Library Briefing Library of the European Parliament 04/03/2011 Russian organised crime The EU perspective Since the fall of the Soviet Union, Russian In this briefing: organised crime groups have grown Context increasingly present in the European Union. The extent of their fraud and money laundering How it was born... activities distinguishes them from other non– ... and what it has become EU groups. Presence in the EU With the disintegration of the communist system in Russia, organised crime has deeply EU policy penetrated the state structure. It has Main references attempted, and to some extent succeeded, in taking control of entire sectors of the economy, Context such as the banking sector. This influence, the size of Russia and its former Since the collapse of the Soviet Union, the role as military superpower define the EU–Russia relationship has been shaped by character of Russian groups and explain their their economic interdependence. Whereas strong position in transnational crime. the EU is Russia's main trading partner, Although involved in every form of crime, Russia remains the EU's biggest supplier of Russians have acquired particular expertise in natural gas and a major supplier of crude oil high-tech crime, such as trade in arms or cyber and oil products. Furthermore, Russian crime. Money laundering is central to their investment in Europe – though substantially activities and has become a 'service' offered to less than the EU's investment in Russia – criminal syndicates from other parts of the reached €2 billion in 2008. Since 1991 an world. Several large-scale money laundering estimated €11.6 billion has been invested in schemes have been reported in the media. Cyprus alone. Over time, cooperation has There are no EU measures that would address extended to other areas. Following the 2007 Russian organised crime as such. However, in agreements on visa facilitation and 2008, Europol devoted a specific threat readmission, Russian citizens have found it assessment to these groups. Tackling easier to enter the EU Member States (MS). organised crime has also been one of the main The dark side of the developing relationship issues raised in the context of EU cooperation has been the increasing presence in the EU with the Russian Federation. of organised crime groups from the Russian Federation (hereafter 'Russian' groups). This is not surprising as, in the past 30 years, they have not only deeply penetrated state structures and economic life in Russia, but also established their position amongst the world's most widespread criminal groups. These organisations are part of a wider phenomenon which is Russian-speaking organised crime. The language is commonly spoken in the former Soviet republics, which facilitates contacts between crime syndicates Image Copyright David Stuart, 2011. Used under licence from Shutterstock.com from various countries. Moreover, many Author: Piotr Bakowski 110140REV3 Contact: [email protected] 41131 Page 1 of 6 Library Briefing Russian organised crime Russian crime syndicates have members of private enterprises. This is where the criminal diverse backgrounds and ethnicities. world stepped in, offering protection ('krysha' – roof) to businesses in return for According to Europol, Russian groups active in the EU play a particularly important role in shares in their profits. During this period boundaries were blurred between criminals, trafficking of women and trafficking in private business, corrupted officials and drugs and chemical precursors used for members of law enforcement and security manufacturing drugs. services. Ethnic criminal groups Even more crucial is their Taking over the impact on national Even before the collapse of the Soviet economy economies through Union ethnic communities played an important role in the Russian criminal The next step was fraud, money laun- world. The majority of so-called 'vory v organised crime's dering and investment zakone' (thieves-in-law, the criminal elite) attempts to control entire of the proceeds of were not Slavic. This led Soviet authorities branches of the economy, crime.1 It is the scope of to associate the world 'mafia' with ethnic including aluminium this financial crime that groups, while denying the existence of production and the distinguishes Russians, ethnically Russian organised crime. banking sector. Given more than anything else, Chechen criminal syndicates stand out as very low capital require- from other non-EU crimi- particularly influential. They have asserted ments for the establish- nal groups operating in their position during turf wars which ment of a bank, it was the EU. ravaged Moscow in the 1990s. They now exert a large degree of control over trade very easy to open one. How it was born... in heroin from Afghanistan. Profits from According to the FBI, in illegal activities have allegedly been used the 1990s almost half the A criminal in Chechnya to finance the separatist banks were controlled by transformation movement. Khozh-Ahmed Noukhayev, to organised crime. The Suppressed by Stalin, the whom the creation of the 'Chechen mafia' Russian Ministry of is ascribed, was later a prominent figure of Russian criminal world Internal Affairs put the Chechen politics. gradually recovered in figure at 85%.3 Other ethnic groups involved in the drug the Brezhnev era. It trade include Georgians, Tajiks, Arme- Capital flight turned restricted access nians, Azeris, and Tatars. These groups do Wary of economic inst- to goods to its advan- not always cooperate with ethnic Russian ability, and/or unwilling tage, penetrating the groups and some of them have tried to to share their rapidly– state apparatus and dominate domestic drug markets. gained profits with the corrupting officials. state or anyone else, However its influence at that time appears entrepreneurs began transferring consider- minor when compared to what happened able funds abroad. This massive capital flight when the communist system disintegrated. used a range of practices, including selling The criminal groups adapted perfectly to the below market prices to subsidiary companies new reality of Gorbachev's perestroika and abroad and invoicing for goods never Yeltsin's economic reforms. Between 1992 actually delivered. It is impossible to present and 2002 the number of criminal groups in the scope of this phenomenon in figures. Russia tripled to 12 000.2 Various estimates exist, the conservative ones ranging from 10 to 20 billion dollars a The transition to free market economy – year since 1992. The proportion of proceeds beneficial only to a privileged few and not of crime in these transfers is unknown. In the accompanied by the establishment of the 1990s, Russian authorities estimated it at rule of law – limited the role of the state, about one-third.4 making it unable to protect newly-born Author: Piotr Bakowski 110140REV3 Contact: [email protected] 41131 Page 2 of 6 Library Briefing Russian organised crime ...and what it has become heroin, makes Russian organised crime an important part of the Northern route for The Russian mafia? heroin transit. Despite the death of many prominent Russians have also established direct contact criminal figures in gang wars, numerous with Colombian and Mexican drug cartels organised crime syndicates have established and assist them in smuggling cocaine to strong positions in Russia. The Solntsevo Eastern Europe. Moreover, Russia is a Brotherhood from Moscow, the Tambov growing market for drug consumption, gang of Saint Petersburg and Uralmash from including Colombian cocaine, and synthetic Yekaterinburg are among the most drugs (amphetamine and ecstasy) which influential organisations. By infiltrating the originate mainly from Germany, Poland and political process at a very high level they are the Netherlands. able to influence policy formulation and avoid prosecution.5 Trade in arms The spontaneous privatisation of parts of In sometimes exaggerated and emotional Russia's conventional military arsenal to accounts of their activities, Western media high-ranking officers led to their trading in use such terms as 'Russian' or 'Red' 'mafia'. nuclear materials, large military equipment These groups are not however strict and classified military technology. Moreover, hierarchical structures based on permanent many military experts became unemployed membership. Nor do they possess character- and thus willing to sell their knowledge to istics seen in traditional definitions of mafia, organised crime. such as family ties or the use of induction rituals. They operate instead as flexible Russian groups are known to have assisted network structures involving a wide range of Columbians in manufacturing a submarine actors, including politicians and business- for drug trafficking purposes. They have also men.6 at least attempted to sell such equipment to Colombian cartels. Moreover, they have Transnational crime consistently supplied arms to parties to Some of these groups have become involved African and Balkan conflicts. in transnational crime. The size of the Russian Federation makes it possible for Cybercrime them to cooperate directly with Far Eastern, Alongside China and Brazil, Russia is the Central Asian and European syndicates. It world's major host of cybercrime and its also explains the unmatched diversity of citizens commit the highest number of their activities, which involve all forms of transnational frauds on the internet. Poverty, crime. Some criminal activities are however a high level