Proxy criminal networks refers to the use of organized crime syndicates based in a foreign country by a state to conduct covert, illicit, or deniable operations, including espionage, sabotage, assassination, cyberattacks, arms trafficking, or money laundering, outside formal state channels.
The concept of proxy criminal networks is the use of statecraft, organized crime, and covert operations in the target country by a foreign country. Unlike traditional proxies such as militias or paramilitary forces, criminal networks provide non-ideological, profit-driven services that are attractive to states seeking to advance their interests while minimizing diplomatic or legal repercussions. These networks often possess transnational reach, logistical expertise, and established underground infrastructure, making them effective tools for off-the-books operations. [1] [2] [3] [4]
Proxy criminal networks have several defining characteristics that make them preferable tools for both state and non-state actors. One of their primary features is plausible deniability: by outsourcing operations to independent criminal groups, states can distance themselves from unlawful or controversial actions, avoiding direct attribution. These networks are built on transactional relationships, where both parties gain—whether through financial rewards, protection from prosecution, or political influence. They also benefit from jurisdictional insulation, as operating through syndicates based in foreign territories allows actors to exploit legal loopholes and evade international oversight. Finally, proxy criminal networks exhibit operational versatility, engaging in a broad spectrum of activities including cyberattacks, illicit trafficking, political assassinations, and efforts to destabilize rival states or regions. [4] [1]
This subtype involves a state actor covertly exploiting or collaborating with criminal organizations located in other countries to conduct operations that further the state's geopolitical, economic, or intelligence objectives. These proxy relationships provide deniability, reduce political risk, and allow extraterritorial influence without triggering formal conflict or direct intervention. [1] [4]
Cross-border state criminal proxy networks refer to a strategic arrangement in which a state actor covertly engages with or exploits criminal organizations operating beyond its own borders to advance its geopolitical, economic, or intelligence goals. These relationships serve as proxies, offering the state plausible deniability, minimizing political risk, and enabling it to exert influence in foreign territories without resorting to formal conflict or overt intervention. [1] [2]
States engaging in proxy relationships with criminal networks often do so to serve a range of strategic purposes that align with broader national interests. One such objective is intelligence collection, where states exploit smuggling routes or leverage cybercriminal groups to gather surveillance data, monitor adversaries, or map critical infrastructure. Another key aim is the destabilization of rival states, accomplished through the deliberate spread of narcotics, the proliferation of illicit arms, or the orchestration of social unrest tactics designed to undermine internal stability and strain governmental capacity. Additionally, these relationships offer lucrative opportunities for revenue generation, particularly through illicit financial mechanisms such as cryptojacking, money laundering, and other forms of economic subversion that are difficult to trace and regulate. Crucially, these operations enable states to wage asymmetric warfare without deploying official military forces, thereby avoiding the costs and international consequences associated with conventional conflict while still advancing strategic objectives through deniable and decentralized means. [5] [6] [1]
Russia’s entanglement with criminal enterprises around the world is a strategic and systemic phenomenon, not merely tolerated but actively utilized by elements of the Russian state to advance geopolitical, economic, and security objectives. This practice blurs the lines between intelligence operations, organized crime, corporate oligarchy, and conventional statecraft. [7] [8] [9] [10]
Longstanding hubs for Russian mafia laundering and illicit finance. [11]
Used for logistics and as transit hubs for drugs, counterfeit goods, and espionage. [12]
Real estate and luxury assets bought with illicit funds; London known as “Londongrad” due to influx of Russian oligarch wealth. [13]
Russian PMC proxies like Wagner Group have collaborated with diamond and gold smuggling operations in:
While not as dominant as in Europe or Eurasia, Russian networks interact with:
Venezuelan Oil smuggling & gold‑laundering with elites and the military.
Research confirms a “web of corruption” linking Russia to Venezuela’s oil and gold trades, reinforcing Russian influence via illicit financial networks. [13]
While evidence is largely indirect, cross‑regional investigations (e.g., Panama Papers, FinCEN leaks) imply that Russian financial institutions and intermediaries have engaged in laundering narcotics-related funds from Latin America into global financial system. [18] [19]
help launder proceeds of Latin American corruption and narcotics sales. [20]
Iran’s involvement with criminal enterprises in Latin America and Europe is part of its broader asymmetric strategy aimed at extending influence, evading sanctions, financing proxy operations, and sustaining illicit revenue streams. This activity is primarily coordinated through the Islamic Revolutionary Guard Corps Quds Force (IRGC–QF) and Hezbollah, Iran’s most capable and globally connected proxy. Below is a detailed overview.
Hezbollah, with logistical, financial, and ideological ties to Iran, plays a pivotal role in Latin America, particularly in the Tri-Border Area (TBA) where Argentina, Brazil, and Paraguay intersect. [21] [22]
Collaborates with cartels like FARC (historically) and Brazilian organized crime (e.g., PCC) to traffic cocaine to West Africa and Europe. [23] [21] [24]
Hezbollah-linked operatives use front companies, currency exchanges, and contraband operations to launder drug revenues. [24]
Key Hezbollah financier arrested in Paraguay; managed import/export and real estate businesses as fronts for laundering. [27] [28]
2018 U.S. DEA Operation "Cassandra"
Operation "Cassandra" Eexposed Hezbollah’s involvement in a $1B global narcotics and money-laundering operation stretching from Colombia to West Africa and Europe. [29] [30]
Iran has expanded its diplomatic missions in Venezuela, Bolivia, Nicaragua, and Cuba, often using diplomatic cover to shield intelligence operatives and IRGC-linked actors. [31] [32] [33] [34]
Venezuela
Collaboration includes oil-for-gold schemes, cyberintelligence sharing, and the use of Venezuelan territory for money laundering and illicit transport. [35] [36] [37]
Civil aviation links (e.g., Mahan Air)
Used to transport illicit materials and personnel under diplomatic immunity. [38] [39]
While Hezbollah is often bifurcated into a “military” and “political” wing in European policy (with only the former designated a terrorist group by some states), its entire infrastructure is deeply embedded in criminal economies across Europe. [40] [22]
Hezbollah-linked individuals operate in Germany, France, the Netherlands, and Spain, using front businesses and real estate. [41] [42] [43]
Particularly in Germany and Belgium, where lax enforcement allowed dual-use charities and small businesses to send funds to Lebanon. [44] [41]
Hezbollah networks cooperate with Albanian, Turkish, and North African gangs for logistics and street-level distribution. [43] [22]
Iranian state intelligence has used criminal contacts and pseudo-diplomatic infrastructure in Europe for assassinations and surveillance Including plots against dissidents in Denmark, the Netherlands, and France. [45]
2018 Paris bomb plot
An Iranian diplomat was arrested for planning a bombing of a dissident rally; the operation was linked to MOIS (Iran's Ministry of Intelligence) and involved European-based logistical support. [46] [47]
North Korea’s involvement in transnational criminal enterprises is not an auxiliary phenomenon—it is a core pillar of the regime’s survival strategy, directly orchestrated by state organs. These enterprises help generate hard currency, evade international sanctions, fund the nuclear and missile programs, and maintain elite loyalty. Here are some examples of North Korea’s criminal operations around the world:
Military intelligence wing overseeing covert operations, cybercrime, and overseas agents. [48]
Office 39 (Room 39)
Office 39 secretive bureau under the Workers’ Party, responsible for generating illicit revenues for Kim Jong-un’s regime. [49] [50]
Ministry of State Security (MSS)
Oversees foreign agents and ensures ideological and financial loyalty among overseas operatives. [51] [52]
North Korea is considered a global leader in state-sponsored cybercrime, with attacks estimated to have generated billions in stolen assets. [48]
North Korea has long been a producer and trafficker of methamphetamine and opiates, often using diplomatic cover.
North Korea has been involved in the production and distribution of high-quality counterfeit goods, including U.S. currency and luxury products. Among the most notable are the so-called "supernotes" counterfeit $100 bills that are nearly indistinguishable from authentic currency and are believed to be manufactured by the regime’s secretive Bureau 39. In addition to currency, North Korea has produced counterfeit pharmaceuticals, such as fake Viagra, which have been distributed across East Asia and the Middle East. The regime has also engaged in the illicit production and smuggling of alcohol and cigarettes, often using its own shipping networks to transport these goods covertly. [53] [54] [55] [56]
North Korea uses a global logistics and front company network to procure sanctioned goods and sell embargoed items like coal, seafood, and weapons. [57]
Tens of thousands of North Korean workers are sent abroad to countries such as China, Russia, and various nations in the Middle East and Africa, where they are employed in sectors including construction, logging, textiles, restaurant work, and IT services. Despite their labor, up to 90% of their wages are seized by the North Korean regime, with much of the revenue believed to be directed to Kim Jong-un’s personal funds. This practice not only contravenes international sanctions and labor rights but also places workers under strict surveillance and coercive conditions. [58]
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