Futures of the interpenetration of criminal and lawful economic activities in the European Union in 2035: Scenarios and policy implications

Umut Turksen, Atilla Havas, Marco Letizi, Holger Nitsch, Philipp Amman

Research output: Book/ReportCommissioned reportpeer-review

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Abstract

Policy-makers – working on various domains, notably regulations, home affairs, security, science, technology, and innovation (STI) policies – need to pay close attention to possible new ways and methods for the interpenetration of criminal and lawful economic activities. This report is aimed at assisting policy-makers by presenting four possible futures (scenarios) and considering their implications.
The scenarios assume that the interpenetration of criminal and lawful economic activities – just as most other types of crime – cannot be fully eradicated. There are two competing groups of actors whose capacities, activities, and efficiency largely determine the possibilities for, and repercussions of, the interpenetration of criminal and lawful economic activities: criminal actors and law enforcement agencies (LEAs). The scenarios are shaped by two main dimensions: i) whether LEAs are well-resourced, strong, and effective or not, and ii) whether large criminal organisations or small-scale ones are the dominant criminal actors. The four scenarios consider various types of ‘push’ and ‘pull’ factors that influence actors to commit – or not – criminal economic activities; the main types of these activities; features of regulations; research, technological development, and innovation activities by the criminal actors vs LEAs; as well as the activities, capabilities, and resources of LEAs.
Scenario 1 depicts a ‘Neck and neck race’ between large criminal groups and LEAs. The EU’s economy is flourishing, it is characterised by high growth, coupled with high taxes. Due to considerable public revenues, LEAs are strong: they have sufficient resources, as well as the necessary skills, capabilities, and capacities to prevent, monitor, and fight the interpenetration of criminal and lawful economic activities. Lawful economic actors and other potential victims are protected by effective regulations that also support LEAs. While illicit actors have an almost negligible influence on regulatory processes, they nevertheless try hard to influence regulations for their interests – occasionally with some success. Large, well- organised criminal organisations have strong incentives to engage in criminal economic activities via penetrating lawful economic activities. They have massive funds already invested in the EU – in the black, grey, and white segments of the economy. They avoid paying high taxes and launder their sizeable illegal proceeds. Furthermore, they use their substantial resources to develop new technological tools and ‘business models’ to further penetrate their criminal activities into the lawful economy.
Scenario 2 describes the EU as a ‘Safe haven for legal actors’. Large criminal organisations have kept a minimal presence in the EU as they found ample, more profitable opportunities in other regions, where LEAs are weaker and regulation is ineffective. Stringent and effective regulation in the EU is a further disincentive for them. Some of them operate from ‘criminals’ shelters’ outside the EU and target victims online or commit online crimes mainly outside the EU but to some extent also in the EU. Small-scale criminal organisations do not possess the skills, contacts, and resources to internationalise, and thus they remain in the EU, in search of ways to penetrate lawful economic activities. LEAs are endowed with the necessary resources, skills, capacities, and capabilities to be strong in the EU and they are also supported by effective regulation. Small-scale criminal organisations are unable to influence the regulatory processes. Thus, the EU provides a safe haven for legal actors.
In Scenario 3 lawful economic actors rely on a number of ‘Protected pockets’. Large criminal groups focus their activities outside the EU where they can exploit more profitable opportunities to commit economic crimes. Small-scale criminal organisations take advantage of the low intensity of the large criminal organisations’ activities, as well as the lucrative opportunities for criminal economic activities offered by regulatory loopholes. In particular, new technologies, as well as disruptive business models are exploited by criminals as there
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Electronic copy available at: https://ssrn.com/abstract=4688563
are no effective regulations ensuring robust cybersecurity, safety, and health standards. Lawful economic actors try to find protected pockets for their business in those domains where regulation still works. It is a somewhat ‘unstable’ scenario as lawful economic actors would push for more effective protection, and thus stronger LEAs, supported by effective regulation.
Scenario 4 describes a ‘Paradise for criminals’. The economy is flourishing, and thus provides ample opportunities for large, well-organised criminal organisations to conduct profitable business activities in the white, grey, and black segments of the economy. These illicit actors successfully influence the regulatory processes to advance their interests by creating loopholes. They can also afford to fund the development of new technological tools and ‘business models’ to penetrate the lawful economy even more deeply in their criminal ways. Although LEAs are also well-funded thanks to public revenues, they are substantially weakened by ineffective regulations. Lawful economic actors and other potential victims are not protected by effective regulations. Hence, LEAs are faced with even more demanding tasks, and thus their efficacy in fighting economic crimes is reduced.
By considering the nature of the criminal activities that aim at penetrating lawful economic activities, and the options to prevent, monitor, and fight these crimes, the report explores a range of policy implications for research and innovation as well as for the governance in the EU, particularly in the following areas:
• Monitoring and foresight capabilities of LEAs in the EU and its Member States in cooperation with third countries.
• Technological tools by the EU and its Member States in cooperation with third countries for anticipating, preventing, monitoring, and fighting harmful criminal economic activities identified in the four scenarios.
• Joint social science research projects in the EU and its member states in cooperation with third countries to understand economic and behavioural incentives for crime and develop regulation against it.
• Framework conditions for effective governance and law enforcement in the EU and its member states in cooperation with third countries.
• The cooperation in the EU and with third countries for more effective monitoring and assessment of criminal and lawful activities and law enforcement.
This policy brief is the result of one of the eight Deep Dive Foresight Studies performed in the frame of the ‘European R&I Foresight and Public Engagement for Horizon Europe’ project, conducted by the ‘Foresight on Demand’ consortium for the European Commission. During the summer of 2023, an expert team identified factors of change and met in four workshops to build scenarios and derive policy implications. Other experts from national and EU public administration have also contributed to this policy brief in various ways, through various channels. Furthermore, the process was supported by discussions in the Commission’s internal Horizon Europe Foresight Network. Finally, we are especially grateful for the guidance and editorial contributions of Nikolaos Kastrinos (DG RTD, European Commission) and Totti Könnölä (Insight Foresight Institute).
Original languageEnglish
PublisherEuropean Commission
Number of pages37
Publication statusPublished - 30 Nov 2023

Keywords

  • criminal activities
  • European Union (EU)
  • EU policy
  • Foresight methodologies
  • 2035

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