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EUR 900M in Criminal Funds Seized: European Authorities Press Charges in Encrochat Case

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Authorities worldwide have made over six thousand arrests – including nearly 200 high-value targets – connected to the takedown of EncroChat, a communications platform favored by organized crime groups (OCGs). The arrests were made possible by a joint investigation team (JIT) between French and Dutch authorities, which began in 2020 with the support of Europol and Eurojust

EncroChat: An International Investigation

The results of the three-year joint investigation were reported at a press conference on June 27, 2023. According to French prosecutor Carole Etienne, the investigation initially revealed the existence of EncroChat, an “encrypted communications solution…for use by very high-level national and international criminal organizations.” The solution enabled criminals around the world to communicate completely anonymously via encrypted devices using France-based servers.

With the help of intelligence gleaned from 115 million encrypted messages, the total criminal funds seized or frozen by the authorities amounted to nearly EUR 900 million. In an infographic breaking down the crime areas EncroChat had enabled, money laundering accounted for 14 percent, accompanied by four critical crimes on the European Union’s list of predicate offenses to money laundering: 

  1. Murder
  2. Heavy-weapons arms trafficking
  3. Organized crime 
  4. Drug trafficking 

Taken together, organized crime and drug trafficking accounted for nearly 70 percent of the total criminal activity. Charges under French law include money laundering to conceal the proceeds of drug trafficking.

The Importance of Collaboration and Information-Sharing

The dismantling of the communications service and related seizures and arrests is a testament to the power of collaborative investigation and information-sharing. According to Dutch prosecutor Renske Mackor, French and Dutch authorities had separately begun an investigation into EncroChat’s activities but quickly realized the importance of joining forces. Mackor highlighted the strength of joint investigations, which allow partners to “directly exchange information and evidence.” She continued, adding:

Partners can operate in real-time and jointly carry out operations. A JIT also enables the respective authorities to participate in an investigation in a mutual beneficial way. Within the frame of a JIT, participating countries can also jointly agree on matters such as prosecution. … In the context of this JIT, teams in both countries have set out on [a] new and innovative path of investigation. This type of case and this type of criminality calls for different approaches. As a result, the crypto services of EncroChat were dismantled in 2020 by interventions of the Dutch and French national authorities.

As global authorities respond to the increasing complexity of worldwide financial and organized crime, savvy firms should ensure they remain up-to-date with the techniques and outcomes of collaborative investigation and enforcement. The importance of international collaboration to combat financial crime was also recently called out by Singapore Minister Sun Xueling in a speech opening the 2023 Regional Anti-Scam Conference. In her address, she particularly recommended countries consider transjurisdictional cooperation to share information and strategies and trace complex financial crimes that cross borders.

Key Takeaways

As authorities worldwide turn to collaborative innovation to transcend jurisdictional limits in criminal investigations, firms should consider following suit. Despite the interconnected reality of financial crime with its predicate offenses and a wider network of illicit activity, anti-money laundering (AML) teams often operate in siloed environments. This results in a focus on complying with specific rules rather than a view to managing the whole risk ecosystem connected to criminal financial flows.

Yet this narrow focus prevents firms from taking advantage of rich resources to tackle the problem from a holistic angle. In a recent piece on money muling, for example, Aite Novarica Strategic Advisor Trace Fooshée highlighted the way money laundering and fraud bleed into each other and form part of a single “logistic network.” Yet all too often, fraud and AML teams operate in silos and do not share crucial information.

Firms should consider the benefits of opening communication between relevant teams within their organization, such as fraud and AML, to allow for information-sharing and collaborative investigation. This could include using integrated risk management solutions designed to benefit both fraud and AML risk management. European firms should also remain aware of possible public-private initiatives in Europe that could improve their ability to investigate and prevent financial crime.

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Originally published 30 June 2023, updated 30 June 2023

Disclaimer: This is for general information only. The information presented does not constitute legal advice. ComplyAdvantage accepts no responsibility for any information contained herein and disclaims and excludes any liability in respect of the contents or for action taken based on this information.

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