compensation authorities. These were involved with a number of well-known criminals having no other connection with the trade union. Among them were criminals believed by enforcement authorities to be involved in illegal drug trafficking but against whom no effective action had been taken. The work of this Royal Commission has again emphasized the significance and movement of money in the sense explored in this paper. It has made valuable advances in developing sophisticated computer techniques in the analysis of monetary transactions. The time has, however, passed for ad hoc reactions such as Royal commissions. There must be a concerted programme to maximize the efficient use of resources to effectively strike at the money basis of organized criminal activity.
Australian Royal Commission of Inquiry into Drugs, Report, Books A, B, C, D, E and F (Canberra, Australian Government Publishing Service, 1980).02
Australian Royal Commission of Inquiry into Drugs, Report, Book D, part XIV (Canberra, Australian Government Publishing Service, 1980).03
Australian Royal Commission of Inquiry into Drugs, Report, Book C, parts X - XIII (Canberra, Australian Government Publishing Service, 1980).04
New South Wales Royal Commission into Drug Trafficking (Sydney, New South Wales Government Publishing Service, 1979).05
Racketeer Influenced and Corrupt Organization Statute, passed by the Congress of the United States under the Organized Crime Control Act (Washington, DC, 1970).06
Royal Commission on the Activities of the Federated Ships Painters and Dockers Union, Interim Reports 1-4 (Canberra, Australian Government Publishing Service, 1982).