A Guide to Anti-Money Laundering for Crypto Firms
More than 100 people have been arrested, many on the Spanish island of Tenerife, over allegations of money laundering, online scams, and violence.
Italian and Spanish officials say the suspects made millions by tricking victims – mostly Italian nationals – into sending large amounts of money to Spanish bank accounts. These were controlled by an Italian mafia gang who laundered more than €10m through a network of cryptocurrencies or reinvested it in criminal activities such as prostitution, drugs, and arms trafficking.
“The suspects defrauded hundreds of victims through phishing attacks and other types of online fraud, such as SIM swapping and business email compromise,” said Europol, who supported the joint operation.
“This large criminal network was very well organized in a pyramid structure, which included different specialized areas and roles. Among the members of the criminal group were computer experts, who created the phishing domains and carried out the cyber fraud; recruiters and organizers of the money muling; and money laundering experts, including experts in cryptocurrencies.”
Investigations into the gang began in Tenerife in June 2020. “[Their] mission was to launder the money obtained through multiple computer crimes committed in Spain, Germany, Ireland, Italy, Lithuania, and the United Kingdom,” Spanish police said in a statement.
In one incident, a woman was kidnapped and forced at gunpoint to steal from one of their bank accounts. When she opened 50 online bank accounts for the gang and was arrested, the suspects threatened her to prevent her from testifying.
“They beat up, robbed, and extorted members of the organization who deviated from their rules, as well as other people or companies in Tenerife,” said Spanish police, adding that law firms and banks were also infiltrated.
During the sting, authorities froze 118 bank accounts and seized 224 credit cards and a marijuana plantation.
Serious crime warning
In April, Europol warned that Europe had reached a “breaking point” over organized crime and that the threat has never been higher.
In its Serious and Organised Crime Threat Assessment 2021 (SOCTA 21) report, it said that criminal networks were likely to try and infiltrate legal businesses that have become increasingly vulnerable during the COVID-19 pandemic. More than 80% of the criminal networks active in the EU use legal business structures for their criminal activities, the report said.
It also warned of a “parallel underground financial system that allows criminals to move and invest their multi-billion euro profits.”
European Commissioner for Home Affairs, Ylva Johansson explained the scale of the problem: “In one year, criminals made almost €140bn in criminal money in the European Union – 1% of EU GDP and more than the GDP of some of our member states.”
Europeans are hoping that the creation of the Anti-Money Laundering Authority (AMLA) – due to be up and running by 2024 – will strengthen rules around money laundering, as well as countering terrorist financing.
In July, Mairead McGuinness, the EU Commissioner for Financial Stability, Financial Services, and the Capital Markets Union, said: “Tackling money laundering is tackling crime at its very heart. In essence, we have looked at where the gaps are in our regulatory framework, and we have said: enough is enough.”
Compliance teams should carry out comprehensive due diligence on business structures and identifying UBO’s when onboarding new customers. Paying extra attention to transactions to and from countries with higher incidences of organized crime is also key.
Explore the latest global trends in financial crime, sanctions, and crypto from the year so far, by downloading our new mid-year financial crime review report.
Originally published October 1, 2021, updated November 18, 2021
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