A federal report says organized crime gangs are flourishing in Canada and employing new technology to commit old-fashioned crimes like money laundering and fraud.

"Technologies that provide benefits to society also provide opportunities for organized crime," says the annual report of the Criminal Intelligence Service Canada released Friday morning in Halifax.

"As technologies for conducting on-line commercial transactions evolve, so do opportunities for fraud. Identity theft and payment card fraud are among the most frequently occurring types of fraud in Canada."

Antonio Nicaso, who's written Bloodlines and nine other books on organized crime, says a soft judicial system and criminals' ability to organize like a big corporation has helped them thrive.

"I believe organized crime has changed its nature. They are less visible and more business-oriented," Nicaso told Canada AM.

"They are getting organized ... Instead of fighting for control of territory, they work together in criminal partnerships as shareholders. They invest money to buy more narcotics and they invest the profits from illicit activities."

The report says Eastern European crime gangs are active in southern Ontario and Quebec and using technology to pursue their goals.

"They are going high-tech. Before they had to communicate with cellular, now they can use e-mail and the Internet," Nicaso said.

Some groups work the drug trade, while others dominate the prostitution rings, according to the report. Groups active in Canadian ports finance their ventures by stealing luxury cars, and smuggling them out of the country.

The report says outlaw biker gangs have been weakened by police crackdowns, but the Sicilian Mafia is strengthening its position at the top of the country's criminal hierarchy.

The crackdown on biker gangs culminated with a huge raid in March, 2001. In several provinces, thousands of police officers rounded up key members of the Hells Angels. The raids hacked away at the upper, middle and lower levels of the multi-million dollar drug empire.

"That was the worst moment in the history of organized crime for them because they raised attention from the media and law enforcement agencies. (Organized criminals) realized that it's better if they keep a low profile, work together to share experience and expertise and use new technology," Nicaso told Canada AM.

Nicaso says police are on the right track and Canada has strengthened laws on money laundering, proceeds of crime and criminal gangs. But he adds sentencing has to be tougher.

"In Canada there is a lower risk of prosecution and detention than in the United States. In the United States 30 years means 30 years. In Canada, with the parole system, they get away after a few years in jail," Nicaso said.

Yves Lavigne, an author who has written extensively on biker gangs, says even high-ranking authorities are on the take from mobsters.

"Organized crime controls at least a police officer on every force in this country," Lavigne said.

Such corruption became apparent Thursday, when police seized an estimated $35 million worth of cocaine, heroin and marijuana at Toronto's Pearson International Airport.

The Pearson ring used an elaborate scheme involving high school students acting as couriers. Police said the students were paid $5,000 each, given passports and suitcases and sent to the Caribbean. When they returned with the drugs, they called a certain number from their cell phones and were directed to a particular customs line.

Police said arrangements had been made to have that particular line operated by a Canada Customs agent who had been compromised, and who would give them access into Canada without further scrutiny.

Nine Toronto-area people have been arrested and warrants have been issued for six more, police said

The detailed report on organized crime is to be officially released Friday. Until then, the RCMP is refusing to comment on the report.

The RCMP website describes "organized crime as a serious long-term threat" and raises the possibility of its links to terrorists.

With reports from Canadian Press