Opinion

Mafia and money laundering

photo_camera mafia

On 5 August 2021, the news reported that the capo of one of the Italian mafias, Domenico Paviglianiti, of the 'Ndrangueta' mafia, also known as the 'Calabrian mafia'1 , had been arrested in Madrid, and a few days later Maria Licciardi, of the Neapolitan Camorra2 , was arrested. However, this is neither the first nor the last time we will see news of this kind. Nowadays, there are different groups known as mafias all over the world.

If these groups stand out for anything, apart from violence, it is for their relentless pursuit of laundering the money obtained from the illegal activities to which they devote much of their time, and how do they do it? What do they look for in a particular place to establish their base of operations? Or rather, where do they hide?

Money laundering was only instituted as a crime in Spain in the 1980s. Already in the Middle Ages, usury existed, from which a percentage of money was obtained as profit, which was later introduced into the legal tender. In the 1960s, it became popular to deposit money from illegal activities in banks, as at the time it was not a prerequisite to certify the origin of the money. There were also tax havens and offshore financial centres (entities created to carry out financial activities outside the country of origin, generally in a tax haven).

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The most curious thing about all this is that the crime of money laundering did not exist as such, but rather was included among other crimes, and so it was not until the 1980s that it was separated from other criminal offences and given the relevance it has today3.

There are many ways of laundering the illegal money obtained by the mafias from illegal activities, the best known of which are4:

  • Banks: A simple and easy way is to deposit small amounts of money in bank accounts, so that the tax authorities do not notice. This method is called "smurfing". They usually use third parties for this purpose.
  • Creating companies: in this case, it is very common to create different companies, generally linked to each other, but which are shell companies dedicated to exchanging certain amounts of money between them. Or also to create fictitious loans through them. In these cases, it is most common to use the role of front men, who are put in charge of these companies to manage them.
  • The real estate and furniture market: the purchase of homes by paying the amount of money in one lump sum. Or, on the contrary, to find businesses for the purchase and sale of movable goods such as cars, works of art5 , boats, etc.
  • Casinos and equivalents: it is very common to resort to this type of recreational activity to launder money obtained by unlawful methods, as it is a business that was not so regulated until a few years ago and where it was still possible to introduce illegal money with little explanation.

However, they are not the only means used for money laundering, as with the advance of technology new methods are emerging, such as bitcoin (where illegal money is exchanged for a digital currency and it is possible to move it from one place to another more easily and quickly than if it were done by legal means), a method that is currently booming due to its ease, agility and lack of regulation. 

As a result of the aforementioned arrests, it has also come to light that one of the last activities on which they focused was the buying and selling of entire orange groves with bad cheques. Their modus operandi consisted of "applying for credits that they did not pay back, simulating theft or loss of goods in order to collect insurance money, not paying transporters or falsifying international goods contracts for the transport of agricultural products"6.

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Another important point is the strategic enclaves they use:

  • Cobo Calleja industrial estate: On this occasion, the National Police found in Madrid in 2015 an accumulation of companies run by Asians that laundered money obtained from Asian prostitution, drug trafficking and gambling, illegal gambling, labour exploitation of people, hawalas and daigou (a recently emerged method that consists of tourists buying luxury goods outside their country as travel gifts, but when they return to their country they resell them to clients, thus avoiding paying taxes for sending these goods from one country to another and obtaining greater profit).
  • Calabrian Mafia: in 2010, they already had 5,000 catering establishments under their responsibility in Italy, from which they obtained a high percentage of the profits and at the same time used them to launder the money obtained in other ways.
  • Gold: converting money into gold is another way of laundering money. Dubai is an ideal location for this, as not only do they move large amounts of money on a daily basis, but they also have a very lucrative gold market.
  • Marbella: it has been an ideal enclave due to its proximity to Gibraltar, which until the middle of this year 2021 was listed as a tax haven, and its proximity to Africa and Europe. This facilitates good communication between the continents for drug trafficking. Marbella is home to all kinds of mafias, from Russian to Neapolitan, and even people linked to Islamic terrorism.

Currently Spain continues to be a prime location for the sale and purchase of real estate, as according to the 2020 Yearbook of the Association of Registrars7 , 7% of buyers of homes with values over 500,000 euros were foreigners in 2020, and 9.72% in the first quarter of 2021, with the British and Moroccans standing out as the largest buyers of homes in Spain and the areas of choice being the islands and coastal areas of the Mediterranean.

These enclaves are generated because what they are really looking for is8:

  • A geographical area of rapid population growth,
  • A place that is the focus of immigration and tourism,
  • And a certain weakness of democratic institutions and lack of control by them.blanqueo de capitales

The aim of all this is to go unnoticed, as Domenico's neighbours commented in the news that Domenico "was a very nice neighbour who did not get into trouble and did not create trouble".

And although today various institutions have been created to fight money laundering, such as the United Nations Office on Drugs and Crime (UNODC), the Financial Action Task Force (FATF), the Anti-Corruption Prosecutor's Office, the Programme of Assistance Against Transnational Organised Crime (PAcCTO), among others, and various regulatory standards have been created, the United Nations Office on Drugs and Crime (UNODC), the Financial Action Task Force (FATF), the Anti-Corruption Prosecutor's Office, the Programme of Assistance Against Transnational Organised Crime (PAcCTO), among others, and various regulatory standards have been created for prevention, such as the fifth directive, there is still a long road ahead, but we are still fighting every day to prevent as much as possible and we will continue to fight with the support of all the organisations, regulations and specialised societies.

Verónica Pérez, Law graduate and senior in PBC-FT and fraud and coordinator and collaborator of Sec2crime, PBC-FT area.

Bibliography:

-    Detención Domenico Paviglianiti: https://www.elconfidencial.com/espana/2021-08-05/detenido-madrid-maximo-responsable-mafia-calabresa-ndrangheta_3218163/
-    Detención María Licciardi: Las mafias italianas fijan su segunda residencia en España | Internacional | EL PAÍS (elpais.com)
-    Origen PBC: https://leyderecho.org/historia-del-blanqueo-de-capitales/ 
-    Algunas maneras de blanquear: https://economipedia.com/actual/como-se-realiza-el-blanqueo-de-dinero.html
-    Artículo Sec2crime: https://www.sec2crime.com/2021/08/06/el-arte-y-el-blanqueo-de-capitales/
-    Noticia compras de plantaciones en España: Así operaba la mafia calabresa en la Comunidad Valenciana: estafas agrícolas y blanqueo de capitales (elespanol.com)
-    Anuario Colegio de Registradores: Colegio de Registradores de la Propiedad y Mercantiles de España 
-    Información sobre mafias: Mafia y corrupción: El blanqueo de capitales en España