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ILLICIT FINANCE IMPLICATIONS OF HUMAN SMUGGLING

Christine Saddy, Illicit Finance and Economic Threats (IFET)

Hannah Norton, Senior Editor

September 2022



Refugees escaping their country in a boat[1]


Geographical Area | North Africa; Europe; Middle East

Countries/Enterprises Affected | Algeria; Egypt; Libya; Morocco; Tunisia; Spain; France; United Kingdom; United States; Canada; France; Germany; Switzerland; Italy; Sweden; Malaysia; Japan; South Korea; Australia


In early September, 70 representatives from law enforcement agencies, the financial sector, and regional and international organizations met in Egypt to address investigations related to illicit finance.[2] Cases of migrant smuggling, human trafficking, and money laundering continue to rise in North African countries, including Libya, Algeria, Egypt, Morocco, and Tunisia.[3] Human smuggling and trafficking are among the most profitable organized crimes in the North African region and are usually associated with supplementary violent and deadly crimes.[4] A Financial Action Task Force (FATF) report revealed that the total revenue generated from smuggling migrants will soon exceed $10 billion annually.[5] Political instability, poverty, and the impacts of a changing climate have very likely prompted individuals from Middle Eastern and African countries to migrate to Europe through coastal North African countries like Libya. Criminal actors have almost certainly profited from the refugee influx and current conflicts, exploiting vulnerable migrants attempting to flee illegally and needing the perceived assistance and expertise that smugglers claim to provide. The influx of refugees to developed countries will almost certainly harm the security and economy of these States as resource demands increase due to a larger population. Governments will very likely need to establish policies to address and provide basic human needs to support the influx.


Security Risk Level:


Areas of High Security Concern: The size of Libya’s coastline makes it difficult to secure effectively without sufficient security forces. The criminal networks that run the human smuggling industry in Libya likely collaborate with transnational gangs and authorities to facilitate their movements in exchange for profit. Corruption and political instability in Libya will likely increase the suffering of smuggled people as they will likely be victims of forced marriages, sexual exploitation, forced labor, and organ harvesting. Victims are likely subjected to numerous human rights violations but are unlikely to report them due to their illegal presence and fear of extortion. The profits that criminal gangs derive from human smuggling will likely perpetuate these crimes by entrenching the power and financial strength of the gangs.

Current Claims: Algeria; Egypt; Libya; Morocco; Tunisia; Spain; France; UK; US; Canada; France; Germany; Switzerland; Italy; Sweden; Malaysia; Japan; South Korea; Australia; Malta; United Nations Security Council (UNSC)

Current Attack: On September 3, the SOS Mediterranee rescued 459 multi-national migrants attempting to reach Europe in the Mediterranean between Libya and Malta.[6] On September 4th, in Tobruk, Libya, security forces raided a warehouse and found 287 Egyptian migrants trying to reach Italy.[7] They were treated inhumanely and robbed of personal belongings and means of communication.[8] Immigrant target destinations are EU countries, the US, Canada, and Australia,[9] with a British Ministry of Defense report stating that 1,000 migrants crossed the English Channel in late August 2022 and that approximately 25,000 people have crossed the Channel from France in 2022.[10] Economic desperation and violence in the Middle East and North Africa have almost certainly forced many people to start migrating to developed countries.

Groups Involved in Conflict: criminal actors; transnational smuggling rings; migrants; European maritime-humanitarian organization, SOS Mediterranee rescue vessel; Financial Action Task Force (FATF); British Ministry of Defense

Major Capital Industries: Intergovernmental organizations (IGOs); humanitarian organizations; finance industry; economic Industry; counterterrorism; border policing

Potential Industry Concerns: The influx of refugees will almost certainly negatively affect global security as the movement of people into countries requires affected countries to implement policy responses, political arrangements, and response plans to handle the additional populations. Asylum seekers will very likely exert pressure on local economies as immediate necessities, like refugee housing and access to food and water, become a priority. This will very likely lead to a greater need for humanitarian organization assistance, as governments will very likely experience limitations in their resources to provide for increased demand and refugee influx if financial support becomes scarce. The influx of migrants to other countries very likely threatens counterterrorism and border policing efforts as infiltration grows easier. Human smuggling also affects transit countries, the countries that migrants pass through, as they will likely need humanitarian aids and resources and likely puts pressure on law enforcement, coast guards, and shelters.


Areas of Caution:

  • Political: Since 2011, Libya has engaged in a civil war with anti-government groups backed by various militias and tribes, degrading the rule of law.[11] The resulting border insecurity encouraged individuals and smugglers from neighboring countries to use Libya to access Europe.[12] In October 2021, the US and the UNSC imposed sanctions on a Libyan official in charge of detention centers for mistreating and torturing migrants in custody.[13] Profits gained from smuggling through Libya can benefit the government-backed or anti-government militants and finance their weapons to gain influence and eventually control the country.[14] A renewed civil war in Libya will spread political and social instability to neighboring countries, potentially causing a Libyan refugee crisis. A possible civil war also impacts the country's oil reserves, potentially falling under the control of militant groups with ample funds for financing threat actors around the world.[15]

  • Economic: About 97,000 refugees and migrants arrived in Europe in the first eight months of 2021, an increase of 95% compared to 2020.[16] Mass migration can lead to an economic burden and strain economic resources, such as education, health, and job opportunities in European countries.[17] Asylum seekers often have limited resources and language skills, leaving them dependent on government assistance for shelter, food, health care, language lessons, and other expenses, which ultimately affect taxpayers.[18] Resource limitation indicates a security concern for current populations’ basic needs as the governments and markets within the economic sectors will expectedly run thin to support the refugees and migrants.

  • Social: Profit-seeking criminals abuse and exploit individuals willing to take risks and illegally cross borders, though many die during transit.[19] The movement of these individuals attracts the attention of criminals or terrorists, resulting in high casualty attacks. Criminals or terrorists often infiltrate these western countries receiving refugees and conduct terrorist attacks, negatively impacting social stability in the host countries and damaging overall social perceptions and opinions of refugees. The lack of government security leaves the population vulnerable to attacks and results in social unrest and outbreaks of violence.


Predictive Analysis:

  • Who: Refugees from conflict-affected countries in the Middle East and North Africa will very likely continue paying high fees to search for better opportunities. Cross-border gangs and criminals are very likely well connected to facilitate refugee journeys between several countries. Criminals will very likely amass profits through undeterred trafficking, likely using it to bribe corrupt officials to facilitate more smuggling. Bribed officials and criminals will likely seek to launder the proceeds of the smuggling to bolster their influence in the region, or fund other transnational extremists groups.

  • What: Government-backed and anti-government militias will likely continue to be a security threat as they leverage control over common smuggling routes to open up a strong source of funding for their operations. Militias will likely kidnap migrants for ransom from family members already in Europe. The illicit funds will very likely be used to procure weapons and buy warehouses to store their weapons. The funds collected from undetected smuggling will also likely be used by local extremist groups to finance their activities and plan terrorist attacks on western countries.

  • Why: Criminal gangs and corrupt security forces will likely have a high interest in participating due to the very likely high profits generated from human smuggling. Criminal groups will very likely conduct more human trafficking schemes as financial profits continue increasing. The struggling economies of Middle Eastern and North African countries due to civil wars and inflation will very likely continue marginalizing individuals to join local armed militias or extremist groups, or very likely attempt to escape the country. These actions will very likely result in increasingly prevalent human smuggling operations, adding to the migration crisis.

  • When: Libya’s political instability will very likely cause a lack of law enforcement on the coastal lines due to their critical presence in maintaining control in the major cities. Human smuggling will very likely remain at the forefront of organized criminal activities in the region, given the militias’ influence and the lack of security forces there. The presence of militias will very likely remain influential in continuing the smuggling operations if financial profits increase from criminal gangs’ human trafficking schemes. The militia's current foothold throughout Libya and the current political deadlock of the two rival governments will likely make this difficult for the foreseeable future.

  • How: Criminal organizations almost certainly took advantage of weak border security which enabled them to carry out human smuggling operations between Libya and Europe. Corruption and bribery are very likely major factors for cross-border smuggling through checkpoints and borders controlled by complicit military elites. The ability to bribe corrupt officials will very likely allow criminals to increase smuggling rates and human trafficking without the risk of law enforcement investigations preventing their operations. The funds generated by smuggling are very likely laundered and used in other illegal activities such as weapon, human, or narcotics trafficking and terrorist financing.


The Counterterrorism Group’s (CTG) Illicit Finance and Economic Threats (IFET) Team recommends a broader regional and international effort to address rampant human smuggling in North Africa. Governments should collaborate to secure borders and demobilize criminal organizations. This action will likely reduce the impact of the smuggling caused by these groups. The EU and other international organizations such as the UN Human Rights Council should provide assistance and training to regional law enforcement agencies to identify criminal gangs and prioritize tackling corruption within law enforcement agencies. IFET recommends addressing the unstable political climate and implementing stronger laws to curb corruption and illicit financing. Law enforcement agencies must use strict security strategies and focus on tracing the sources of funds.


CTG works to detect, deter, and defeat terrorism and the financing of terrorism, and the IFET team will continue to monitor the avenues transnational criminal actors are utilizing to finance their illegal activities. CTG’s Worldwide Analysis of Threats, Crimes, and Hazards (WATCH) Officers will monitor ongoing money laundering and human trafficking crimes and help establish trends to aid in prevention methods against future incidents.

 

[1]Refugees” by WikiMedia Commons licensed under Creative Commons Attribution-ShareAlike 3.0 Unported (CC BY-SA 3.0)

[2] N. Africa seeks to thwart traffickers' money laundering, China Daily, September 2022, https://www.chinadaily.com.cn/a/202209/07/WS6317f862a310fd2b29e76635.html

[3] Morocco’s Efforts against Human Trafficking Highlighted in Sharm el-Sheikh, North Africa Post, September 2022, https://northafricapost.com/60509-moroccos-efforts-against-human-trafficking-highlighted-in-sharm-el-sheikh.html

[4]Middle East and North Africa Top Organized Crime Report, Fair Observer, October 2021, https://www.fairobserver.com/region/middle_east_north_africa/hugh-miles-global-organized-crime-index-2021-middle-east-north-africa-news-66578/

[5] N. Africa seeks to thwart traffickers' money laundering, China Daily, September 2022, https://www.chinadaily.com.cn/a/202209/07/WS6317f862a310fd2b29e76635.html

[6] Hundreds of migrants rescued in Mediterranean dock in Italy after uncertain days, Euro News, April 2022, https://www.euronews.com/2022/09/04/hundreds-of-migrants-rescued-in-mediterranean-dock-in-italy-after-uncertain-days

[7] Libya: Smugglers’ abuse of Egyptian migrants, including children, calls for cooperation to combat human trafficking, reliefweb, September 2022, https://reliefweb.int/report/libya/libya-smugglers-abuse-egyptian-migrants-including-children-calls-cooperation-combat-human-trafficking-enar

[8] Ibid

[9] N. Africa seeks to thwart traffickers' money laundering, China Daily, September 2022, https://www.chinadaily.com.cn/a/202209/07/WS6317f862a310fd2b29e76635.html

[10] Hundreds of migrants rescued in Mediterranean dock in Italy after uncertain days, Euro News, April 2022, https://www.euronews.com/2022/09/04/hundreds-of-migrants-rescued-in-mediterranean-dock-in-italy-after-uncertain-days

[11] Instability in Libya, CFR, August 2022, https://www.cfr.org/global-conflict-tracker/conflict/civil-war-libya

[12] Libya: Smugglers’ abuse of Egyptian migrants, including children, calls for cooperation to combat human trafficking, Euro Med Monitor, September 2022, https://euromedmonitor.org/en/article/5332/Libya:-Smugglers%E2%80%99-abuse-of-Egyptian-migrants,-including-children,-calls-for-cooperation-to-combat-human-trafficking

[13] Imposing Sanctions on a Libyan Individual for Serious Human Rights Abuses, U.S. Department of State, October 2021, https://www.state.gov/imposing-sanctions-on-a-libyan-individual-for-serious-human-rights-abuses/#:~:text=Imposing%20Sanctions%20on%20a%20Libyan%20Individual%20for%20Serious%20Human%20Rights%20Abuses,-Press%20Statement&text=The%20United%20States%20is%20designating,abuses%20against%20migrants%20in%20Libya.

[14] UN, US sanction Libyan official over human trafficking, Arab News, October 2021, https://www.arabnews.com/node/1956261/middle-east

[15] Video of abuse of child refugee in Libya raises alarm over migrants’ plight, LA Times, September 2022, https://www.latimes.com/world-nation/story/2022-09-07/video-child-refugee-libya-rampant-abuse

[16] Refugee and Migrant Crisis in Europe Appeal, UNICEF, https://www.unicef.org/appeals/refugee-migrant-response-europe

[17] Irbid

[18] Are Refugees Bad or Good for the Economy?, ICMC, July 2020, https://www.icmc.net/2020/07/14/refugees-good-or-bad-for-economy/

[19] Smuggling of migrants: the harsh search for a better life, Unodc, https://www.unodc.org/toc/en/crimes/migrant-smuggling.html

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