Ghada Waly

Director-General/Executive Director

 

INL Webinar: The Drug Trade and Illicit Finance

  29 October 2021

 

Distinguished participants,

Ladies and gentlemen,

It is my pleasure to join the US State Department and INL to open this event on tackling the drug trade and illicit finance.

INL provides essential support to the work of the UN Office on Drugs and crime around the world, allowing us to assist countries in preventing and tackling drug threats, and we greatly value our partnership together.

Today’s event focuses on an aspect of the illicit drug trade that very much requires public-private partnerships: countering illicit finance.

The private sector defines large parts of global economies and is in many cases the decisive actor in such economies.

Private companies are at the centre of many sectors from shipment to chemicals and from internet services to mail delivery, all of which form pillars of lawful economic activity and trade.

In parallel however, a shadow drug economy has emerged, bleeding real economies and undermining security and development, often by infiltrating, circumventing, or competing with licit economic structures.

Organized criminal groups, drug cartels, corruption networks and terrorist groups are finding common ground in generating illegal profit through this shadow economy.  

Drugs illicitly cultivated and produced are trafficked across borders to be unlawfully bought and sold, enabled by corruption and infrastructures used for other illicit flows.

Drugs are the most common commodity seized together with illicit firearms, and they are often smuggled through routes used by human traffickers. 

There are also reports of traffickers exploiting migrants in vulnerable situations, sometimes even children, to carry the drugs.

In some regions, taxes are levied on smuggled drugs by cartels and even terrorist groups, just as a government would tax lawful economic activity and collect the revenues.

As the current situation in Afghanistan develops, concerns are rising that terrorist groups, including ISIS-K, may seek to exploit the drug economy as a source of finance.

This shadow economy has become impossible to ignore; once drugs are sold on illicit markets, they can generate enough illegal revenue to throw economies out of balance.

Data gathered through the statistical measurement framework established by UNODC and UNCTAD reveals that at times, the value of illicit financial flows entering a country from trafficking of drugs equals the value of all agricultural exports from that same country.

And just like many licit industries, the illicit drug market is breaking new ground online.

UNODC’s World Drug Report 2021 has found that the main drug marketplaces on the darknet are now worth at least 315 million dollars in annual sales, a number that is four times higher than a decade ago.

The money that is made through the illicit drug trade both online and offline is funnelled through the global financial system, using the same money-laundering networks that serve different forms of transnational organized crime.

 Many countries lack the capacities to conduct financial investigations linked to drug trafficking and other serious crimes. As a result, only a fraction of the proceeds of crime are seized or frozen globally, and even less is confiscated.

That is why the focus of today’s webinar on public-private partnerships addresses a crucial front in the fight against illicit drugs and organized crime.

Governments and the private sector need to work hand-in-hand to protect lawful industries from criminal infiltration, and to eradicate the illicit financial structures that enable drug trafficking.

Private sector actors have an essential role in fortifying financial institutions, in preventing misuse of products and services, and in countering illegal activity online.

Aware of this role, UNODC’s new corporate strategy 2021-2025 places partnership with the private sector as a priority of our work in countering different forms of crime.

To draw upon one example that UNODC experts will discuss in more detail later, the private sector is a key pillar of our new Synthetic Drug Strategy.

Our work under the strategy will include supporting companies to stop the diversion of chemicals that could be misused as precursors and pre-precursors to manufacture illicit synthetic drugs.

In parallel, our Office is providing legislative and technical assistance to countries to counter drug-related offences, money laundering and corruption.

At the webinar today you will be hearing more about UNODC’s work supporting asset recovery networks in Southern and West Africa, Latin America and the Caribbean, Asia Pacific, and most recently in West and Central Asia.

Such networks facilitate the complete asset recovery process, from the tracing of assets, to freezing and seizure, management and confiscation.

In the same vein, our Office is supporting countries to explore public-private partnerships to track, trace, freeze, seize and confiscate virtual assets, such as cryptocurrencies, which are increasingly being used to enable the illicit drug trade.

UNODC is also building law enforcement capacities in 40 countries around the world to prevent money-laundering and illicit financial flows and providing financial investigation train-the-trainer training courses. 

To facilitate secure and informal information exchanges between anti-corruption law enforcement authorities, Our Office launched the GlobE Network earlier this year.

In addition, UNODC and the World Bank continue to cooperate through the joint StAR Initiative on asset recovery.

StAR worked recently with the World Economic Forum’s Partnering Against Corruption Initiative and the Global Future Council on Transparency and Anti-Corruption to help “gatekeeper” professions self-regulate against money laundering and illicit financial flows, including in sectors such as finance and law.

Looking forward, we are seeking to more closely integrate public-private partnerships in responses to the illicit drug trade and its enablers.

In November, we will bring financial-sector experts to Vienna, with INL’s support, to discuss best practices and lesson learned in promoting public-private partnerships in addressing the proceeds of narcotics trafficking.

And in December, we will be organizing the 9th session of the Conference of States Parties to the UN Convention against corruption in Egypt.

It will present us with an opportunity to highlight the importance of public-private partnerships in curbing the corruption and money-laundering that enable crimes such as drug trafficking.

Ladies and gentlemen,

The public sector and the international community need private sector allies more than ever to address increasingly complex drug challenges.

Bringing closer together the actors who operate on the right side of the law, we can work towards dismantling the illicit drug economy and the structures it relies upon.

Once again, I would like to thank INL for bringing us together to advance the fight against the illicit drug trade and illicit finance. UNODC is here to support you and partner with you to effectively break the trafficking chain.

Thank you and I wish you fruitful discussions.