2.1
The COVID-19 pandemic and the measures introduced to suppress it, has led to changes in serious and organised crime. On the one hand, organised crime groups (OCGs) have seized new opportunities and adapted their operations to continue generating revenue. A clear example of this has been OCGs capitalising on the world's need for medical products and personal protective equipment (PPE), which will be discussed in the next chapter. On the other hand, certain criminal markets and activities, such as human trafficking, have slowed or ceased in the wake of state and international border closures.
2.2
This chapter discusses how OCGs have shifted their operations in response to government-imposed COVID-19 related restrictions. It then examines Australia’s law enforcement responses and discusses further measures for consideration going forward.
The nature of organised crime and criminal organisations
Defining organised crime
2.3
Organised crime is a complex, changing and pervasive phenomenon with transnational implications. Definitions for the term vary, both within academic research and across jurisdictions, and tend to focus on differentiating between OCGs and the activities they engage in.
2.4
Within Australia, the Australian Criminal Intelligence Commission (ACIC) regards serious and organised crime as 'including all crime of an entrepreneurial nature and/or that [is] committed to support a criminal enterprise, whether by a group or an individual'.
2.5
The Australian Crime Commission Act 2002 (ACC Act) defines serious and organised crime as an offence that:
(a)
involves 2 or more offenders and substantial planning and organisation; and
(b)
involves, or is of a kind that ordinarily involves, the use of sophisticated methods and techniques; and
(c)
is committed, or is of a kind that is ordinarily committed, in conjunction with other offences of a like-kind; and
(d)
is a serious offence; and
(e)
is punishable by imprisonment for a period of 3 years or more or is a serious offence as defined by the Proceeds of Crime Act 2002 or the Crimes Act 1914.
2.6
Serious offences under the ACC Act include crimes such as theft, fraud, money laundering, illegal drug dealings, bribery or corruption of, or by, an officer of the Commonwealth, state or territory, and cybercrime.
Characteristics of organised crime groups
2.7
The United Nations Office on Drugs and Crime (UNODC) describes OCGs as organised operations or networks that are driven by market forces and motivated to seek opportunities that provide significant financial returns while keeping costs down and avoiding risks. There are a number of enabling factors that facilitate serious and organised crime, such as money laundering, public sector corruption and technology.
2.8
OCGs are adaptable and flexible, enabling the expansion and diversification of operations and activities as opportunities are sought or presented. Several submitters and witnesses to the inquiry noted this aspect of OCGs. For example, at the public hearing Mr Michael Pezzullo, Secretary of the Department of Home Affairs, noted:
While the pandemic has had a short-term disruptive effect on transnational, serious and organised crime, most groups have adapted—and are, indeed, adapting—demonstrating their own flexibility and resilience.
2.9
The UNODC stated that the COVID-19 pandemic has presented challenges and opportunities for OCGs. Criminal groups have identified opportunities in infiltrating the legal economy both in sectors experiencing distress and those that have become lucrative due to the pandemic. They have also sought to increase their influence and enhance their control in certain territories. Yet the COVID-19 pandemic countermeasures, such as travel restrictions and lockdowns, have created logistical obstacles for OCGs and riskier operating environments.
2.10
Regarding the impact of the pandemic on organised crime in Australia, the Home Affairs Portfolio stated:
Overall, the threat posed to Australia from serious and organised crime has not changed significantly… some crime types reduced in risk over the short to medium term… other crime types has increased and OCGs have adapted their operations to continue functioning despite COVID-19 restrictions.
Emerging risks in organised crime
2.11
The committee heard that the COVID-19 pandemic is likely to contribute to the reshaping of global serious and organised crime. A resurgence in organised crime is expected in Southeast Asia with significant effects on the illicit drug market.
2.12
Dr John Coyne and Ms Leanne Close, appearing in a private capacity, informed the committee that Mexican cartels have been the main OCGs in Central and North America over the past decade, with control over the manufacturing, trafficking and selling of a variety of drug types such as cocaine and fentanyl. These groups successfully expanded their operations globally by integrating their supply chain with other OCGs. Nevertheless, the pandemic has challenged their command of the global illicit drug trade. Cartel access to cocaine from Central America and synthetic drug components from China has been obstructed due to restrictions on the movement of people and goods across borders.
2.13
Conversely, Dr Coyne and Ms Close advised that OCGs operating in the Southeast Asian Mekong region are likely to become a global methamphetamine source and emerge from the COVID-19 pandemic as a dominant organised crime force. It was explained that these groups have close connections with Chinese chemical and pharmaceutical manufacturers, and are likely to begin producing other synthetic drugs such as fentanyl.
2.14
Similarly, Professor Roderic Broadhurst, appearing in a private capacity, advised that OCGs in Southeast Asia have been 'revitalised' by the opening of the region's economy and the growing profitability of synthetic illicit drugs.
2.15
Furthermore, Professor Broadhurst's detailed submission discussed a variety of factors that have contributed to the recent growth in wealth and power of OCGs in Southeast Asia, such as:
access to precursor chemicals and the ability to stockpile illicit drugs;
adaptability to socio-technological change;
deficiencies in anti-money laundering efforts;
trafficking opportunities presented by free trade agreements and infrastructure initiatives;
corruption of, and collusion with, government officials;
formation of interdependencies with other transnational OCGs; and
the lack of impact from crime reduction strategies in the region.
2.16
Professor Benjamin Schreer, Head of Department, Macquarie University Department of Security Studies and Criminology (DSSC), presented the view that all OCGs are well equipped to operate under challenging conditions such as those experienced from COVID-19. OCGs are highly skilled and have cash reserves, placing them in a good position to deal in illicit drugs when Australia re-opens its borders.
2.17
Professor Broadhurst stressed that Australia needs to reassess its priorities and tackle the sizeable illicit drug trade from Southeast Asia. He advised that the micro-importation of synthetic drugs that are small in mass, highly potent and very valuable through the mail has changed the drug landscape and is highly concerning.
2.18
It is clear that illicit drugs will continue to be a major threat in Australia, with OCGs in Southeast Asia having the potential to be a significant source of synthetic drugs globally. The next section considers the trafficking and consumption of illegal drugs in Australia during the pandemic.
Illicit drugs
2.19
Evidence to the inquiry discussed the impact that international and domestic border restrictions have had on the movement and availability of illicit drugs in Australia. The onset of the pandemic resulted in some shortages of illegal drugs, but as time went on, most OCGs adapted and found alternative methods to traffic and distribute illicit drugs.
Trafficking and distribution
2.20
Restrictions implemented to curb the pandemic, such as international border closures, disrupted air trafficking routes worldwide. Some submitters noted that travel restrictions led traffickers to seek alternatives, such as maritime routes. Dr Coyne said bulk imports through sea cargo sustained the drug market as well as the increasing trend of micro-imports of drugs through the postal system.
2.21
To transport illicit drugs across Australian state and territory borders, OCGs used trucking and courier companies as they were exempt from interstate travel bans.
2.22
The domestic delivery of illicit drugs diversified as a result of travel restrictions and the resourcefulness of OCGs. The DSSC advised that OCGs exploited largely unregulated home food delivery services to distribute their drugs. Exploitation was made easier with limited measures in place to track and identify the courier, and delivery content as well as the lack of certification of food delivery workers.
2.23
The DSSC recommended that the food delivery industry be regulated through the introduction of guidelines and protocols similar to that of other delivery services. The DSSC submitted that measures could be designed to establish a clear chain of movement and possession of a product.
Availability and consumption
2.24
Although border restrictions have impacted illicit drug routes, intelligence suggests there has been little change to the availability of illicit drugs.
The Home Affairs Portfolio advised of localised changes in the availability of some drugs and that price increases were likely due to profiteering and domestic travel restrictions, rather than international supply issues.
2.25
The Western Australia Police Force stated that domestic border closures restricted the movement of people and disrupted the movement of illicit drugs across regional areas. For example, methylamphetamine became difficult to source and doubled in price.
2.26
At the public hearing on the examination of the ACIC's Annual Report 2019–20, Mr Michael Phelan, Chief Executive Officer of the ACIC, advised that although OCGs experienced some difficulties trafficking illicit drugs into Australia during the initial stages of the pandemic, as world trade effectively opened up again after several months, OCGs were able to return their operations to pre‑pandemic levels and continue to meet the 'insatiable demand' of Australians for illicit drugs.
2.27
The ACIC's Annual Report 2019–20 stated that based on wastewater samples taken in October 2019, December 2019 and February 2020, Australia ranked fourth for the highest total estimated stimulant consumption and third highest for the consumption of methylamphetamine (ice) and MDMA in comparison to 30 other countries.
2.28
The ACIC National Wastewater Drug Monitoring Program—Report 12, found that drug consumption during the COVID-19 pandemic, varied between record high and record low levels of illicit drugs in both capital cities and regional areas. Between April and August 2020, the population-weighted average consumption of methylamphetamine and fentanyl decreased in capital cities, while the use of all other drugs increased. In the same period, regional consumption of methylamphetamine, heroin and fentanyl decreased, while alcohol, nicotine, cocaine, oxycodone and cannabis increased.
2.29
The ACIC observed that over the four years of the wastewater drug monitoring program, the population-weighted average consumption of all drugs monitored has fluctuated, but consumption of methylamphetamine, cocaine, MDMA and heroin has increased substantially. In the fourth year of the program, a record high consumption of cocaine, MDMA and heroin was recorded, but the consumption of methylamphetamine decreased to the second highest level recorded, largely due to the impact of the COVID-19 restrictions on supply and demand.
2.30
Furthermore, the ACIC's eleventh wastewater drug report found drug price variations have not been a reliable indicator of consumption levels, as drug use increased with price in some locations during the pandemic.
2.31
As explained above, OCGs dealing in illicit drugs were ultimately able to effectively overcome the logistical challenges presented by government restrictions under COVID-19. The next section considers changes in other forms of organised crime activity and how the COVID-19 pandemic measures have impacted them.
Trends in other illicit activities
2.32
OCG activities were impacted by international border closures and domestic restrictions, as well as market supply and demand factors. However, it may not be known for some time the degree to which illicit markets have been affected by measures to control the pandemic.
Wildlife trade
2.33
The Department of Agriculture, Water and the Environment (DAWE) and the Australasian Institute of Policing (AiPol) reported that international travel restrictions have hindered wildlife trafficking. For example, AiPol noted that the illicit wildlife trade has been disrupted in several source and destination countries, such as South Africa and China, due to a decline in air travel as well as in the demand for products.
Modern slavery and human trafficking
2.34
Evidence to the committee indicated that while travel restrictions have limited the opportunity for OCGs to traffic people into Australia for exploitation purposes, the pandemic has exacerbated modern slavery risks for those in vulnerable circumstances, such as financial hardship, across the globe.
Illicit tobacco
2.35
British American Tobacco Australia and Imperial Brands Australasia reported a connection between border restrictions and reduced international passengers with a rise in domestically grown tobacco, the increased sale of illegal tobacco online, and the distribution of illicit tobacco through the postal system.
2.36
In November 2020, the committee reported on its inquiry into illicit tobacco and made eight recommendations. The committee recommended the development of a National Illicit Tobacco strategy, in conjunction with state and territory police forces, as a co-ordinated, national law enforcement response. Additionally, the committee recommended that state and territory legislation be aligned with Commonwealth offences and enhanced penalties.
Money laundering and infiltrating legitimate businesses
2.37
The ACIC has reported that money laundering enables organised crime to disguise criminal proceeds. The Home Affairs Portfolio advised that cash movement by OCGs has been hampered by travel restrictions, the closure of businesses such as casinos and clubs and the general reluctance to handle cash in the pandemic.
2.38
The committee heard that OCGs infiltrate legal businesses to launder money and traffic goods as well as expand their influence in the licit economy. Professor Broadhurst warned that businesses under economic stress due to the pandemic are likely to become targets for organised crime:
[W]e'll have a lot of distressed businesses, often with pretty good assets, and possibly a good business model, but not able to survive the recession that we're in and no doubt will be in for a bit longer. [They've] become attractive targets for organised crime groups. At least in some places, we're going to see more of that kind of activity. That obviously contributes to the wealth of these groups.
2.39
The Home Affairs Portfolio drew attention to the Anti-Money Laundering and
Counter-Terrorism Financing and Other Legislation Amendment Bill 2020, enacted in December 2020. It was noted that the bill contained a range of measures that aimed to strengthen Australia's framework for the use and disclosure of financial intelligence, to better support combatting money laundering, terrorism financing and other serious crimes.
2.40
Observations of organised crime markets and activities during the pandemic show how OCGs adapt quickly to engage in illicit activities to generate profits. Law enforcement taskforces and intelligence surveillance helps reduce the threat and impact of serious and organised crime in Australia, as explained further in the next section of this chapter.
Increased extremist and terrorism chatter
2.41
During the COVID-19 pandemic, an increase in online activity involving extremist groups was also observed.
2.42
In mid-2020, AFP Commissioner Reece Kershaw was reported as having stated that extremists are leveraging the isolation, loneliness and financial stress caused by COVID-19 to recruit online. The Director-General of the Australian Security Intelligence Organisation, Mr Mike Burgess, has also raised concerns that there had been an increase in radical extremist ideology chatter since the beginning of the pandemic.
2.43
The AFP echoed this advice, noting that there had been 'an increase in right wing groups sharing COVID-19 rhetoric online to reinforce their messaging'.
Cartel conduct
2.44
The government's stimulus measures and expedited government procurement processes arising as a result of the pandemic, raised concerns from the Australian Competition and Consumer Commission (ACCC) regarding Australia's increased vulnerabilities to cartel conduct.
2.45
While cartel conduct had not been identified as having occurred in Australia at the time of the committee's public hearing in August 2020, Mr Daniel Crennan, the former Deputy Chair of ASIC, advised there can be a lag between the occurrence of this behaviour and detection. Mr Crennan stated that ASIC had alerted agencies to the risks of cartel conduct and how it could be mitigated.
2.46
The ACCC advised it is engaging with government agencies to assist them to deter and detect cartel conduct in their procurement processes. This has included providing guidelines and advice on measures in the design and implementation phase. The agency is also developing a digital screening toolkit to detect anomalies in procurement data. It is encouraging Commonwealth procurement agencies to collect bidding data in a searchable format. They argued that this will assist with screening for patterns such as bid rotation agreements which could indicate fraud against the Commonwealth.
Australia's response to organised crime
2.47
The Department of Foreign Affairs and Trade's 2017 Foreign Policy White Paper noted that OCGs seriously threaten Australia's interests, safety and security.
The Home Affairs Portfolio and the Australian Federal Police (AFP) outlined a range of initiatives employed during the pandemic to disrupt and respond to serious and organised crime.
2.48
The Home Affairs Portfolio advised it worked closely with other Commonwealth agencies through the Criminal Justice and Law Enforcement Forum (CJLEF) during the pandemic. The CJLEF considers the threat of transnational, serious and organised crime and provides strategic oversight and guidance to develop a whole-of-Commonwealth strategy to tackle serious and organised crime in Australia.
2.49
The AFP established the Joint Intelligence Group (JIG) to respond to crimes with increased risk during the pandemic, including financial crime, cybercrime, espionage and foreign interference, human trafficking, child exploitation, and counter-terrorism. The JIG coordinates efforts across Australian law enforcement and intelligence agencies, and international partners, to provide timely and informed advice to assist with decision‑making.
2.50
Furthermore, the Home Affairs Portfolio reported that its agencies achieved significant operational success during the COVID-19 pandemic. For example, Home Affairs Portfolio agencies led and supported various operations, including the interception of illicit drug imports and cash seizure.
2.51
However, Australia's response will need to continue to be multi-faceted to meet the challenges presented by organised crime, as discussed below.
Safeguarding the future from organised crime
2.52
Law enforcement agencies have an opportunity to learn from the pandemic's effect on organised crime and reduce Australia’s vulnerability to it in the future.
2.53
Dr Coyne advised that it is important to be proactive and to strategically address the risks expected in the pandemic's aftermath:
We have this problem that, if we wait for that sort of data, we're going to be in a major problem with drugs, human smuggling and specifically pharmaceuticals… I strongly urge policymakers to step beyond waiting for absolute evidence and to look forward in order to avoid us walking and sleepwalking into this sort of problem.
2.54
Similarly, Professor Schreer advised it is vital to prepare for criminal activity in a post-COVID-19 environment:
[W]e think it's important for this committee to not just consider the immediate impact of COVID-19 on criminal activity and law enforcement in Australia, but also really to prepare for the post-COVID-19 era. In our view, preparing for the latter period might be even more important for the committee than focusing on the short term, which of course is also important. In our assessment, this is because the post-COVID era is likely to see intensified activities of transnational serious organised crime targeting Australia.
2.55
The Home Affairs Portfolio acknowledged that there are lessons to be learnt from the COVID-19 pandemic which will enhance its responses to the threat of organised crime into the future:
The COVID-19 pandemic provides lessons in strengthening, streamlining, and unifying responses to increase Australia's resilience to organised crime threats, while future proofing the country from challenges similar to COVID-19 in their size, scale and mass impact. Home Affairs will consider its responses and assess the utility of continuing taskforces and networks formed during the COVID-19 pandemic.
2.56
Suggestions for combating serious and organised crime moving forward included the broad themes investing in border security and strengthening regional partnerships.
2.57
Professor Schreer stated that as air traffic has been significantly disrupted, Australia should invest more in maritime border security. Further to this, Professor Broadhurst advised greater investment in new technologies at Australia’s borders and in mailrooms to intercept illicit products and substances.
2.58
To tackle organised crime in the Asia-Pacific region, it was proposed that regional partnerships and international cooperation need to be strengthened.
Professor Broadhurst suggested that Australia's best tactic or strategy would be to build capability among our regional neighbours and increase funds to strengthen Australia's police liaison network and UNODC agencies. He suggested that 'investment in regional crime prevention will ultimately save Australian taxpayers additional expenditure on domestic harm reduction and law enforcement.'
Committee view
2.59
Government measures introduced to limit the spread of the COVID-19 virus and safeguard communities and economies have impacted serious and organised crime in a variety of ways. It is clear the measures that have decreased mobility and socialisation (such as travel restrictions, physical distancing requirements and lockdowns) have disrupted illegal supply chains. However, OCGs have overcome these challenges by modifying their operations and by developing new methods.
2.60
OCGs have demonstrated resilience and adaptability during this crisis. Therefore it is vital Australia remains vigilant and proactively engaged in the surveillance and disruption of organised crime.
2.61
The committee heard concerning evidence of OCGs exploiting the largely unregulated home food delivery industry to distribute illicit drugs. To counteract OCG attempts to exploit the industry and transport illict drugs, it was suggested that regulation be introduced that contains measures designed to establish a clear chain of movement and possession of a product. The committee believes an investigation of this industry is required to assess whether additional regulation is needed to prevent the potential opportunity for exploitation by OCGs.
2.62
The committee recommends that the Australian Government investigate whether clear chains of movement and possession can be established in the home food delivery industry to reduce its potential for exploitation by organised crime groups.
2.63
The committee is of the view that lessons learnt from measures implemented under COVID-19 will provide valuable insights to assist Australia in addressing organised crime, both during unprecedented events and more generally into the future.
2.64
The committee was reassured to learn that law enforcement bodies have worked together to protect Australia from organised crime threats during the pandemic. The committee commends the establishment of the JIG by the AFP as an opportunity to increase law enforcement collaboration. Conscious of the ongoing effects of COVID-19 on criminal activity, the committee believes it is vital the JIG is retained.
2.65
The committee recommends that the Australian Federal Police retain the Joint Intelligence Group, while any COVID-19 security risks remain, so they can continue to coordinate efforts across Australian law enforcement and intelligence agencies, and international partners.
2.66
Increased global cooperation is needed to combat organised crime, particularly during extreme crises such as the COVID-19 pandemic. Some factors that need to be considered are:
international information exchange to share data and trends in the operations of OCGs to inform and prepare future responses;
increased surveillance, regulation and transparency of financial markets; and
sharing of tactical responses that have been successful in combatting serious and organised crime.