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Illegal businesses violate laws and regulations, which vary from country to country. Prohibited goods and services, labor law violations, false information, and anti-competitive practices are common forms of illegal activity. Some countries prohibit all private enterprise, while others allow limited commercial activities.
An illegal activity is a violation of the laws of the country or region in which it operates, and the laws governing business vary widely from country to country. There are no universal standards for businesses, but in general businesses that trade in illegal goods or services are considered illegal businesses. Companies can also break labor laws and standards, transparency rules, statutes governing anti-monopoly practices, or even criminal laws.
Perhaps the most widespread forms of illegal businesses are those involving the sale of prohibited goods or services. Goods that are legal in one jurisdiction may be restricted in another and prohibited entirely in a third. Alcohol is strictly prohibited by law in Saudi Arabia, so the many businesses that sell liquor are clearly illegal. Other nations tax or regulate the sale of alcohol, so distilleries and liquor stores can operate legally as long as they comply with laws governing the purity, strength, safety, and taxation of liquor. Some illegal businesses, such as moonshine sales, try to circumvent these restrictions and operate outside the law.
Nations and states often set labor standards and practices. These vary widely from country to country. Germany offers strong protections to its workers, for example, unlike most nations in developing countries. Violating these labor laws is another form of illegal activity. Such violations include practices such as enforced unpaid overtime or the hiring of workers, often illegal immigrants, who are not legally permitted to work in that country.
In other cases, illegal companies break the law by intentionally providing false information about themselves, their assets and their businesses. Most Western nations have laws requiring businesses to follow strict accounting practices. When a company, like Enron, doesn’t follow these disclosure and transparency rules, it’s breaking the law. Companies can also break the law by sharing information too freely with each other. Many nations have laws prohibiting anti-competitive practices such as price fixing between rival companies.
There are more extreme examples of illegal businesses around the world. In post-Soviet Russia, collusion between financial interests and organized crime was commonplace and businesses, large and small, needed protection, known colloquially as a “ceiling” to operate. This is not a problem unique to Russia. Organized criminals conduct business all over the world.
The commercial act itself is illegal in some countries. In the few strictly communist nations in the world, all private enterprise is illegal business, as the state retains the sole right to engage in economic activity. In other countries, such as Cuba, only very limited types of commercial activities are allowed.
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