A CANADIAN businessman has been arrested in the US for allegedly modifying and encrypting BlackBerry smartphones used by "upper echelon" Australian criminals, Mexican drug cartel members and other members of the global underworld.

Vincent Ramos, 41, the chief executive of Vancouver-based Phantom Secure, was taken into custody in California last week after a global investigation involving the Australian Federal Police and the seizure of shipments of cocaine from the US to Australia.

Phantom Secure technicians gutted BlackBerry handsets of their original hardware and software and installed new encryption software and an email program, according to a criminal complaint filed in the US District Court.

Of the 20,000 Phantom Secure devices in service around the world, 10,000 were allegedly in Australia, according to estimates touted by the FBI.

"According to law enforcement sources in Australia, Canada, and the US, Phantom Secure devices are used by the upper echelon members of various transnational criminal organisations to communicate with their criminal compatriots and conduct the illegal activities of the organisation," FBI Special Agent Nicholas Cheviron wrote in the complaint.

Phantom Secure allegedly charged customers between $US2000 and $US3000 for six month subscriptions and were "specifically designed to prevent law enforcement from intercepting and monitoring communication".

The phones' emails were allegedly routed through encrypted servers in Panama and Hong Kong, nations Phantom Secure claimed in marketing materials were "unco-operative" with law enforcement.

A transnational drug trafficker and associate of Mexico's infamous Sinaloa cartel, known in court documents as Cooperating Witness One (CW-1), told authorities cartel members used Phantom Secure phones.

"CW-1 stated that over the course of several years, his drug trafficking organisation moved hundreds of kilograms of cocaine per month from Mexico through the US, ultimately destined for Canada and Australia," the FBI special agent wrote.

"CW-1 used a Phantom Secure device to co-ordinate and complete each of these drug transactions."

In August 2015, using Phantom Secure devices, "CW-1 and his Australian conspirators co-ordinated a shipment of 10kg of cocaine from the US to Australia, which was seized by the Australian Border Force," according to court documents.

In 2016 Australian Federal Police seized a Phantom Secure device from an Australian arrested for drug smuggling, according to the FBI.

"During this period, the AFP communicated with an unknown individual in Los Angeles who packaged and shipped 16 kilograms of cocaine to Australia where it was intercepted on September 11, 2016," the FBI special agent wrote.

Ramos faces racketeering conspiracy, conspiracy to distribute narcotics charges and aiding and abetting charges.