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Oleg Babinov, Head of Russia, Eastern Europe and Eurasia
July 2011

On 25 July 2011, the US National Security Staff released its Strategy to Combat Transnational Organized Crime: Addressing Converging Threats to National Security.  On the same date, President Barack Obama issued Executive Order 13581, ‘Blocking Property of Transnational Criminal Organizations’. 

The Strategy states that ‘[t]ransnational organized crime (TOC) poses a significant and growing threat to national and international security, with dire implications for public safety, public health, democratic institutions, and economic stability across the globe. Not only are criminal networks expanding, but they also are diversifying their activities, resulting in the convergence of threats that were once distinct and today have explosive and destabilizing effects’.  It also lists such threats as ‘penetration of state institutions, corruption, and threats to governance’ (particularly, in developing countries) and ‘threats to the economy, US competitiveness and strategic markets’ alongside (and, in fact, above) drug, weapons and human trafficking, cybercrime and theft of intellectual property.  It also mentions unscrupulous ‘facilitators’: accountants, attorneys, notaries, bankers and real estate brokers who ‘provide services to legitimate customers, criminals, and terrorists alike’; the Strategy completes the list of threats posed by TOC with a reference to the ‘critical role of facilitators’.

The Executive Order bans all transfers, payments, withdrawals and any other dealings in property and interests in property associated with TOC by ‘any United States person, including any overseas branch’.  The Order prohibits any contribution or provision of funds, goods or services to and from any person associated with TOC.  In addition, the Executive Order contains an annex which specifically lists four entities with which the US President prohibits any interaction with:

1. The Brothers’ Circle (f.k.a. Family of Eleven; f.k.a. The Twenty)
2. Camorra
3. Yakuza (a.k.a. Boryokudan; a.k.a. Gokudo)
4. Los Zetas

It is not accidental that, of all four, only ‘The Brothers’ Circle’ does not have a dedicated webpage on Wikipedia.  This is because it is a less formal entity than the other three – to the extent that, as Mark Galeotti, academic chair of the Centre for Global Affairs at New York University, put it in his blog, ‘[t]he term bratsky krug, brothers’ circle, has been used from time to time within the vorovskoi mir, the traditional Soviet/Russian underworld. But even then it did not represent a specific group, so much as a general term for the most respected and powerful of the vory v zakone, the ‘thieves within the law’ who made up that underworld’s elite…  The ‘Brothers’ Circle’ is not a term Russian law enforcement would recognise either, and, like ‘the Family of Eleven’ and ‘The Twenty’, seems rather to reflect pop culture representations of Russian OC.’ 

We agree with Dr Galeotti that Russian (or, as it has become common in recent years to describe it, Eurasian) organised crime is ‘a very fluid, entrepreneurial and networked phenomenon’ – how else could it have its successful formative period in the Soviet era when the state would not tolerate any underground (and underworld) organisation? 

In the past decade, throughout much of the former Soviet Union, we saw an emergence of some leading members of Eurasian organised crime as powerful businessmen (and, in some instances, politicians) and significant movements of various groups and individuals across the FSU and into Western countries.  The text of the Strategy also shows disappointment that ‘foreign kleptocrats… have corrupt relationships with TOC networks’.  Of course this statement could be applied not just to Russia, but it is Russia and other FSU countries that spring to mind immediately in this context. 

It is noteworthy, in this regard, that the section entitled ‘Strategy to Combat Transnational Organized Crime: Protect the Financial System and Strategic Markets Against Transnational Organized Crime’ contains a reference to the ‘Mogilevich Organization’. 

The US authorities are disappointed that Semion Mogilevich (‘wanted by the United States for fraud, racketeering, and money laundering and… recently added to the FBI’s Ten Most Wanted fugitives list’) ‘has continued to expand his criminal empire’ and ‘was arrested by Russian police on tax charges in January 2008 and was released pending trial in July 2009.’

It is exactly the expansion of Eurasian OC into the US and its partner countries in the West (with, at least, tacit support by ‘foreign kleptocrats’) that appears to have caused the US regulators to seek to firmly identify it as an organisation and to put a name to it – otherwise, it would difficult to require US persons to stay away from transactions with members of a loose informal network.

Although the Strategy sets out an objective to ‘[d]evelop a mechanism that would make unclassified data on TOC available to private sector partners’, it is inevitable that the US authorities will expect private sector players (and, particularly, financial institutions) to implement even more ardent anti-money laundering due diligence. 

Then it is the Russian and Eurasian angles of this due diligence that will likely prove most challenging – if only because it will require knowledge and understanding of who the eleven (or twenty or more) Eurasian ‘brothers’ and members of their ‘circle’ are and why.

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