National Drug Intelligence Center   Washington/Baltimore High Intensity Drug Trafficking Area Drug Market Analysis 2009   March 2009

Drug-Related Crime

Drug-related violence is prevalent in all areas of the W/B HIDTA region; much of it is attributed to the distribution of crack cocaine by street gangs. Twenty-one of the 27 state and local law enforcement respondents to the National Drug Intelligence Center (NDIC) National Drug Threat Survey (NDTS) 20091 in the W/B HIDTA region report that crack cocaine is the drug that most contributes to violent crime in their areas. Although law enforcement agencies attribute a significant number of homicides in the region to drug-related violence, the number of homicides in the region did not increase significantly in 2008. In Washington, D.C., the number of homicides increased only slightly, from 181 in 2007 to 185 in 2008. In Baltimore the number of homicides decreased from 282 in 2007 to 234 in 2008. Homicides in Richmond decreased from 103 in 2007 to 36 in 2008, the lowest number of homicides since the city began keeping such records in 1971. State and local law enforcement officials credit a stronger working relationship with their federal counterparts along with aggressive targeting of violent offenders, a significant increase in police manpower, and targeted efforts to curb blight in some troubled neighborhoods.

Drug-related property crime is also a problem in the region. Some drug abusers commit crimes such as burglary, forgery, fraud, and theft to support their addictions. Of the 27 regional respondents to the NDTS 2009, 19 report that crack cocaine is the drug most associated with property crime in their jurisdiction. NDTS respondents from Baltimore report that heroin is the drug most associated with property crime.

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Illicit Finance

Drug traffickers in the W/B HIDTA region use various money laundering techniques to conceal drug proceeds and finance their operations. The means of transferring illicit funds vary by group and include bulk cash smuggling, wire transfers, the structuring of bank deposits and money order purchases, the commingling of drug proceeds with funds generated at legitimate businesses, purchases of real estate and vehicles, front businesses, smart cards, prepaid stored value cards, and the use of hawalas.2

Colombian, Dominican, and Mexican DTOs and criminal groups transport drug proceeds primarily in bulk from the HIDTA region, across the U.S.-Mexico border, and into Mexico, Central America, or South America for eventual repatriation. In transporting bulk cash, these traffickers use private and commercial vehicles, freight transportation companies, shipping containers, and package delivery services. Additionally, Mexican DTOs launder drug proceeds by structuring bank deposits into multiple accounts to avoid meeting the Currency Transaction Report (CTR) filing threshold.

Vietnamese DTOs and criminal groups often use cash-intensive front businesses, such as travel agencies or car washes, to launder illicit drug proceeds. They also transport drug proceeds in bulk, in the form of cash and money orders, to Canada. Once the proceeds are in the country, these groups deposit them into Canadian bank accounts and then electronically wire-transfer the proceeds to source countries. Vietnamese DTOs and criminal groups also launder drug proceeds by structuring bank deposits and participating in real estate fraud.

Middle Eastern and Pakistani DTOs and criminal groups launder illicit heroin proceeds through front businesses, such as used car dealerships, and through the use of hawalas. Nigerian DTOs favor bank fraud schemes as well as bulk currency smuggling. West African groups often purchase cars or other legal assets to ship back to Africa as a method of payment. In September 2008 the U.S. Attorney for the District of Maryland announced the conviction of a Pakistan-born U.S. resident who had conspired to launder illicit drug proceeds through his money remitter business, based in Washington, D.C. He had transferred money from the United States to Pakistan, England, Spain, the Netherlands, and Canada using a hawala. Additionally, he had failed to file the required CTRs for transactions in excess of $10,000.

Most retail-level drug dealers launder drug proceeds through the purchase of consumer goods (clothing, jewelry, and vehicles) and real estate, and through the use of front businesses. Some retail-level dealers also launder money through recording studios and businesses that promote rap music concerts. Drug traffickers use other techniques to launder illicit drug proceeds that involve money orders, stored value cards, automated teller machines (ATMs), the precious metals and gems trade, and casinos, as well as schemes involving real estate and the insurance industry.

Stored value cards are increasingly being used by traffickers to launder money because they are an easily transportable and virtually anonymous way to store and access cash. Stored value cards physically resemble traditional credit or debit cards and can be used to access both global debit and ATM networks. Stored value card programs often accept applications without face-to-face verification of cardholder identity, taking applications online or by fax. Funds can be prepaid by one person and withdrawn by another through ATMs anywhere in the world; multiple cards can be issued for a single account.

Traffickers in the W/B HIDTA region use Internet payment systems to launder their drug proceeds. Online payment systems, including digital currencies,3 offer drug money launderers anonymity, versatility, and convenience while establishing a global reach and reducing issues linked to fluctuating exchange rates. Some online payment services are unable to definitively authenticate customer identification, and others openly promote anonymous payments.

Footnotes

1. National Drug Threat Survey (NDTS) data for 2009 cited in this report are as of February 12, 2009. NDTS data cited are raw, unweighted responses from federal, state, and local law enforcement agencies solicited through either the National Drug Intelligence Center (NDIC) or the Office of National Drug Control Policy (ONDCP) High Intensity Drug Trafficking Area (HIDTA) program. Data cited may include responses from agencies that are part of the NDTS 2009 national sample and/or agencies that are part of HIDTA solicitation lists.
2. Hawala is a fairly anonymous form of banking that has been used in the Middle East for centuries. Hawala money transfers are made outside the formal banking sectors and are virtually undetectable. Transfers are made primarily from one location to another without the physical movement of funds and, in many cases, with little or no recordkeeping. Any records that are kept are usually in an unrecognizable form of shorthand or are encoded.
3. Digital currencies are privately owned online payment systems that allow international payments, which are often denominated in the standard weights for gold and precious metals.

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