Crime becomes transnational when its operations and organizational structures are not confined to the sovereign territory of a given state and are coordinated across borders.

Objects of transnational crime

A state, in an exercise of its sovereignty, determines what crimes are.  It may therefore happen that what is criminal in one state is legal in another.  Or a particular act may be a crime in both states but the penalties are not the same.  As transnational crime flourishes, a number of states may see the need for a transnational penal

UN Convention against transnational organized crime 2000

code to collectively combat the former.  This code can take the form of treaties or conventions.

It may be argued that transnational crime is not a recent phenomenon. If crime is as old as humanity, then the transnational character of ancient or pre-modern crime may have preceded the modern Westphalian state system.  Crime aimed for material gain is organized around a basic business model with two components—‘industrial supply chains’ and ‘financial supply chains’[1].  If needed, the organization becomes more complex.  More supply chains are built for redundancy to cope with disruption, say from law enforcers and competing criminal syndicates.  The criminal supply chain involves the procurement of inputs, production of illicit goods and services, and delivery of such products to final consumers.  If demand exists behind a particular political jurisdiction, then there are strong incentives to go beyond borders if returns are greater than operational costs and risks.  Logically, the oldest transnational organized crime is the smuggling of illicit products.  The examples that come to mind are cross-border transactions of slaves, women, and hallucinogens. 

Global cocaine flows, 2008

Slaves in ancient Egypt

Other analysts object that the analysis above suffers from a modernist bias.  The practices named above were not considered as crimes at the time.  Slaves and (prostituted) women were part of war booty and became commodities.  Hallucinogens and other exotic substances produced elsewhere were believed to have medicinal properties.  What however emerges here is the insight that practices which were licit in the past begun to be considered illegal across historical time. Identifying what is crime is not static; it is a dynamic process. 

Sex trade in the ancient world

A major reason was a change in social norms and beliefs and this change was not confined to a single state.  For instance,  slavery (and ‘white slavery) was legal and considered normal until it was condemned as barbaric and was banned altogether in the modern era.  Of course, banning did not mean that the practice stopped altogether.  Criminalization did not douse demand for slaves, imported prostitutes, and drugs.  Criminalization disrupts industrial (and financial—but more on this point later) supply chains of illicit goods.  It increases the prices of these products—a result which in turn heightens the incentives to supply them.  Criminalization does and could not dismantle cross-border industrial supply chains.  In fact, it encourages their retention and increase in number.

Production and distribution of illegal goods require financing given production and other operational costs.  If the supplier of illegal goods relies on his own funds (or those of his immediate circle of relatives and friends), the scale of production is limited.  As a result, he may be confined to a local market and cannot engage in trans-border operations.  For economies of scale to kick in and returns to rise, financing must likewise increase.  Such funds need not come from a single source.  Thus, the need for financial supply chains.

Consider slavery during its licit phase in human history.  Even then, there was intra-state slavery and cross-border slavery.  For both types of slavery, a single financier may not be able to fund all the operational aspects.  This is especially true for cross-border slave trading.  While slaves may be war booty, the slave trader has still to buy them in the slave markets.  He also needs to feed and house them to protect his investment.  Higher morbidity and mortality reduces his return on investment (ROI).  If he wants to serve a cross-border market, he must also fund transport of the slaves.  If he lacks enough funds, he will seek financial ‘partners’ to subsidize these other operations like transport, housing in destination markets, advertising and other costs of sales.  Even in this historical period, (pre-criminal) cross-border trade was organized and conducted through the establishment and maintenance of industrial and financial supply chains.

Trans-Atlantic slave trading

Did the business model change when the formerly licit practices were criminalized?  The short answer: No and yes.  Criminalization introduced additional risks to the now-criminal operation that were absent in the earlier period.  Consider white slavery.  In its licit phase, total costs consisted of costs of production and distribution and the risk of decreasing product quality due to morbidity and decrease in product supply because of diseases, accidents, and natural disasters.  However, the inventory of slaves may also fall due to escapes and the predation of other slave traders, raiders, etc.   To protect their property rights and ensure maximum returns, slave traders must spend accordingly.  Such expenditures may be in the form of bribes for  state agents and the employment of ‘specialists in violence’. 

Criminalization increases costs and risks.  Criminalization forces ‘black’ operations to go underground and requires more complex organizations to include ‘white’ (or front office) components.  Redundancy of industrial and supply chains is necessary to deal with possible disruption of operations.  Organized crime now faces a more powerful organized force—the state—that is (at face) devoted to the task of enforcing its penal code.  A state qua state is imbued with the authority to use the full extent of state power to combat crime.  Since authority is the legitimate use of power (including the use of force to discipline and punish ala Foucault 1975/1977), the state possesses (or is presumed to have) greater power vis-à-vis criminal groups. 

Foucault’s “Discipline and Punish”

However, law enforcers and politicians themselves can simply add to the roster of predators who cut returns on crime through various ways.  For instance, state agencies seize illegal drug caches only to sell them in similarly clandestine markets instead of presenting them in court as evidence.  With more predators, protection of property rights became more expensive.  Criminalization introduced new costs like fees for lawyers, accountants, money launderers, publicists and bribes for law enforcers, law makers, and arrested or imprisoned conferees (to ensure their tolerance or silence). 

The capacity of a state to enforce its laws is an important variable that affects the profitability of the criminal enterprise.  State capacity is understood to include material resources and the  resolve to combat crime.  Even if a state has adequate material assets, the willingness of state agents to fight crime can be eroded through threats and bribes.  This same is also true for private actors such as journalists. When organized crime becomes transnational, the variability of state capacity induces changes in the supply chains.  For industrial supply chains, it is better to locate procurement/production/processing operations in states with weak law enforcement capacity.  Logically, the richer economies presided over by stronger states are the targeted markets even as smaller markets elsewhere may likewise be served.

[1] The generic concepts ‘industrial supply chains’ and ‘financial supply chains’ are from Lester Young, a professor in finance at the City University of Hong Kong.  Mapping industrial supply chains is relatively easier than delineating financial supply chains specially for criminal goods.


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