Surge in EU organised crime is hampering economic recovery

published 25 June 2013

THE recession has created a boom in organised crime across Europe, as the demand for cheap, counterfeit goods has bolstered the black market. Rob Wainwright, the head of Europol, the EU's crime-fighting agency, said there are now 3,600 criminal syndicates across the continent selling counterfeit goods worth around €2bn. As a result, the illegal trade is hampering the EU's economic recovery.

Wainwright told the Financial Times that while the black market used to be about Gucci handbags, the financial crisis has created a call for anything from cheap household detergents to aircraft engine parts. Europol has also seen a rise in counterfeit products that are health and safety hazards, such as medicines and food. These accounted for 28.6 per cent of all seized fake goods in 2011, up 14.5 per cent from 2010. According to Wainwright, a decline in spending power significantly increases social tolerance for the black market. The financial crisis has also created a willingness by companies to cut costs by using illegal labour, leading to breaches of the minimum wage and fuelling people-trafficking networks. Criminal gangs have also been cashing in on attempts by EU countries to boost their economies by increasing tax revenues. The decision by some member states to raise VAT has spurred a growth in falsified claims. VAT fraud is now estimated to be worth €100bn a year across Europe. In 2011, the UK increased VAT from 17.5 per cent to 20 per cent, making any fake claim instantly more profitable. Wainwright also warned about the new breed of cyber criminals who operate in gangs, combining computer hackers and financial experts, who then target weaknesses in financial service groups. The gangs often use 'botnets', where a hacker remotely controls other computers to launch attacks. When asked whether these type of crimes were hampering the EU's economic recovery, Wainwright said: "Yes, I think the short answer to that is yes . . . there is a deliberate exploitation of our global economic conditions."