State of Financial Crime 2023 Report

“Super Cartel” Controlling a Third of Europe’s Cocaine Trade Taken Down in Europol Raids

Financial Crime Latest News

On November 28, 2022, Europol reported that a “super cartel” of drugs traffickers controlling around one third of Europe’s cocaine trade had been busted in a series of coordinated raids. Codenamed Operation Desert Light, 49 suspects were arrested, including six targets regarded as “high-value” by international law enforcement. 

Authorities from six countries took part in the investigation, including Spain, France, Belgium, the Netherlands, the United Arab Emirates, and the US. 

Operation Desert Light

Commenting on the arrests, Europol stated that the “drugpins formed a prolific criminal network involved in large-scale drugs trafficking and money laundering.” Spanning a period of two years, Operation Desert Light led to the seizure of more than 30 tonnes (30,000kg) of drugs. 

According to InSight Crime, five leading participants in the super cartel are among those arrested, two having been apprehended in previous years, and one – Daniel Kinahan – having fled arrest. He has been wanted by the United States Department of State since April 2022, with a reward set at 5 million dollars. In April, the Office of Foreign Assets Control (OFAC) sanctioned Kinahan alongside other leading members of the notorious Kinahan Organized Crime Group (KOCG) he is a part of. 

Among the tactics involved in the investigation, the police hacked encrypted phones using the messaging service Sky ECC to intercept communications about organizing drug shipments. The service had become a popular tool for criminal communications since the 2020 interception of EncroChat by authorities. Last year, the platform was reported to host around 3 million communications daily.

Drug Trafficking: Red Flags

Red flags associated with financial crimes can often overlap – especially regarding the laundering of illicit proceeds. However, certain typologies stand out concerning drug trafficking and are worth noting. The United States Financial Crimes Enforcement Network (FinCEN) describes key indicators to look out for in a 2019 advisory:

  • Money transfers to foreign countries (such as China) – using money services businesses (MSBs), online payment processors, convertible virtual currency (CVC), or bank transfers.
  • Transfers, like the above, that show signs of structuring – especially the use of multiple MSBs or other payment services.
  • Apparently unrelated recipients sharing key information – especially phone numbers.

The report details further typologies and examples. Among emerging trends, the use of the Darknet is becoming increasingly popular for sourcing and paying for illicit drugs. The advisory also notes that China is a primary source for these substances.

Key Takeaways

One of the European Union’s 22 identified predicate crimes for money laundering, drug trafficking has also been recongized as such by FinCEN and the Financial Action Task Force (FATF). As such, it’s especially important for compliance departments to ensure they have up-to-date risk assessments regarding their institution’s vulnerability to drug trafficking abuse by accountholders. In accordance with its risk assessment and jurisdictional regulations, each institution should ensure all analysts are trained in recognizing and reporting relevant red flags.

The State of Financial Crime 2022

Uncover the latest trends in financial crime and ensure your firm's risk assessment is up-to-date

Access the Report

 

Originally published December 2, 2022, updated December 5, 2022

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.

Copyright © 2023 IVXS UK Limited (trading as ComplyAdvantage).