Commission on Crime Prevention and Criminal Justice Topic Guide

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Dear Delegates, Hello there everyone and welcome to the CCPCJ! I’m Angie, one of the Senior Staffers here at YIRA in charge of this awesome committee. I am currently a junior in Ezra Stiles College double majoring in Political Science and Environmental Studies. Born and raised in Lima, Peru the two topics that we will be discussing this year are very close to my heart. Topic A is actually modeled after a class I took last year and which I consider one of the best classes I have ever taken at Yale, called, you guessed it, Corruption in Latin America. I loved this class so much that I knew I wanted to make a YMUN committee out of it. While Peru is one of the so-called up-and-coming economies of the century, we still very much struggle with corruption, criminal activity and money laundering.

Aside from YIRA and organizing Model UN Conferences, I am heavily involved in the international community at Yale, being on the board of the International Students Organization Accent – the multilingual magazine at Yale, the Orientation for International Students and the Latin American Student Organization; I’m also on the board of the solar power education initiative Project Bright and the Yale Climate and Energy Institute.

- Angie Hanawa, Yale 15 angie.hanawa@yale.edu I am Abhimanyu Chandra, a senior majoring in political science, and am delighted to welcome you to YMUN. I am overjoyed to serve as one of the Senior Staff members in the CCPCJ, and look forward to hearing your thoughts.

I am interested in the humanities and social sciences broadly conceived. My engagement with these interests has come from classes, extra-curricular pursuits, and work outside of Yale. Over the 2013-14 academic year, for instance, I am a student in the Studies in Grand Strategy program, which examines current affairs through the study of ancient as well as contemporary classics. Outside the classroom, I am a writer for various Yale publications and a member of the Yale Political Union.

And, lastly, outside of Yale, I have worked at the US Department of State Office of the Special Representative for Afghanistan and Pakistan, and at the newspaper Rising Kashmir in the Indian state of Kashmir.

As some of my work interests will tell you, I am interested in the workings of exciting, dynamic, and conflicted places—and issues surrounding such places? I look forward to debating them with you in CCPCJ. You have seen James Bond movies and read crime novels. Now come debate and learn about, and contribute to the conversation on issues such as crime, illicit money flow, and terror financing.

- Abhimanyu Chandra, Yale ‘14 abhimanyu.chandra@yale.edu

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TABLE OF CONTENTS History of the Committee Corruption and Organized Crime in Latin America Topic History Current Situation Questions to Consider International Money Laundering Topic History Current Situation Questions to Consider Role of the Committee Structure of the Committee Suggestions for Further Research "##$%#$&'! ! ! ! ! !

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History of the Committee !

The CCPCJ has a very particular history, and it has achieved a variety of goals.

From the UN website: “The political agreement to establish the Commission derived from a ministerial meeting held in Versailles in 1991. It was preceded by a more technically focused Committee on Crime Prevention and Control, formed in 1971 to replace an earlier expert advisory committee and tackle a broadened scope of UN interest in criminal justice policy.

“The Commission on Crime Prevention and Criminal Justice is the central body within the United Nations system dealing with crime prevention and criminal justice policy, including trafficking in persons, transnational crime and aspects of terrorism prevention. It monitors the use and application of relevant United Nations standards and norms and guides policy development in response to emerging forms of crime.

“The Commission offers Member States a forum to exchange expertise, experiences and information, to develop national and international strategies and to identify priorities for combating crime.”i The CCPCJ has successfully achieved an assortment of goals. For instance, it has contributed to reducing illegal trafficking in flora and fauna. Its work has also contributed, notably, towards reducing the number of piracy attacks in the Indian Ocean and the Horn of Africa regions.

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1: Pirate looking out to the horn of Africa.

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Corruption and Organized Crime in Latin America Topic History!

Ever since Christopher Columbus landed in the New World in 1492, Latin America has been the focus of political and social reform in the Americas, as well as the stage of various power struggles between international superpowers. The first colonisers, hailing from Spain and Portugal and coming to the Americas in the 15th century, discovered a land full of unexploited resources and potential riches for their newly expanding nations and claimed the territory as a royal mandate of their respective monarchies. By then, most of the land was inhabited by two major civilizations: the Incan Empire whose influence stretched from modern-day Ecuador along the Pacific Coast all the way down to modern-day Chile, and the Guarani, whose tribes were scattered all the way from Brazil to Paraguay, Uruguay and Northern Argentina. Both civilizations were battled and eventually subdued by the colonial powers who, better-armed and more experienced, conquered their territory and claimed it for the European thrones. The Spanish created the Viceroyalties of

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New Granada, Rio de la Plata and Peru in the Western Pacific border while the Portuguese claimed the Atlantic coast as the Viceroyalty of Brazil as per the Treaty of Tordesillas. In these new colonies, royal rule reigned supreme and the indigenous populations, who had owned the land for centuries before the arrival of the settlers, saw themselves oppressed and enslaved by their new rulers.

2: Map of colonial Latin America. From Explanationizer.

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Academics trace the origin of corruption in Latin America to this point in history. The rulers, far removed from the oversight of the royal court and the King, openly accepted bribes, appointed family and friends to high-raking positions and blatantly exploited the native populations for personal gain. Indians were considered secondtiered citizens, and sometimes not even citizens at all, a race to be subdued and converted, and so were often used as forced labor and an additional source of income through unfairly high taxes and tributes to the King. Positions of power abounded as the territories were still young and thus could be sold to the highest bidder or traded for political favors. The legislative branch was almost fully independent from the supervision of the monarchy and, along with the administrative branch, virtually immune from sanctions. Officials even went as far as scamming the monarchy, underreporting the shipments of gold that were supposed to be sent to Spain and keeping the surplus for themselves. Corrupt practices were so engrained in the political system of colonial Latin America that it became the de facto form of government for centuries of colonial rule.ii

3: From http://teams.as.edu.au/

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Even when the wave of independence came with the libertadores Simon Bolivar and Jose de San Martin, most of the political institutions of government were left intact after a region that had been suppressed for as long as memory served it, scrambled to establish effective systems of selfgovernment. By the mid 20th century Latin America saw military dictatorships in virtually all of its constituting countries, most of the immature democracies having failed to live up to expectations, almost all of which were plagued with rampant corruption. From the military dictatorship in Brazil to the one in Venezuela and Nicaragua, Latin Americaâ&#x20AC;&#x2122;s wealth was slowly being transferred to the pockets of politicians.

While all of Latin America had become independent states, much of the remaining paternalistic political institutions and cultural mindsets remained from colonial times and after centuries of post-colonial reorganization, coups, wars and dictatorships, corruption was still very much the common denominator of Latin American politics continuing up until the end of the 20th century. In response to years of dictatorships, civilian coups were being organised to throw the military out of power in hopes of terminating the widespread corruption and increasing social welfare. However, even as the region transitioned into democracy, budget gaps from small tax revenues, as well as a lack of a mature economy; created financial shortages within the government that left corruption as virtually the only option available to sustain the new governments.iii

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4: Jose de San Martin and Simon Bolivar, Latin America’s two fathers of independence. From http://historiageneral.com

The so-callled “3rd wave democratization”iv brought with it changes to the political system in Latin America which, after years of intermittent military dictatorships, was finally starting to stabilize in the 80’s and 90’s. With this newfound stability, however, processes such as privatization and neopopulism, along with the particular cultural practices of clientilism and political elitism also came with it, and thus created the very particular form of corruption found in Latin American countries. Between 1992 and 2004, there were a total of six presidential impeachments.

In Brazil, 1989, Fernando Collor de Mello was the first president to win a direct election after more than twenty years of military dictatorship.

Despite strict economic measures from the administration, the military dictatorship had taken its toll on the Brazilian economy and inflation was slowly but steadily rising. Rent-seeking behaviour

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started to appear in construction and social projects and media scandals concerning corruption of Collor’s administration filled the news for the next two years. In 1992 Fernando Collor was accused by his brother, Pedro Collor, of condoning an influence peddling scheme run by his campaign treasurer, Paulo César Farias. He was found guilty by the Senate and, after days of protests asking for Collor’s impeachment, which finally resulted in his resignation. This incident is commonly known as ‘Collorgate.’

5:: Protests during Collorgate. From http://7segundos.com.br

The following year, in Venezuela, President Carlos Andrés Pérez was also removed in his second term in office. Immediately after taking office for the second time in 1989, Pérez introduced an economic reform package known as the Great Turnaround. In response, protests and riots broke in Caracas and spread throughout the country. Ensuing actions of the security forces caused more than 300 deaths. Subsequent riots and subsequent human rights violations for the next three years resulted in public outcry against the government and calls for the resignation of various ministers and congressmen. In 1992, Hugo Chavez attempted a coup d’état but his efforts were thwarted. However, claims that Pérez had

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embezzled millions from the country´s economy eventually led to Congress permanently removing Pérez from the Presidency. The actions of Pérez and his successor Rafael Caldera, which centered on neoliberalist reformed, led to the election of Hugo Chavez in 1998.

In Colombia, 1994, just weeks following the election of President Ernesto Samper, the press began to publish transcripts of a telephone conversation in which one of the heads of the Cali drug cartel suggested that they had contributed some 3.5 million dollars to Samper´s campaign.

Later that year, another tape linked Samper´s campaign treasurer to the same cartel. Although publicly Samper denied the claims, various members of his campaign were being arrested for receiving money from drug lords. However, the lack of public outcry and social mobilization eventually resulted in the overturning of is impeachment, and thus Samper continued in office until 1998.

Shortly after the election of Samper, Latin America entered an economic crisis. All throughout the continent, cash flow started to decrease abruptly and no country felt it as much as Ecuador. Newly elected Abdalá Bucaram had no choice but to enact strong anti-popular economic measures, which generated disapproval from the Ecuadorian people. On top of that, during his administration, various members of his party were accused of political misbehaviour (corruption, abuse of power and political rudeness). Bucaram’s political style had always been described as eccentric and flamboyant and finally, in 1997, after months of riots due to Bucaram’s economic policies, Congress voted to declare the president “mentally incapacitated” to continue his role.

Bucaram initially regarded this move as a coup,

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but increased civilian and military support of the Congress’ decision forced him to step down.v

6: Resignation of Abdala Bucaram. From Wall Street Journal.

A few years later, Paraguay suffered not one but two cases of presidential impeachment, one in 1999 and another in 2001. In 1998 Raúl Cubas ran for and won the Paraguayan presidency after the arrest of his superior General Lino Oviedo for military rebellion against the previous government. Cubas shortened Oviedo’s sentence, which allowed him to exit prison shortly after Cubas’ election. Luis M. Argaña, Oviedo’s political opponent and Cubas’ Vice President, plotted with the infuriated Congress to impeach Cubas for his actions. However, shortly after Argaña was murdered. Blamed for the crime and faced with public demonstrations in the capital, Cubas was forced to step down. Immediately after, González Macchi assumed the new presidency. The new administration suffered its own scandals.

Accusations of fraud and embezzlement surrounded the new President and soon people took to the streets protesting against corruption, mad microeconomic management and human rights abuse of Macchi’s opposition. The Senate finally decided to remove Macchi on charges of “political terrorism.”

CCPCJ 2 Finally, one of the largest and most wellknown corruption scandals in Latin America occurred in 2000 when Vladimiro Montesinos, Chief of Intelligence of Peru’s pseudo-dictator Alberto Fujimori was found to have virtually all of the Fujimori administration, secret service and state media in a massive corruption web. Alberto Fujimori won his first term in office against worldrenowned author Mario Vargas Llosa in 1990 and took it upon himself to rid Peru of the rampant terrorism that it had suffered for the previous decades. In 1993, Fujimori threw an auto-coup and changed the constitution so he could stay in office for five more years after the end of his term in 1995. During that time, Montesinos controlled a secret squad which carried out everything from mass murders of civilians in search of terrorist and forced sterilization programs in the mountains of Peru. In 2000, at the start of Fujimori’s 3rd term in office was coming to an end, various videos surfaced of Montesinos bribing government officials, tv and newspaper owners and industrial leaders and thus revealed the massive web of corruption that existed within the administration.

Both Montesinos and Fujimori resigned and fled the country as trials were being issued against them for crimes against humanity and embezzlement.vi

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7: Vladimiro Montesinos offering a minister a substantial bribe caught on video was the beginning of the Vladivideo scandal. From http://napa.com.pe

These six cases, along with much more recent ones such as the resignation of Andrés Manuel López Obrador from Mexico in 2005, show how widespread corruption was in Latin America, from illegitimate campaign funding bribes to misuse of power and also set the stage for the rise of organised criminal activity in many of the countries mentioned. Most of the political scandal and corruption schemes resulted in a general mismanagement of both the economic and social aspects of Latin American people’s lives. As a result of these institutional voids, criminal groups started to rise up to the plate and provide the basic services that people needed such as jobs and

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security and, taking advantage of the need of the people, expanded their domain to even international proportions. In many cases, in response to the corrupt and incompetent actions of the government, paramilitary insurgent groups surfaced as a means of protests and political change, which then sought financing sourced in illicit activities such as drug, arms and human trafficking.vii Many resources are linked to conflict.

Drugs, like alluvial diamonds, are easy to appropriate and transport to markets, as opposed to oil, gas, timber and minerals. The illegal drug business is the branch of organized crime which generates the highest revenues. The end of the Cold War drastically reduced the availability of state financing for terrorist and insurgent movements. The need for alternative funding made drug trafficking attractive to many groups.

These developments lead to the blurring of criminal and political groups and to different variations and combinations of the two. The access to funds by participating in illegal actions enables to pay fighters, acquire weapons and buy legitimacy. Drugs are hence instrumental in enabling a group to threaten the state’s monopoly on the legitimate use of force and control over territory, as well as the security of its citizens.

Where narcotics production exists, armed conflict is altered in its dynamics and alters the involved groups in its structure and behaviour. This also changes the challenge they pose to states.

One of the most notable cases is that of Colombia. The deeper economization of the Colombian conflict started in the 1980’s with the beginning of drug production and export, starting with marihuana. The changing dynamic in the conflict was enhanced in the 1990s with the

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production and export of cocaine, formerly concentrated in Bolivia and Peru, and the formation of the Paramilitary groups, the AUC (Autodefensas Unidas de Colombia). With the beheading of the big drug cartels of Calí and Medellín in the 1990s, smaller networks gained power but are integrated into a system of illegal businesses that includes a wide array of branches, from the kidnapping industry to the protection of racket deals, made possible by the lack of management by a corrupt central government linked to and funded by the cartels themselves.

They became much stronger with the drug lords becoming wealthier, who in return with that money bought more land to grow coca and became more influential in local politics. Landowners and their drug money supported paramilitary squads and in 2000 AUC’s then leader, Carlos Castaño, admitted that 70% of AUC funding was drugrelated. Another similar groups is the FARC (Fuerzas Armadas Revolucionario de Colombia) which, in the 1990’s funded their operations through trafficking drugs and a fluent kidnapping industry.

8: Colombian drug lord Salomon Camacho Mora being detained for leading a Colombian drug cartel. From Associated Press.

CCPCJ 2 Mexico is another example of how organized crime and hard hand politics are eroding democratic governance. The history of organized crime in Mexico dates back to the beginning of the 20th century when criminal groups in Baja California were smuggling opium into the US. In 1931, President Pascual Ortiz Rubio, expressed worry over “the increase in national and international narcotics trafficking along the rail line joining Mexico City and Ciudad Juárez.” By then, Ciudad Juárez was the main center for narcotics trafficking at the national and international level, most of it going north to the US. Political power was weak in the north and Mexico City, with the hegemonic PRI (Partido Revolucionario Institucional) plague by corruption, could not exert sufficient control on the northern provinces. As a result, criminal groups and drug cartels took over the administration of the region, founding their administrative and political tasks with the drug money.viii The lack of political control resulted in violent outbreaks between the national forces and the cartels in the 60’s and 80’s, a situation that has only escalated since hen. But organized crime simply didn’t exist separately from the political system. There were individual gangsters and criminals, but no independent syndicates and no armies upon which the capos could draw to resist

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the state or intimidate the citizenry, at least not without the active cooperation of the politicians.

Various famous politicians such as ex-governor of Puebla Mario Marín and former director of the National Institute of Migration have been accused of being involved in criminal activities such as prostitution and drug trafficking.ix

9: Support for drug cartel La Familia Michoacana, saying they are better than the State. From http://vanguardia.com.mx

Although in traditional concepts of security, the Latin American region is considered to be one of the most peaceful regions in the world, since interstate war has not been a serious concern for the last decades, new forms of violence, like inner state conflicts and organized

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crime are undermining the capacity of states in Latin America to govern and fulfill the basic principles of modern statehood: the control of territory, the security of its citizens, a well functioning judicial system and the monopoly on the legitimate use of force. All across Latin America, rampant corruption allows criminal groups to operate and endanger the people of this developing region.

Past UN Actions In response to the limited regional actions of previous corruption treaties such as the InterAmerican Convention against Corruption, the OECD Anti-Bribery Convention, and the African Union Convention on Preventing and Combating Corruption, the United Nations General Assembly adopted the United Nations Convention against Corruption (UNCAC) on 31 October 2003 by Resolution 58/4. It is the first global legally binding international anti-corruption instrument.

In its 71 Articles divided into 8 Chapters, UNCAC requires that States Parties implement several anticorruption measures that may affect their laws, institutions and practices. These measures aim at preventing corruption, criminalizing certain conducts, strengthening international law enforcement and judicial cooperation, providing effective legal mechanisms for asset recovery, technical assistance and information exchange, and mechanisms for implementation of the Convention, including the Conference of the States Parties to the United Nations Convention against Corruption (CoSP).x The United Nations Convention against Transnational Organized Crime, adopted by General Assembly resolution 55/25 of 15 November 2000, is the main international instrument in the

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fight against transnational organized crime. The Convention is further supplemented by three Protocols, which target specific areas and manifestations of organized crime: the Protocol to Prevent, Suppress and Punish Trafficking in Persons, Especially Women and Children; the Protocol against the Smuggling of Migrants by Land, Sea and Air; and the Protocol against the Illicit Manufacturing of and Trafficking in Firearms, their Parts and Components and Ammunition. The Convention represents a major step forward in the fight against transnational organized crime. States that ratify this instrument commit themselves to taking a series of measures against transnational organized crime, including the creation of domestic criminal offences, the adoption of new and sweeping frameworks for extradition, mutual legal assistance and law enforcement cooperation; and the promotion of training and technical assistance for building or upgrading the necessary capacity of national authorities.xi In addition, the UNODC has enacted the Single Convention on Narcotic Drug, the Convention on Psychotropic Substances, the Convention against the Illicit Traffic in Narcotic Drugs and Psychotropic Substances and Counter-terrorism Conventions.

10: From UNDOC.

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Current Situation Corruption commonly defined by the United Nation as the misuse of public office for personal gain. Although the definition may be somewhat broad, it is generally understood to mean any of the following: bribery, extortion, cronyism, nepotism, patronage, graft, or embezzlement although this list is not exhaustive.

It normally stems from a lack of both accountability and answerability from the part of the government to the public.xii In a democratic state, the power of government is bestowed upon public officials via elections and the vote of the people. Therefore, the official carries a responsibility to carry out his or her duty in the interest of the people; otherwise, the official runs the risk of not being re-elected. This is the basic concept of the social contract and the guiding principle of most democracies. However, in practice, politics offers much less checks and balances for public officials and bureaucrats in the government, which allows for the rise of exploitation of a position of power for private gain.

In the last few decades, corruption has become the focus of various studies around the world as it has been identified as the cause of economic and social stagnation as well as an obstacle to development.

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11: Overview of the index of perception of corruption, 2012. From Transparency International.

As shown by the most widely use method of measurement, the Corruption Perceptions Index (CPI) published by Transparency International, Latin America as a region is one of the most corrupt in the world, with the regional average being above the world average.xiii The Index ranks 176 countries according to their perceived levels of public sector corruption, 32 of which are in the Americas. Two-thirds of those do not even make it to the middle of the global ranking â&#x20AC;&#x201C; indicating that corruption is a serious problem in many countries. There are several challenges ahead for the region that, if not tackled, could reverse the progress made in the last few years. One of them is that despite formal economic growth, it is still the most unequal region in the world. Twelve out

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of the twenty countries worldwide with highest levels of inequality are from the region. Another one of the main pending issues for some countries of the region is, no doubt, democratic governance that goes beyond election day. Honduras and El Salvador are among the most violent countries in the world. Honduras is, in fact, the most dangerous with a homicide rate of 82 homicides per 100.000 inhabitants. While the global average is nine, the Latin American one is 27.xiv

12: Stop the death of journalists. From LA Times.

Both income inequality and violence are directly linked to and a consequence of weak democratic governance and corrupt practices.

Drugs, weapons and human beings can hardly be smuggled without bribe paying, abuse of state resources is hard to achieve when there are autonomous watchdog institutions, and policy decisions cannot favour specific groups against the benefit of the majority when there is transparency.

All these factors, bribes, lack of autonomy, impunity and limited access to public information, among others, enable corruption in modern-day Latin America.xv Guatemala has a record 98 per cent impunity rate, showing a dramatic lack of justice in the country. In Mexico, seven journalists have been murdered up to mid-November in this year alone for doing their job. During the 2012 Venezuelan presidential campaign, President Chavez’ abuse of state resources shows that out of

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5271 minutes of airtime that he used, according to law, to transmit issues of state affairs from January to July, more than three-quarters were broadcast in July alone, when the official campaign period started.

It is clear that besides growing economies, what Latin America urgently needs are the policy decisions and actions that support fairer distribution of wealth and democratic powers.

Nonetheless, in some countries of the region, there is good momentum to continue building anticorruption efforts, hand in hand with growing economic perspectives. A positive example this year is Brazil, where together with the approval and implementation of important laws like the Clean Record Bill, which limits the access of individuals with pending judicial cases to politics and the Access to Information Bill, the Mensaläo (or “Big Monthly Payment” in English) case has shown that impunity does not prevail for cases of corruption. Sentences that added up to more than 250 years in prison were given to 25 out of the 37 individuals who were on trial, including prominent political figures. To get there, the region needs leaders that think about long-term policies, stable and modern institutions, as well as citizens able and willing to exercise democracy in their daily lives.xvi

13: Mensaläo Case at the Brazilian Supreme Court. From Pulsamerica.co.uk

CCPCJ 2 Although a problem that has become widespread throughout large portions of the developing world, efforts to tackle corruption have only started to surface in the last couple decades.

Most anticorruption programs rely on legal and financial institutions- judiciary, police and financial auditors-to enforce and strengthen accountability in the public sector. The tacit assumption is that more and better enforcement of rules and regulations will reduce corruption.

However, in many poor Latin American countries, the legal and financial institutions are weak and often corrupt themselves. In such a setting, providing more resources to enforcement institutions may not be the right solution to the problem of corruption. In Northern Mexico, for example, when the elite units of the Mexican police obtained more advanced guns to combat crime, they simply sold these guns to the mafia at higher prices than the previous, less powerful, weapons could fetch. First and most urgently, scant evidence exists on how to combat corruption. Because traditional approaches to improve governance have produced rather disappointing results, experimentation and evaluation of new tools to enhance accountability should be at the forefront of research on corruption.

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14: From Herald Scotland.

Corruption has taken a great toll on the recently increasing economic growth of the region.

In recent years, an increase of corruption of two points in a ten-point scale in Latin America has lead to a 0.5% decrease in GDP and a 4% decrease in FD in the region. Although the corrupt action by itself does not impose the largest social cost, the primary social losses of corruption come from propping up of inefficient firms and the allocation of talent, technology and capital away from their socially most productive. When profits or potential profits are taken away from firms through corruption, entrepreneurs choose not to start firms or to expand less rapidly. Entrepreneurs may also choose to shift part or all of their savings toward the informal sector, or to organize

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production in a way that the need or demand for public services is minimized. Moreover, if entrepreneurs expect they will be forced to bargain over bribes in the future, they have incentives to adopt inefficient "fly-by-night" technologies of production with an inefficiently high degree of reversibility, which allows them to react more flexibly to future demands from corrupt officialsand more credibly threaten to shut down operations. Corruption also affects the allocation of entrepreneurial skills. When corruption is widespread and institutionalized, some firms may devote resources to obtaining valuable licenses and preferential market access, while others focus on improving productivity.xvii A recent example is that of Wal-Mart in Mexico. In September 2005, a senior Wal-Mart lawyer received an e-mail from Sergio Cicero Zapata, a former executive at the company’s largest foreign unit, Wal-Mart de Mexico, describing how the subsidiary had paid bribes to obtain permits to build stores in the country. Wal-Mart sent investigators to Mexico City and found a paper trail of hundreds of suspect payments totaling more than $24 million, but the company’s leaders then shut down the investigation and notified neither U.S. nor Mexican law enforcement officials.xviii However, by and large the most harmful negative effects of corruption are the exacerbation and its connection with organized crime. The socalled “Narco states“ pose an ongoing threat to regional and international security as the so-called “narcotraffickers” or other non-state actors already undercut institutions of the political system and therefore have a negative impact on democratic governance. In a region where a large proportion of the population is rural and dedicated to agriculture, drug production is widespread and

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transport is easy. Human trafficking is, beside the dominant drug market, an important branch for organized crime to generate incomes. UNODC (2008) estimates that human trafficking worldwide is worth 32 billion in these states annually. The laundering of its revenues is crucial to actors of organized crime therefore international standards on national legislation and policies for fighting money laundering are essential. In Latin America and the Caribbean, the percentage of violent crimes due to the use of firearms is higher than in other regions. Violence and the availability of small arms are intertwined and fueling the spiral of violence, hence protection and attack are relative concepts in zones of constant violence. In these states, structured groups are committing serious crimes through concerted action by using intimidation, violence, corruption or other means, and carry out illegal activities. Organized crime has been adopting mechanisms of the globalized economy in terms of a high degree of flexibility, the ability to adjust to market changes and the use of socially weak segments of society for their means. While organized crime gets more access to and through politics, already weakened states in Latin America are put under serious pressure.

15: From Jobs With Justice.

CCPCJ 2 The reach of actors of organized crime into the political sphere is, among intimidation and clientelism, mainly based on corruption. The level of organized crime is correlated with the failure in the delivery of basic political goods by the state.

The stability of state institutions grants predictability to political processes, an impartial and effective judiciary guarantees individual rights, and the protection of political rights allows citizens to vote and to compete for public offices. If corrupt politicians undermine these rights the trust in institutions and democracy are diminishing and contribute to the growth of criminal networks. Corruption has diverse functions to maintain or newly perceive power through infiltrating police and military forces, political institutions of decision making such as national or local parliaments, judicial decisionmaking or the media. The strength of institutions decides over the vulnerability to corruption and can only be improved by building agencies and institutions that are granted with high levels of independence, impartiality and financial resources to address corruption efficiently.

Again, the drug market and its incomparable high revenues make it difficult to create alternative incentives. Breaking the high levels of income through partial legalisation and decriminalisation, better payment for public

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16: From Hispanically Speaking News.

servants and employing better-trained staff are possible ways. Besides corruption, impunity is another challenge on the political agenda. In many Latin American countries impunity is a historical factor (military dictatorships) that has risen again in the last decade since actors of organized crime

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have become more influential in judicial and security sectors.

Apart from the economic and political levels, which show several levels of constructive intervention, the social level also has to be integrated when searching for new approaches to tackle the phenomena. The level of organized crime is directly correlated with the failure of the attainment of general material well being by the population under the economic system.

Socioeconomic inequality and the resulting mistrust in politics are due to a missing integrative social policy. The widening of the social gap is obvious in Latin America but also true for most European countries. Globalization has lead to growing worldwide urbanization that has created fertile conditions for the growth of gangs, cartels and other non-state actors connected to organized crime. They often occupy the vacuum created by the retreat of the social welfare policies of the state.

Especially youth active in organized armed violence demonstrate the failure of social politics that include those who didn’t profit from globalization processes on the economic level.

They could also be interpreted as a form of resistance that includes millions of people. In the midst of political legitimacy, the boundary between resistance and crime becomes increasingly blurred.xix

17: Drug rings in Mexico has been increasing in power and influence. From The Guardian.

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The Northern Triangle The Northern Triangle is the name given to three countries in Central America suffering from some of the highest levels of violence and crime in the Latin American region: El Salvador, Guatemala and Honduras. Incidents such as the May 2011 massacre on a farm in Guatemala’s Petén region, resulting in the murder and decapitation by drug gangs of 27 peasant farmers and their families, serve to underscore the serious threat to human rights, democratic governance, and the rule of law posed by organized crime in Central America. The international community has begun to address the burgeoning crisis and commit significant resources to the fight against crime and violence; indeed, not since the Central American wars of the 1980s has the region commanded so much attention in the international arena.xx The growing presence and activities of organized crime groups in Central America has worsened an already alarming crisis of citizen security. In mid- 2010, the Inter-American Commission on Human Rights reported that Latin America had the highest levels of youth violence in the world. UN figures indicate that the rate of youth homicide in Latin America is more than double that of Africa, and 36 times the rate of developed countries. In El Salvador alone, sixtyeight percent of homicide victims are between the ages of fifteen and thirty-four, and nine out of ten victims are male. Crime and violence in Central America have multiple drivers, but none appears more responsible for the dramatic increase in violence than the illegal drug trade, Murder rates in the Northern Triangle are five times that of Mexico, making the sub-region the most dangerous in the world outside of situations of open war. The World Bank noted in 2011 that drug trafficking constitutes “the main single factor behind rising levels of violence in the region,”

CCPCJ 2 indicating that crime rates are more than 100 percent higher in drug trafficking “hot spots” than in other areas. Crime and violence have become a serious development issue, with “staggering economic costs” at the national level.

Honduras has recorded one of the highest homicide rates in the world, upwards of 60 murders per 100,000 inhabitants. Honduras is one of the world's most dangerous countries for journalists. The 2009 coup against President Manuel Zelaya facilitated the expansion of organized crime in the country. Honduras’ international isolation and the termination of assistance and information-sharing deprived the government of resources to fight transnational criminal organizations.

18: From The Economist.

The growing activity of organized crime groups in Central America takes advantage of the region’s weak and fragile institutions as well as its geographical proximity to North American drug markets. While there is significant variation among the countries of the region, in most cases dysfunctional judicial systems have long fostered high levels of impunity and corruption. The region’s porous land borders and extensive coastlines are not adequately controlled, making them vulnerable to exploitation by criminal groups.

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19: Gang member apprehended by the police in El Salvador. From The Economist.

El Salvador’s murder rate for people aged 15 to 24 is 94 per 100,000, the highest in the world. Cold War networks originally formed to transport weapons and people who survived the peace processes have transformed into criminal entities led by former members of the security forces or former FMLN combatants. El Salvador serves as a pipeline due to its lengthy unguarded Pacific coast, porous borders with Guatemala and

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Honduras, and the small Gulf separating it from Nicaragua provide land and sea trafficking routes.

Organized crime presents a challenge to nascent institutions and political structures in El Salvador, which are vulnerable to corruption. Cartels infiltrate political leadership and pump resources into local and municipal elections in order to ensure that specific trafficking routes are protected.

Guatemala is fighting two wars: one with organized crime and one with itself, confronting a legacy of corruption and impunity rooted in the 36-year internal armed conflict. Organized crime in Guatemala was sheltered by the armed conflict and grew following the end of the war. The Colombian cartel incursion into Guatemala was ultimately facilitated by military corruption. It was not until the 1996 peace accords and the withdrawal of the military—the main contacts for Colombians—that Colombian influence declined and the Mexican cartels entered to fill the vacuum.

As a result of nepotism and an ineffective public service law, the public sector in Guatemala has historically been weak. Comprehensive police reform is impeded by a lack of financial resources, the effect of the government's inability to convince the Congress and society to raise taxes and the country’s ability to adopt and implement laws and policies is hampered by the extreme fragmentation of the political system, reflected in the composition of the legislature. xxi Colombia In the Latin American region as a whole, the country that shows the biggest change according to the Corruption Perceptions Index sources this year is Colombia.xxii Despite the government headed by president Santos pushing for many institutional reforms, including a new

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anti-corruption law, it is now time for these reforms to show concrete outcomes and for the judiciary system to tackle impunity related to corruption.xxiii

20: Most of the violent groups are located in remote areas away from the central government and where state influence is weak.

From The Pulitzer Centre.

Although the FARC and the AUC have been mostly eradicated, remaining factions will monopolize an important part of the organized crime in Colombia. Most of these groups have split into smaller factions, making them much harder to detect for the government and to hold accountable. Furthermore the ongoing judicial investigations of the “Para-politics” scandal, in which government officials were found to have ties with criminal groups, shows the infiltration of local public institutions by and involvement of legislators with the AUC.xxiv Both organizations have links to groups of organized crime and themselves fulfill criteria of organized crime actors, being at the same time protagonists of the political conflict. The Colombian state has lead in recent years under the presidency of Álvaro Uribe a campaign of promoting its concept of “democratic security policy” that focused on the demobilisation of the paramilitaries and fighting the FARC. The “democratic security policy” led to grave human

CCPCJ 2 rights abuses committed by state agents, victimising especially the rural and urban poor and enhancing the internal displacement of Colombians living in the conflict zones. The “democratic security policy” approach has been supported by the Plan Colombia, the US governmental support of the “anti-drug strategy”, with Colombia therefore receiving the third highest amount of US military aid. The aimed eradication of coca crops through aerial spraying of herbicides proved to be far from effective, it only lead to a displacement of coca crops since peasants constantly have to move their fields.

Colombia remains to be the main cocaine producer with 80.000 hectares under coca cultivation in 2008 and several hundred laboratories for cocaine production. xxv

21: Violence in Ciudad Juarez is one of the highest in the world.

From RNL.nl

Mexico Mexico is currently divided into zones that connect the country and the crucial transshipment

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points of the Caribbean, Central America and the Pacific. Along these channels the battles between cartels take place that have in parts replaced the Colombian cartels as the protagonists of the cocaine trafficking business towards the U.S. and Europe. The most affected areas are located in the north of the country (e.g. Ciudad Juarez with a death toll of around 1000 murders in the current year 2009xxvi), but also the south is now affected and divided into battle zones of the cartels and violent clashes between armed forces and drug cartels. But since corruption is endemic in the police forces of Mexico, it is often unclear who is fighting on which front. Certain is that the concept of modern democratic statehood is highly affected by the very high level of violence.

The young Mexican democratic system reacts very vulnerable to a death toll of around 6000 people in 2008. The cartels have decided to confront the Mexican state directly after former President Fox and current President Calderón have made the security agenda their prime political goal. By doing so, armed forces have been deployed to fight the cartels on critical points scattered over the country. Thereby, the Mexican government admitted that the federal police alone is not able to fight the cartels that are home to legions of deserted soldiers and police men who are familiar with the system which makes bribing and infiltrating much easier. xxvii

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22: Mexico’s Institutional Revolutionary Party has become a symbol of government corruption. From RT.com.

The deficiency of the Mexican institutions of public security, justice system and the defence and intelligence units is due to the fact that the transformation of the Mexican state in the 1980s and 1990s has left out the reformation of the state’s institutions. This deficit is reflected in the current crisis of public security. The corruption of the police forces and the inability of the Mexican state to enforce an adequate police reform is one of the reasons of the lack of trust in political parties. xxviiiThe latest midterm elections in Mexico show a vast disappointment in the society towards politics in general (e.g. constant corruption scandals of politicians involved in drug deals have enhanced a feeling of indifference) and a tendency towards a re-traditionalisation towards the PRI. The media, trade unions, lawyers and other democratic actors are harassed by the cartels and their political mercenaries. The “narco notes” often include new accusations of politicians or police and army officers having relations with one of the cartels to fuel the feeling of mistrust. xxix

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23: In 2012, Mexican authorities arrested 35 police officers for ‘helping’ members of the Zetas gang. From BBC.

Groups of organized crime in Mexico have changed their tactic from a covert way of operating to direct confrontation. That is not only an indicator for a massive gain in power, it also shows that an obvious interest of the cartels exists to maintain the former cliental structures of political power where actors of organized crime had “their place” that is now at risk. In confronting the state, organized crime groups move into a sphere that is traditionally inhabited by groups with a political agenda such as Paramilitaries, Guerrilla groups or other non-state actors who aim to directly confront the state and address the political system.

Some observers compare the Zetas, a Mexican hit man group of ex-elite soldiers with the Colombian paramilitaries since they are also intertwined with the army and expanding their activities from illicit trade to extortion. The blurring of defining elements of actors and their role in a conflict is one characteristic of the changing relationship between the regular market, illegal markets and the state.

Within one group the economic and political incentives blur: the political becomes more economic and at the same time the economic incentives reach deeper into the sphere of politics by the move in of drug lords into a national

CCPCJ 2 parliament and the financing of election campaigns with drug money such as in Colombia.

24: Colombian citizens protest against the FARC in Cali, Colombia. From The Age.

The Colombian as well as the Mexican conflicts are neither solemnly economic nor purely political and surely differ in crucial points. Social cleansing is a unifying â&#x20AC;&#x153;side effectâ&#x20AC;? promoted by high levels of impunity that builds the incentive for local governments to get rid of (left-wing) people that disturb business and cliental politics like human rights activists, lawyers and journalists. Organized Crime has gained its power from the weakness of the legal and constitutional powers and within a process of infiltration of the political system. xxx Solidarity, equality and empowerment of the excluded are not integrated in the governance of crime that is rather based on greed and fear. But the excluded are part of the structures that built organized groups like the mafia as well as local

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heroism incorporated in a culture of protection by drug lords that replace social and protective functions of the state. Neoliberal politics widened already existing non-governed spaces that have easily been occupied by groups of organized crime who had often been part of cliental structures on the local level but have never been globally connected like in our days. Illegal forms of organized crime groups have restructured themselves into flexible transnational operating units that are international linked as an adjustment to globalization and the global economy.

The structural conditions (socioeconomic insecurity, absence of a welfare state) have not been addressed by Mexico and Colombia since both current administrations react with traditional security tools and therefore ignore the root causes that give rise to the emergence of new non state groups i.e. bandas criminales that fight against the government and at the same time with parts of the same against democratic actors.

The role of organized crime in the erosion of democratic governance is marked by zones of fragile statehood, the undermining of political institutions, the replacement of social policies by non state actors, the bribing of political actors and the illicit financing of political campaigns. The most important factors for upholding a criminal system are therefore income generation through the drug trade and human trafficking, and the intensification of political power through corruption and impunity.xxxi

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governance. Although counter-drug strategies are recognised as failed by policy makers as well as security agents, police staff and others, policies remain unaltered. One of the reasons for that is the absence of consensus between the U.S., Europe and Latin America on how to reduce demand and supply in a more effective way. xxxii 25: One of the criticisms of Plan Colombia is that it is another policy designed by the US in order to establish its influence in Colombia. From Colombia Politics.com.

In regard to the reduction of drug related conflicts the crucial point is the illegality of drugs.

As the global drug control regime is inherently prohibitive, it is infeasible to offer non-state actors a negotiated solution whereby they would be allowed to retain the drug trade. Therefore, compromise is a very seldom solution. Conflict between the state and the drug cartels, as in Mexico, has only a winner/loser solution or an illegal/non official compromise as possible outcomes to choose. The politics of drug eradication and repression have not lead to any positive outcomes so far. It has often been combined with “counterinsurgency” or “antiterrorist” strategies in forms of military aid (Plan Colombia and Mérida Initiative). It has not lead to any reduction in drug production or traffic or the reduction of drug related human rights abuses. Cocaine availability and demand have been increasing in Europe and Latin American countries. Repression has on the other hand lead to a growing number of prisoners in the United States and Latin America and most of the times their continuing criminal activities, especially gang violence, inside prison. New gangs are formed or persist in prison that spread back to their communities. The current treatment of drug related conflicts is increasing harm to democratic

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26: Drug use in developed countries such as North America and Western Europe are mainly provided by Latin American conflict countries. From Business Insider.

What should be done?

The described process of “organized crime penetration” of public and political institutions has to be stopped since democratic governance is considered to be a normative goal for the international community. The political process has to offer solutions on different levels. Organized crime can be tackled on three fronts: the economic one that would require a new global regime of controlling illicit trade; the social front which would include the creation of a renewed level of trust in politics and reduce incentives to join organized crime by integrating marginalized groups, and thirdly the political front that would require the implementation of new political concepts and institutions on the national, regional and global level. xxxiii

CCPCJ 2 Solutions to the global drug trade are crucial since it is the basis of organized crime.

Arms trafficking, money laundering, among other criminal activities, is considered to be secondary effects of the illegal drug economy. The international community has to create integrated and cooperative strategies for addressing organized crime and drug trafficking. A more balanced approach to the supply and the demand side would reduce the harm of current anti-drug policies: strategies on the demand side should focus on prevention and the support of public health. The political strategies attacking the supply side should no longer focus on the eradication of illicit crops since it has only lead to spread of mainly coca cultivation across the Latin American region. A paradigm shift in international antinarcotics policies is needed and initiatives such as the latter ply for an open debate about future politics in that field that could have a chance with the new Obama governments security policy. One alternative approach in the debate on future antidrug policies is to tackle the revenues generated by the drug business rather than the drugs themselves and could be one strategy to fight organized crime.

Also drug regulation could show alternatives to the existing prohibitive regime. The latest approval of a law in Mexico that decriminalises the personal possession of small amounts of drugs is a sign for a growing recognition that the current prohibitive

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regime is contra productive. Brazil launched a national Commission on Drugs and Democracy in 2009 to develop more balanced strategies. It discusses the key principles for a proposed reform of the Brazilian drug law, so as to move away from the current situation where the majority of arrests and harsh punishments are directed at low lever users and dealers, where the more violent and powerful dealers remain untouched. xxxiv

27: One of the most prominent anti corruption attempts has been by Brazilian President Dilma Roussef, who at the beginning of her term purged the upper echelons of the Brazilian government. From Voxxi.

The containment of small arms and light weapons is another important factor for implementing violence reducing instruments. A broad range of global, regional and sub-regional norms on small arms trade exist, but are not implemented on the global level. Legal arms sales in zones with low regulation contribute to the

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economy in a reasonable way, so 90% of the light weapons used in Mexico come over the border from the United States. Fields of action to reduce the crucial impact of trading in small arms and light weapons should be the implementation of international and regional norms such as the UN Firearms Convention and on the regional level the Inter-American Convention against Arms Trafficking among others. Border zones should be stabilized through the exchange of intelligence and anti-corruption methods such as the replacement and better payment of customs officials like in Mexico where 700 custom inspectors have been replaced by better-paid and educated inspectors.xxxv On the political level the fight against corruption and impunity is a precondition to strengthen governance and limit the influence of organized crime on democratic structures. The interface of corruption and organized crime such as the funding to political parties and campaigns is a crucial aspect to concentrate on. Transparency on the origins of funds for political parties has to be improved, especially at the local level. A preventive strategy is the training of civil and judicial servants to raise awareness on the effects of corruption on democratic institutions. Also research on corruption as a part of organized crime is necessary as well as cooperation among the respective organisations. The implementation of regional and international anti-corruption norms and conventions such as the anti-corruption conventions of the OECD, the UN and the OAS should be strengthened. Also regional organisations should pay greater attention to corruption and organized crime such as the UNASUR, which is currently implementing a special council to enhance the fight of organized

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crime on the regional level. The multilateralization of justice through the implementation of transnational justice courts could be a future option to fight impunity. The role of the media as an observer on corruption and organized crime has to be strengthened since it is attacked by for example the Mexican cartels.xxxvi

28: Events such as the International Conference of Security in Guatemala are a step forward in the efforts of bringing the issue of citizen security and the link with corruption to international attention. From Dialogos Americas.

The international community has to acknowledge the growing impact of organized crime on democratic governance and work on creating mechanisms to reduce it. In LAC there is a growing call for international responsibility and engagement of international governance policies to reduce the negative impact of organized crime to democratic politics.

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Questions to Consider

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1

What are the main issues that the CCPCJ, the Economic and Social Council and/or the General Assembly should focus on in order to reduce corruption? Is it social? Infrastructural? Economic?

Political?

2

Should the CCPCJ focus more on the more pressing, more dangerous consequences of flawed governance such as drug and human trafficking or should it tackle the problem from the root?

3

Corruption is a delicate subject since it is an ill that affects the nature of a nation’s government. If it is the government itself that is suffering from corruption, how can the CCPCJ have its anti-corruption policies implemented without threatening the country’s sovereignty?

4

How can the UN assist ‘weak states’ who have been taken over by organized crime and whose system of government has fallen to corruption?

5

How can the UN offer assistance when organized crime becomes transnational and highly evasive of authorities?

6

How can corruption be effectively identified and remedied?

7

What should the procedure be when a politician is found to have engaged in corrupt practices?

(Consider diplomatic immunity)

CCPCJ EC TOPIC II.

International Money Laundering Topic History !

Broad Overview Money laundering, in essence, is the “placing” of illegally acquired money into the official economy, “layering” it by rendering the origins of the money unclear through a series of meaningless financial transactions and, finally, “integrating” the money into the economy through consumption.xxxvii Even this very skeletal definition of money laundering gives us an inkling of its origins. Ever since man has engaged in illegal activity that has elicited monetary gain, and ever since there have existed authorities against illegal activity and illegally acquired funds, money laundering of money has existed as an accomplice.

According to one study, “no one can be really sure when money laundering first began.

However, we can be confident that it has been going on for several thousand years. In… China, merchants some 2000 years before Christ would hide their wealth from rulers who would simply take it off them and banish them. In addition to hiding it, they [the merchants] would move it and invest it in businesses in remote provinces or even outside China.”xxxviii Since then, four thousand years ago, money laundering has evolved alongside the evolution of financial systems. Since the early twentieth century, with the rapid rise in population and more numerous and more complex financial transactions, national and international financial systems have evolved towards greater sophistication and to cover a wider scope.

Governments have framed wide-ranging laws to address all sorts of financial malfeasance and irregularities. Within this framework of

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governmental caution, addressing money laundering has been a matter of some importance.

Governments typically hold the view that money illegally acquired is often associated with activities such as drug-peddling, prostitution, extortion, kidnapping, et al. So, the view goes, the integration of illegal money into legal channels can be made more difficult, the incentive for seeking money through illegal means would also decrease.

Fighting money laundering, therefore, is also a means of fighting crime, illegal prostitution, extortion, smuggling, sale of illegal drugs, and other illicit activities.

But international money laundering is a concern not just because of the dubious sources from which illegal money tends to emerge. While it is true that the central purpose of money laundering is to make illegal money legal, a lot of research suggests that the same money tends to be employed for further illegal activity. Dirty money emerging from dirty activities is circulated around, cleaned up, and then used for dirty purposes.

There’s a cycle at play. The extreme end that illegal money finds itself put to use for is terrorism.

In recent decades, terrorism has gained in sophisticated, and has also seemingly become more expensive. For evidence we need just ask a simple question: Where and how do entities such as the Hamas, Lashkar-e-Taiba and Al Qaeda acquire the money to carry on audacious acts of terrorism such as 9/11 and 26/11? How are the millions required for such acts collected, brought together, and finally put to use?

Research has found that a lot of terrorism is supported (terror financing) by informal channels of finance, often related to money laundering. People who blow up planes rarely

CCPCJ 2 acquire the money to do so from official channels of incomes. They tend to do so through gangs involved with drugs, extortion, prostitution, trafficking, and other nefarious undertakings.

The relation between money illegally acquired and money illegally, briefly capitulated above, has placed as much focus on the illegal acquisition and transfer of money as on its application in the form of terrorism.xxxix The UN’s View on Money Laundering Money laundering has several ill consequences. But, as the UN Office on Drugs and Crime notes, “most disturbing of all, moneylaundering fuels corruption and organized crime.

Corrupt public officials need to be able to launder bribes, kick-backs, public funds and, on occasion, even development loans from international financial institutions. Organized criminal groups need to be able to launder the proceeds of drug trafficking and commodity smuggling. Terrorist groups use money-laundering channels to get cash to buy arms. The social consequences of allowing these groups to launder money can be disastrous.

Taking the proceeds of crimes from corrupt public officials, traffickers and organized crime groups is one of the best ways to stop criminals in their tracks.”xl

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The US and Money Laundering One way of understanding the history of money laundering is to look at its history in a particular country. In this section, we illustrate a brief history of the phenomenon in the US. Money Laundering has a long history in the US as it does in other places. The US government’s Internal Revenue Service (IRS) Criminal Investigations division found its first large-scale case of money laundering—entailing opium trafficking in Hawaii—in 1920. There was little, however, that the government then could do to address the matter, given the inadequate legal structure in place at the time. Tax evasion was the only charge it could bring to bear against the traffickers.

It was another fifty years, not until 1970, before the US government passed what was called the Bank Secrecy Act (BSA). According to the IRS website, “the BSA created the paper trail needed by law enforcement to track untaxed dollars and the millions of dollars being laundered through financial institutions. IRS has been able to follow this paper trail to disrupt and dismantle, through investigation, prosecution and forfeiture of assets, the country's major drug and money laundering organizations.”xli Since 1970, numerous other laws complementing the BSA have furnished the

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US government with a greater ability for combating money laundering. These include: " " " " " "

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Money Laundering Control Act (1986) Anti-Drug Abuse Act of 1988 Annunzio-Wylie Anti-Money Laundering Act (1992) Money Laundering Suppression Act (1994) Money Laundering and Financial Crimes Strategy Act (1998) Uniting and Strengthening America by Providing Appropriate Tools to Restrict, Intercept and Obstruct Terrorism Act of 2001 (USA PATRIOT Act) Intelligence Reform & Terrorism Prevention Act of 2004#$%%

In the last several decades, particularly since 9/11, the US government has enhanced its watchfulness on all informal, underground, and illegal channels of money. Its aim is to flag all such alternative financial transactions, with the view to drastically eliminating illegal monetary acquisition as well as illegal applications of such money.

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Current Situation Introduction to International Money Laundering Today While the world of money laundering is often impregnable and murky, the one thing we can be fairly confident of is that money laundering, and attempts to address it, are spreadeagled all over the world.

For instance, in August 2013, the Papacy announced its decision to seek more efficient methods for combating money laundering. With this, the Vatican seeks to bring its financial transactions and dealings within the ambit of international regulatory standards. Another example, also from August 2013, entails Chinese investors in French vineyards. France, eager for injections into its economy, has demonstrated greater and perhaps hazardous permissiveness towards foreign investments. The consequence has been that many French vineyards bought, for instance, by Chinese investors have rapidly been resold several times over. As a result, at this point, French authorities find it difficult to ascertain the real owners of particular vineyards. French authorities have grown increasingly suspicious, and are moving to bring charges of money laundering against some of the international investors.

These are only two amongst an assortment of recent instances concerning international money laundering.

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The following paragraphs examine the issue in greater depth through the following categories: 1. Underground economies, money laundering, and the official economy 2. Corruption and government officials 3. Domestic and international crime, such as sale of illegal drugs 4. Terror financing 1. Underground Economies, Money Laundering, and the Official Economy Money laundering adversely affects the official economy of a country. Money that is laundered typically has contact with the underground or parallel economy. Every time money is successfully “laundered,” that money is an injection into the official economy. Depending on the circumstances, such money can contribute to inflation, and likely to remain untaxed.

Governments therefore lose on substantial tax revenues because of the existence of underground economies. Evidence of money laundering can also severely taint the reputations of financial institutions. Given that such institutions depend on a reputation for managing others’ money with integrity, allegations of money laundering can put them out of work.

Because, at least, of these two ill effects of money laundering—harm to governmental and

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private institutions—financial institutions of almost all countries have drawn a variety of regulations for combating money laundering.

Private institutions must meet these, and the costs of not doing so can be severe. HSBC, for instance, was recently fined $1.9 billion for an inadequate regulatory framework for combating money laundering.

We might be tempted to think, at this point, that regulatory puritanism is always and necessarily a good thing. After all, what’s the harm in some extra paperwork if the benefits entail fighting agents involved in smuggling drugs and guns, prostitution and trafficking?

The challenge of addressing money laundering, however, is more complicated.

Abiding by regulations is expensive. As a result, whereas it is manageable for an HSBC to come around and enhance its regulatory standards in western and mostly developed and developing countries, it is not always financially plausible for it to do so in under-developed countries. Barclays, for instance, announced in May 2013 that it would cease banking services for 250 money transfer companies, over concerns regarding money laundering and terror financing. But its decision to do so has erased one of the only channels of remitting funds to Somalia, a country that depends greatly on remittances. And so, in our attempt to combat money laundering we are also, in parallel, ending up clipping the ability of Somalians to receive money from friends and relatives abroad.

As we think about combating money laundering, it is therefore incumbent upon us to also keep in mind the bigger economic and political context within which it operates. Our

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solutions for one set of problems should not end up creating problems for another set of issues.

2. Corruption and Government Officials Money laundering has a demonstrated link with political patronage and political turmoil.

When societies and economies undergo rapid shift, there are often big winners just as there are those devastated. With the fall of the Soviet Union and increased privatization of the Russian economy, for example, various politicians were able to furnish their family members, friends, and associates with sizeable financial benefits. Since these benefits were illicit, they were siphoned off to other countries such as Cyprus and Switzerland that allow for relative financial opacity. The link between political turmoil, patronage, and money laundering is true not only for Russia but for most countries, including, for instance, Afghanistan after the fall of the Taliban, and India, where politics and patronage seem to ubiquitously go hand-in-hand.

The Barclays-Somalia example offers one glimpse into the complexity of money laundering.

Another reason why addressing money laundering is complex is that simply creating greater regulations and government watchdogs can be counter-productive when these entities, themselves, are corrupt. For instance, evidence suggests that the Russian government’s increased financial regulations are mostly only a strategy for exercising greater political control over the country’s financial elite. With its heightened powers, the government, when it chooses to, can pull the strings on someone who incurs its disfavor—threatening them with closure of their bank accounts.

CCPCJ 2 Because of the problem of corruption, countries are increasingly moving—and are under pressure to move—under the ambit of international regulatory bodies that seek to combat money laundering.

3. Varying International Secrecy Laws and Tax Evasion This section is related to sections 1 and 2.

One of the central aspects of money laundering today is the advantage “launderers” take of varying secrecy laws in different countries. Money is shifted from a country with more stringent laws, such as the US, to one with relatively less stringent laws, such as Panama. As a consequence, money that would otherwise have been taxed is left untaxed, or taxed to a far lesser extent. The host country (Panama) benefits from the entry of such foreign money into its shores. But the home country (US) loses in a variety of ways. It loses large amounts of tax revenue, as well as the investment potential of the money that is flown out of its shores.

Most countries are increasingly converging on an agreed set of standards for combating money laundering. But it is probably going to be several years before all countries can converge on, for instance, a single tax code. Until then, money will continue to be shifted around for tax evasion, which of course has a murky link with money laundering.

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4. Terror Financing It might at first seem strange to include terror financing as a section since, in obvious ways, money laundering and terror financing are conceptual opposites. The former looks at the reincarnation of illegal money as legal. The latter, on the other hand, cares little about the source of money, and seeks simply to use money for illegal purposes.

Even so, for many countries today, money laundering features within the broader context of unaccounted money and the underground economy, which have a link with terrorism. The one issue that many countries are most worried about is the application of unaccounted and illegal money for illegal purposes, especially for terrorism.

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Bloc Positions !

Many western countries and (informal allies) of western countries—such as South Korea, India, and Israel—will likely favor muscular laws for combating money laundering. Their particular incentives for such a position may differ; but at least one common reason for their convergence will be their shared concern over terror financing.

Countries against “western hegemony” will, at least on the surface, oppose western attempts at initiating worldwide standards for combating money laundering. One can think of China, Russia, North Korea, Iran, and Cuba as belonging in this category. But these countries, like most others, have plenty to gain from strict anti-money laundering laws. It is plausible, therefore, that whereas these countries are against money laundering in principle, they will likely propose solutions other than those proposed by the West.

A group of countries will likely favor antimoney laundering measures in principle, but at the same time resist greater financial transparency.

Immediate examples are Switzerland and Liechtenstein, which thrive on an opaque banking system. These countries would argue in favor of customers’ rights and banking traditions.

Various countries, including those in the “Muslim world,” will likely make the case that while international standards for combating money laundering are desirable, traditional practices for monetary exchange must nonetheless be valued and respected. These countries would defend, for example, the traditional hawala system of money transfer.

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The above are just a few amongst a wide variety of possible blocs.

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Questions to Consider

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1

Are we moving towards a single international financial system? If so, who gets to decide the rules? Is there any space for dissent? What about the hawala system for monetary exchange? Can it coexist with the increasingly homogenous western-driven international financial system? If not, are we seeing something of a cultural war—a war among the world’s biggest cultures for imposing their ideas and institutions upon the rest of the world?

2

How do disruptions such as the Arab Spring and the Cypriot economic crisis affect the international flow of money and money laundering?

3

Is what we term “money laundering” always bad? What if money laundering for one person is no more than entirely legitimate money exchange for another? Who gets to decide what is licit and what illicit?

4

Addressing money laundering seems to require empowering governmental and inter-governmental bodies. How are we to do this, while also ensuring that governments remain accountable? In other words, how can we be sure that governments, themselves, will not misuse their heightened powers?

5

Why do certain people choose to bypass official channels of money transfer? What expectations do they have of success? Why are all the laws and law enforcement personnel of the world unable to stop them?

CCPCJ DB

Role of the Committee The Commission on Crime Prevention and Criminal Justice is the central body within the United Nations system dealing with crime prevention and criminal justice policy, including trafficking in persons, transnational crime and aspects of terrorism prevention. It monitors the use and application of relevant United Nations standards and norms and guides policy development in response to emerging forms of crime.

The Commission offers Member States a forum to exchange expertise, experiences and information, to develop national and international strategies and to identify priorities for combating crime. It coordinates its efforts with other United Nations bodies that have specific mandates in the areas of crime and criminal justice, including the Conference of the Parties to the United Nations Convention against Transnational Organized Crime and the Conference of the States Parties to the United Nations Convention against Corruption. The Commission also acts as preparatory body to the United Nations Crime Congresses.xliii Specified in its mandate, the function of the CCPCJ includes international action to combat national and transnational crime, including organized crime, economic crime and money laundering; promoting the role of criminal law in protecting the environment; crime prevention in urban areas, including juvenile crime and violence; and improving the efficiency and fairness of criminal justice administration systems.xliv

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Structure of the Committee The CCPCJ operates under regular GA Parliamentary Procedure, with the exception of the possibility to suspend rules of debate in case of an emergency or crisis during committee, or as the dais sees fit.

Membership The Commission is composed of 40 Member States elected by the Economic and Social Council, with the following distribution of seats among the regional groups: a. Six for African States; b. Five for Asian States; c. Eight for Latin American and Caribbean States; d. Four for Eastern European States; e. Seven for Western European and other States.#$& Decisions of the CCPCJ are focused and action-oriented but may only offer suggestions or condemnations.

It utilizes the mandates of several other UN organs such as the UN Development Programme, the GAs and international treaties to create and enforce international law and implement programs and initiatives.

We hope to see a lively and interactive debate between delegates and participation from all delegations in the committee. Performance will be evaluated based on significance and frequency of contributions to debate, resolution drafting and negotiations. Pre-prepared speeches are discouraged and pre-written resolutions are prohibited. Laptops will only be allowed during unmoderated caucuses and only for the purpose of writing resolutions or conducting relevant research.

Position Papers Position papers should be turned in by the first committee session on January 23rd in order to be eligible for awards. If the delegates would like feedback, they must be sent via email to Senior Staffers (Topic A: Corruption and Organized Crime in Latin America to Angie Hanawa at angie.hanawa@yale.edu and Topic B: International Money Laundering to Abhimanyu Chandra at abhimanyu.chandra@yale.edu) by January 9th.

They should be roughly 1-2 pages on each topic, and should outline the delegateâ&#x20AC;&#x2122;s position on the topics and original research, not restate what was said in the topic guide.

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Please also make sure you are registered on the delegate forum, your advisors should provide you with a sign up ink. For the latest information, updates, topic guides and more, visit Yale Model United Nations online at: http://ymun.yira.org For the second year, YMUN will be offering a competitive essay competition. For the rules and guidelines visit: http://ymun.yira.org/essay-contest/ Interested in participating in a challenging new program for highly motivated and exceptional delegates? Apply for the Global Exchange Program at: http://ymun.yira.org/global-exchange/ Get connected and download the new Yale Model United Nations iPhone application: https://itunes.apple.com/tc/app/yale-model-unitednations/id721125366?mt=8 or search for Yale Model UN

Like Yale Model United Nations on Facebook and receive all the latest updates: https://www.facebook.com/yalemun

Stay up to date and follow Yale Model United Nations both before and during the conference: @YaleModelUN Find the latest pictures on Yale Model United Nationsâ&#x20AC;&#x2122;s Instagram: ymun: http://instagram.com/ymun

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Suggestions for Further Research Belse, Patrick. "Topic A: " Official Website of the UNODC. United Nations Convention Against Corruption. http://www.unodc.org/unodc/en/treaties/CAC/index.html#UNCACfulltext " Official Website of Transparency International, where you will find the CPI Reports http://cpi.transparency.org/cpi2012/ " Acemoglu, Daron, and James A. Robinson. Why Nations Fail: The Origins of Power, Prosperity, and Poverty. New York, NY: Crown Publishing, 2012. Chapters 1& 9. " (Recommended even if not for the committee, an amazing read) Fisman, Raymond, and Edward Miguel. Economic Gangsters: Corruption, Violence, and the Poverty of Nations. Princeton, NJ: PU Press, 2008. Chapters 3-4. " (If you read Spanish) An interview with corruption expert Edgardo Buscaglia conducted by Angie. http://www.cari.org.ar/recursos/buscaglia.html " Cacho, Lydia. Slavery Inc. London, UK: Portobello Books, 2012. Chapters 1-7. " Grillo, Ioan. El Narco: Inside Mexico's Criminal Insurgency. New York NY: Bloomsbery Press, 2011.

Chapters 1-7 " Jakob Svensson, â&#x20AC;&#x153;Eight Questions about Corruption,â&#x20AC;? Journal of Economic Perspectives 19(3): 19-42 (2005) Topic B: " Money Laundering: A New International Law Enforcement Model, by Guy Stessens ' " The Art And Science Of Money Laundering, by Brett F. Woods " Dirty Dealing: The Untold Truth about Global Money Laundering, International Crime and Terrorism,

by Peter Lilley " Chasing Dirty Money: The Fight Against Money Laundering, by Peter Reuter and Edwin M. Truman " Anti-Money Laundering: International Law and Practice, by Wouter H. Muller, Christian H. Kalin, John G. Goldsworth'' " http://www.imolin.org/imolin/organiza.html " https://www.imolin.org/amlid2/browse_regions.jsp?lf=1070&lng=en " http://www.fatf-gafi.org/ " http://www.gfintegrity.org/ " https://www.unodc.org/unodc/en/money-laundering/index.html " http://www.fbi.gov/news/stories/2013/july/terror-financing-tracking-the-money-trails/terrorfinancing-tracking-the-money-trails " http://www.law.cornell.edu/wex/money_laundering " http://www.reuters.com/article/2013/09/27/nigeria-moneylaundering-idUSL5N0HN33U20130927 " http://www.bbc.co.uk/news/world-africa-24175264 " http://www.aina.org/news/20130924135336.htm

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Forced Labor and Human rafficking: Estimating the Profits” (Working Paper). International Labour Office, March 1, 2005.

Hughes, Donna, Laura Joy Sporcic, Nadine Mendelsohn, and Vanessa Chirgwin. The Factbook on Global Sexual Exploitation, Coalition Against Trafficking in Women, 1999.

Kristof, Nicholas D. "The 21st-Century Slave Trade." The New York Times, April 22, 2007.

Krug, Etienne G., James A. Mercy, Linda L. Dahlberg, and Anthony B. Zwi. "The World Report on Violence and Health." The Lancet 360 (October 5, 2002): 1083-88.

Penn, Michael L., and Rahel Nardos. Overcoming Violence Against Women and Girls: The International Campaign to Eradicate a Worldwide Problem. Rowman & Littlefield, 2003. http://www.who.int/gender/violence/who_multicountry_study/en/ Report of the Fourth World Conference on Women, Beijing, 4–15 September 1995 Skinner, E. Benjamin. A Crime So Monstrous: A Shocking Exposé of Modern-day Sex Slavery, Human Trafficking and Urban Child Markets. N.p.: Mainstream, 2008.

U.S. Department of State. Trafficking in Persons Report 2012, 2012.

Watts, Charlotte, and Cathy Zimmerman. "Violence against Women: Global Scope and Magnitude."

The Lancet 359 (April 6, 2002): 1232-37.

Reichenbach, Laura, and Mindy Jane Roseman. Reproductive Health and Human Rights: The Way Forward. Philadelphia: University of Pennsylvania Press, 2009.

"Reproductive Rights: Advancing Human Rights: UNFPA." UNFPA - United Nations Population Fund. http://www.unfpa.org/rights/rights.htm.

"Reproductive rights approach to reproductive health in developing countries." National Center for Biotechnology Information. http://www.ncbi.nlm.nih.gov/pmc/articles/PMC3241939/.

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http://www.unodc.org/unodc/en/commissions/CCPCJ/ccpcj-mandate-functions.html McFarlane, Anthony. "Political Corruption and Reform in Bourbon Spanish America." Political Corruption in Europe and Latin America. Eds. Walter Little and Eduardo Posada-Carbó. New York, NY: St. Martin's Press, Inc., 1996. 41-63. iii Lomnitz, Claudio. “Understanding the History of Corruption in Mexico.” The University of Chicago Chronicle. Chicago, IL: University of Chicago News Office, Nov. 27, 1995. Vol. 15, No. 6. iv Weyland, Kurt. "The Politics of Corruption in Latin America." Journal of Democracy 9.2 (1998): 108-121 v Pérez-Liñán, Aníbal. Presidential Impeachment and the New Political Instability in Latin America. Cambridge, MA: Cambridge University Press, 2007. Pages 14-29. vi McMillan, John, and Pablo Zoido. "How to Subvert Democracy: Montesinos in Peru." Journal of Economic Perspectives 18.4 (2004): 69-92. vii Interview with corruption expert Edgardo Buscaglia by Angie Hanawa, Argentine Council on International Relations. http://www.cari.org.ar/recursos/buscaglia.html viii Hoffman, Katharina. “The Impact of Organized Crime on Democratic Governance - Focus on America and the Caribbean.” Dialogue on Globalization ix Cacho, Lydia. Slavery Inc. London, UK: Portobello Books, 2012. 1-7, 107-142. x http://www.unodc.org/unodc/en/treaties/CAC/ xi http://www.unodc.org/unodc/treaties/CTOC/ xii Lagunes, Paul. "Corruption's Challenge to Democracy: A Review of the Issues." Politics & Policy 40.5 (2012): 801-824. xiii http://cpi.transparency.org/cpi2012/results/ xiv http://blog.transparency.org/2012/12/05/the-americas-economies-grow-democracies-shrink-what-does-corruption-haveto-do-with-it/ xv Jakob Svensson, “Eight Questions about Corruption,” Journal of Economic Perspectives 19(3): 19-42 (2005). xvi Anonymous. "Corruption in Brazil: A Healthier Menu." The Economist December 19. 2012, sec. The Americas. xvii Jakob Svensson, “Eight Questions about Corruption,” Journal of Economic Perspectives 19(3): 19-42 (2005). xviii Barstow, David. "Wal-Mart Hushed up a Vast Mexican Bribery Case." The New York Times April 21. 2012, sec. Business. xix http://library.fes.de/pdf-files/iez/global/06697.pdf xx Cynthia J. Arnson, Eric L. Olson, Steven S. Dudley, James Bosworth, Douglas Farah, and Julie López. “Organized Crime in Central America: The Northern Triangle.” Wilson Center Reports on the Americas No. 29. xxi Organized Crime in Central America: The Northern Triangle.” Wilson Center Reports on the Americas No. 29. xxii Transparency International Website xxiii http://blog.transparency.org/2012/12/05/the-americas-economies-grow-democracies-shrink-what-does-corruption-haveto-do-with-it/ xxiv http://www.theguardian.com/world/2008/apr/23/colombia xxv http://library.fes.de/pdf-files/iez/global/06697.pdf xxvi http://www.cnn.com/2012/01/15/world/mexico-drug-war-essay/index.html xxvii http://library.fes.de/pdf-files/iez/global/06697.pdf xxviii http://library.fes.de/pdf-files/iez/global/06697.pdf xxix http://www.cnn.com/2012/01/15/world/mexico-drug-war-essay/index.html xxx http://library.fes.de/pdf-files/iez/global/06697.pdf xxxi http://library.fes.de/pdf-files/iez/global/06697.pdf xxxii http://www.strategicstudiesinstitute.army.mil/events/details.cfm?q=134 xxxiii http://www.cfr.org/transnational-crime/global-regime-transnational-crime/p28656 xxxiv library.fes.de/pdf-files/iez/global/06697.pdf' xxxv http://www.cbsnews.com/2100-202_162-5245589.html xxxvi library.fes.de/pdf-files/iez/global/06697.pdf' xxxvii http://www.fincen.gov/news_room/aml_history.html xxxviii http://www.countermoneylaundering.com/public/node/6 ii

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http://www.unodc.org/unodc/en/money-laundering/introduction.html http://www.unodc.org/unodc/en/money-laundering/introduction.html xli http://www.irs.gov/uac/History---Money-Laundering xlii http://www.fincen.gov/news_room/aml_history.html xliii http://www.unodc.org/unodc/commissions/CCPCJ/ xliv Resolution of the United Nations General Assembly 1992/22 xlv http://www.unodc.org/unodc/en/commissions/CCPCJ/members.html xl

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