AbstractThe war in the former Yugoslavia produced many highly trained and experienced combatants, some of whom engaged not only in a variety of organized criminal activities such as the illicit trade of natural resources, trafficking and corruption, but also war crimes. In the post-war environment various criminal groups took advantage of post-conflict transition conditions which enabled them to be transformed into legitimate legal entities. The failure to investigate and hold to account those involved in criminal activity meant that demobilized soldiers turned to highly profitable, legally constituted private military and security companies (PMSCs). This is coupled with poorly designed security sector reforms that often fail to enhance effective and accountable security that is respectful of human rights. In recent years, similar transformations of many former combatants and criminal groups into legitimate PMSCs around the globe have raised new concerns about their growing activities across different sectors. This article uses the former Yugoslavia as an example from which to highlight some of the increasingly common problems posed by the creation of private military and security providers globally, as a result of the current uncoordinated processes to prevent armed conflicts. The article reflects on the need to avoid smart sanctions and use other foreign policy tools, while calling for an integrated approach to security sector reform and transitional justice that is necessary for sustainable peace.