(OTTAWA) - The weakened US dollar has fallen out of favor with organized crime groups to pay for drug shipments or to settle scores, a Canadian government report said Friday.

And if the greenback continues its slide in 2008, as expected, more and more criminals are likely to exchange euros for illicit goods, said Criminal Intelligence Service Canada in its annual report.

"The US dollar weakened significantly against other major currencies in 2007 and according to some economists, is expected to depreciate further in 2008," said the report.

"As a consequence, other currencies -- particularly the euro -- are poised to weaken the US dollar's dominance as the currency of choice for international remittances and payments," it said.

"This trend could also drive an increase in observed instances of bulk-cash transfers denominated in currencies other than Canadian and US dollars," the report added.

Organized criminal groups, topping 900 in Canada, are primarily focused on the illicit drug trade, but have also expanded into credit card fraud, organ trafficking, identity theft and even illegal logging of Canada's vast forests, said the report.

"The illicit drug market remains the largest criminal market in terms of extent, scope, and the degree of involvement by the majority of organized crime groups," many of them operating across international borders, it said.

Marijuana remains one of the most trafficked illicit drugs in Canada, and crops harvested here supply much of Canada and the United States.

Methamphetamine production in Canada, meanwhile, has risen to meet expanding international demand with several "super labs" set up for foreign distribution of late.

As well, Canada, the Netherlands and Belgium are now the primary source of ecstasy to the world, said the report.

Canadian forests, representing one tenth of the world's forested area, are vulnerable to illegal harvesting "due to their relative abundance, isolation, and the large number of logging access roads," it explained.

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