Sophisticated Chinese crime syndicates play a growing role in laundering proceeds from the estimated €30 billion European drug trade, EU officials disclosed Tuesday.
European authorities have seen a steady rise in the number of suspicious transaction reports, cash seizures and money laundering investigations involving Chinese individuals and entities in recent years, officials with the European Monitoring Center for Drugs and Drug Addiction, or EMCDDA, and Europol, the EU’s law enforcement agency, noted in a 260-page report.
Chinese criminal organizations operating in the bloc have proven especially adept at cooperating with one another, deploying the latest technologies and exploiting gaps in individual jurisdictions’ anti-financial crime controls to further advance their illicit activities, according to the document.
“Money laundering activities are, thus, conducted at [an] international level through complex and well-organized schemes,” officials claimed.
The report separately raises concerns over Colombian narcotraffickers’ increased use of Bitcoin ATMs to wash their dirty funds.
European investigators have found that Chinese criminal groups are “extremely flexible,” taking advantage of any opportunity to engage in illicit activity, regardless of location or type of crime, according to the report.
Thanks to large-scale commercial shipping links between the EU and China, these groups can launder large volumes of funds across the world through trade-based schemes.
U.K. investigators in February froze £3.6 million that dozens of Chinese foreign exchange students held in nearly 100 bank accounts. Authorities suspected that Chinese gangs were funneling tens of millions more pounds of British narcotraffickers’ proceeds through the accounts , obscuring the origin of the funds through fraudulent exports of luxury goods to China.
Chinese criminal groups also commonly abuse the trade in sugar, scrap metal and other bulk goods, as well as high-value products such as medicines or mobile phones, Christopher Moore, director of re4tify, a London-based consultancy, told ACAMS moneylaundering.com.
“You can’t analyze all transactions with China, so [financial institutions] need to be more sophisticated in their risk assessment,” Moore said. “New tools such as network analytics software allow you to identify connections between individuals, bank accounts, companies … they help you to prioritize which transactions to analyze first.”
Cocaine, cash and crypto
EMCCDA and Europol officials separately warned that Colombian drug cartels are increasingly depositing reams of €500 banknotes smuggled from Europe into bitcoin ATMs in Colombia to acquire cryptocurrency anonymously and under authorities’ radar.
Around two-fifths of Europe’s estimated illicit drug sales involve cannabis, a third cocaine and a quarter heroin, according to the report.
Some seventy percent of all Latin American cocaine sold in Europe originates from Colombia, yielding revenues of between €5.3 and 6.4 billion each year, senior EMCCDA official Andrew Cunningham, who co-authored the report, told moneylaundering.com.
The European Central Bank decided to stop printing the €500 bill in January, amid allegations of its abuse by criminals.
But the denomination, which is still legal tender, remains a favorite of narcotraffickers after Canadian authorities pulled the $1,000 banknote nearly twenty years ago, an illicit finance expert told moneylaundering.com on condition of anonymity, claiming it is now commonly used in ransom payments.
Colombian drug traffickers also have money mules deposit cash into European bank accounts in their names and exchange it for digital tokens, according to the report.
“The virtual currency is then sold to buyers in Colombia, who transfer the value to accounts held by the OCG [organized crime group].”
Drug trafficking organizations’ increasingly innovative money-laundering schemes pose an additional challenge for European authorities, who already struggle to confiscate criminal proceeds, freezing “as little as” one percent of illicit funds flowing through the EU, officials noted in the report.
Contact Gabriel Vedrenne at email@example.com
|China , European Union
|November 26, 2019