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Europol's latest Serious and Organised Crime Threat Assessment, published yesterday, made for interesting reading – notably the admission that officials previously underestimated the scale and complexity of contemporary money-laundering networks.
Thread on #SOCTA2021:
Thread on #SOCTA2021:
More than 80 % (!!) of crime syndicates active in the EU control legal businesses, according to the report. 2/3 of estimated 5,000 crime groups use “basic” money laundering methods such as investing in property, luxury goods, & moving dirty cash through cash-intensive businesses.
The remaining third – the bigger players, including powerful drug gangs and fraud rings – tend to rely on “specialized criminal networks and individual experts offering money laundering as a service on a subcontractor basis” to move their profits.
Stricter financial regulation and banking supervision have given rise to a "parallel underground financial system" consisting of money brokers, money mules and criminal investors, Europol said.
These networks offer a wide range of services, incl. underground banking, currency exchange, crypto trading, company formation and cross-border payments through the formal financial system using fake contracts and invoices. "Brokers" also implement complex compensation schemes.
Belgian officials last year flagged such a compensation scheme, one in which criminals obtained cash to pay undeclared workers from Chinese crime syndicates selling counterfeit goods in the country.
The Belgian criminals paid for the cash by routing funds through payment services providers to a broker based in Dubai, who then sent the money on to China.
UK officials've warned abt growth of Chinese underground bankers, who help affluent individuals circumvent Beijing’s controls on capital flight while relying on illicit cash generated in Britain to settle currency conversions. Money never crosses borders. https://www.moneylaundering.com/news/europol-flags-organized-crimes-links-to-parallel-underground-financial-system/
Dutch officials have seen Kenya, Uganda and other African countries emerge as top destinations for drug traffickers to launder profits through bulk trades of precious metals / other goods. Dubai (shock, horror) also features as central hub in these schemes https://www.moneylaundering.com/news/dutch-investigators-note-africas-growing-role-in-trade-based-money-laundering/
The report arguably reiterates pretty much well-established notions about the increasing professionalisation of money-laundering networks.
But as @antonm_law points out in my piece (link below), emphasis on the previously unknown scale and complexity of laundering suggests law enforcement agencies learned valuable lessons after infiltrating at least two encrypted messaging services used by thousands of criminals.
Last year, Dutch and French authorities hacked #EncroChat to glean intelligence on drug shipments, contract killings, money laundering schemes and other crimes, resulting in record cash and drug seizures in several countries. Background: https://www.moneylaundering.com/news/encrypted-platform-hack-fueled-uk-cash-seizures-during-covid-19-lockdown/
The head of the UK National Economic Crime Center has said that the UK EncroChat operation has given investigators "phenomenal insight into how money laundering happens in the U.K." and sparked "investigations into high-end money laundering and international money controllers."
As @antonm_law also points out, references to a "parallel financial system" may be a bit misleading. Complex schemes described in the report have touchpoints w/ formal economy – accounting, company formation, customs, financial institutions – that can be exploited by authorities.
What's happening is greater complexity, a larger cadre of professionals sustaining laundering networks, greater criminal infiltration of the licit economy, while transactions between crime groups are increasingly settled in different parts of the world using goods, not money.
As one senior Dutch investigator put it recently: "I sometimes refer to the importance of 'follow the value' instead of [the traditional maxim] ‘follow the money."
Certain is that professional money launderers are now considered to be high-value targets whose detection and arrest would “seriously damage” the criminal networks they serve.
They are seen as "brokers": individuals who play a key role in linking individual criminals with crime syndicates, producers with distributors and distributors with transporters; and facilitating access to informants, hitmen, document forgers and other skilled-services providers.
