Pirate Trails: Tracking the Illicit Financial Flows from Pirate Activities off the Horn of Africa
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It is estimated that US$339 million to US$413 million was claimed in ransoms between April 2005 and December 2012 as a result of acts of piracy off the Horn of Africa. The effects of twenty-first century piracy off the coast of Somalia are felt far and wide by individuals and institutions in the region and beyond. Piracy hurts those forced to endure the ordeal of hijacking and has a financial impact on economies many miles from Somalia itself.
Just as few commentators have examined the true nature of the pirates, little attention has been paid to tracking and disrupting the financial flows from piracy. The focus has been on securing the ships that pass through Somali waters and where apprehended, prosecuting and incarcerating the captured pirates. The global community has made very little effort to take collective action to track, detect, disrupt and confiscate the proceeds of piracy.
Pirate Trails tracks the financial flows resulting from piracy and aims to identify what happens once a ransom payment has been made. It follows the money through a system of filters that enable the money to be reinvested in further acts of piracy as well as in other business activities–both legitimate and criminal, such as buying into the khat trade and human trafficking–and it identifies pirate financiers as the main beneficiaries of these flows. Using financial and economic data, and garnering evidence from interviews with relevant stakeholders who are or have been involved with piracy, and with other regional actors, the study attempts to assess how the proceeds are moved, invested, and used.
This study is aimed at financial sector regulators, money value transfer companies with links to the region and other relevant public and private sector stakeholders in their efforts to protect the region's financial systems against criminal abuses. Furthermore it seeks to inform the international community–including non –governmental organizations (NGOs), donors, and other international organizations involved in efforts to resolve the piracy problem within the region.
operations, and channels (gatekeepers) through which financial flows are distributed to stakeholders within and between economies • Law enforcement and military officials, who provided a deeper understanding of pirate operations to date • Victims, including shipping companies and the law firms and consultants that represent them, which provided information on where, when, and how much ransom has been paid as a result of piracy activity off the coast of Somalia and method of payment •
during that interview confirmed that one could buy a US$15,000 car in Dubai using MVTS in Puntland. However, in this case the operator was clearly abused, since the client had to justify the origin of his funds, and lied to the operator saying it came through charity. Telecom financial services in Somalia are offered by various telecom companies operating in Somaliland, Puntland, and Southern and Central Somalia. During interviews with pirate inmates or reformed pirates, the team was informed
pirate markets, where the khat is sold at higher prices, thereby enhancing their profits. Since consolidators in Somalia fix the prices of khat when they communicate their demand to brokers in Kenya, the increased role of pirate financiers or former pirate financiers in the khat trade also means that these actors have an increasing influence over the economy of Maua, in Kenya where the khat is produced. The Real Estate Market Laden with sacks of cash, these rogue investors were said to be
Eyl. After speaking with A.O., the former officer in charge of A.O.’s debriefing and a former UNODC staff member in Nairobi concluded that it was actually not a brothel A.O. had been taken to but a “residence” where pirates lived when they were not at sea. Other Somali girls were also living in the residence, providing maid services and sexual services to pirates. A.O. eventually became pregnant and gave birth inside the residence. Following the delivery, she got sick and said she was “thrown
Paris. ———. 2011. “2011 Report on International Engagement in Fragile States: Somali Republic.” OECD/DAC Discussion Paper, OECD Publishing, Paris. Omar, Shiine. 2012. “The Khat Conudrum, Somalia’s Drug Scourge.” January 17, (accessed April 5, 2013), http://www.somaliareport.com/index.php/post/2521. Opala, Ken. 2009a. “All Roads Lead to Nairobi.” Forum for African Investigative Reporters Transnational Investigations, http://fairreporters.files.wordpress.com/2011/11/a-better-life-elsewhere.pdf.