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“Finally, you can have an offshore debit card with an encrypted account. The privacy you’ve always wanted.”

Such is how a third-party website advertised an “anonymous” debit card for Trustcom Financial, an electronic money institution, or EMI, now at the center of a €2.6 billion cross-border money-laundering investigation in Europe. The card did not bear the names of holders or store their personal details, thereby freeing them to “start spending with discretion.”

Corporate records, web archives and other public information reviewed by ACAMS moneylaundering.com shed light on the legal, personal and administrative links between Trustcom Financial, its Italian co-owners and a network of LLCs, limited companies and other entities in Britain, Latvia, South Africa, the Seychelles and other jurisdictions.

Perhaps more importantly, the records and archives further outline what investigators suspect was Trustcom Financial’s true business model: Providing “money laundering as a service” to more than 6,000 suspected drug traffickers, tax fraudsters and other criminals in Italy and elsewhere from 2018 to 2023.

The third-party website, cartadicreditoanonima.eu, was tied to Business Service Distribution, a limited liability company, or LLC, in Tbilisi, Georgia, operating within a global network of legal entities linked through various means to Trustcom Financial, which opened for business in Vilnius, Lithuania, in 2017 with the alleged backing of a crime syndicate in Italy.

Lithuania yanked the EMI’s license in March 2022 after its two co-owners and directors, Italian nationals Michele Scognamiglio and Marco Spinola, became top suspects in the investigation, which culminated with the arrests of 18 suspects and seizure of a combined €25 million of assets in the Baltic nation, in neighboring Latvia and in Italy.

Home and abroad

Though formally headquartered in Vilnius, Lithuania, Trustcom Financial’s presence in the Baltic nation largely existed on paper.

In practice, Trustcom Financial allegedly employed a “specialized and loyal workforce” of 15 staff at “hidden offices” in Portici and Ercolano near Naples, Italy, and offered clients around the world anonymous “freedom cards,” accounts held by shell companies with nominee directors and, in an unusual move for a fintech, bulk-cash collection and custodial services.

The corporate clients, according to Trustcom Financial’s website, consisted of merchants and “freelancers” who could access their funds online or via a mobile application, all while benefiting from a 24-hour switchboard and online chat function the EMI set up to assist them.

Paradisi-fiscali.org, a second website linked to Trustcom Financial through Business Service Distribution, the LLC in Tbilisi, Georgia, meanwhile offered clients the full suite of offshore services at the EMI, from account opening and tax planning, to the formation of entities in Antigua, Cyprus, Hong Kong, Panama, Delaware and more than 20 other jurisdictions.

Prices on the now-defunct website ranged from €1,600 for a U.K. entity to €9,000 for an entity in Georgia, to €9,500 for a fully fledged “e-commerce” business with a nominee director, shareholders, websites, an online billing platform and “anonymous” sim cards.

In 2018, Business Service Distribution, or BSD, boasted to prospective customers of employing a staff of 25 in London, Tblisi, Geneva, Milan and Barcelona and bringing 15 years of experience to bear in forming offshore legal entities “in the safest tax havens.”

Moneylaundering.com identified another corporate services provider that promoted Trustcom Financial’s services: Offshore Pro Group in Panama City, Panama, which specifically catered to Russian clients, offering to open them accounts at the EMI with French and Portuguese entities they controlled.

“The suspects also allegedly made use of IT and telematic equipment designed to prevent and interrupt communications [and] avoid … surveillance, capture and interception by police forces,” Italian authorities said in a statement last month.

Shell game

Moneylaundering.com has yet to establish who controlled Trustcom Financial on paper, but information retrieved from Companies House, which administers Britain’s databases of beneficial owners and other corporate details, suggests the firm formed one segment of a broader structure headed by a single parent entity: Trustcom Holding LLP in London.

Trustcom Holding LLP is in turn owned by BSD Services LLC in Latvia—possibly the same entity Italian authorities suspect played a key role in the money laundering scheme—and by Akrotex Inter Limited in South Africa.

BSD Services LLC and Akrotex Inter Limited also own Trustcom Limited, an entity in Glasgow, Scotland, that lists Spinola and Scognamiglio as directors. Trustcom Limited meanwhile owns Trustcom Financial Limited in London, records obtained from Companies House show.

Other records identify Scognamiglio as the owner of several other British legal entities, including Worldwide Real Estate UK Ltd., a company in London that 16 years ago obtained a mortgage from Barclays plc to buy a luxury residence in Ercolano, one of the two towns near Naples where the suspected money-laundering network allegedly operated.

Worldwide Real Estate UK Ltd. is in turn owned by Aglomex LP in Canada.

Scognamiglio and Spinola also jointly owned Silverton & Grant LP, a limited partnership in Douglas, Scotland. Scottish limited partnerships have long functioned as the corporate vehicle of choice for fraudsters and money launderers.

The Pandora Papers, a cache of millions of corporate and banking records leaked in 2021, identify Scognamiglio as a director of a second entity operating under the name of Business Service Distribution but formed in the Seychelles, not Tbilisi.

Italian authorities arrested Spinola, 36, and Scognamiglio, 50, in Naples as they stepped off a plane from Latvia on Feb. 27. They also seized three properties and a yacht pursuant to their investigation after taking €700,000 of cash and €1.3 million of cryptocurrency, watches and jewelry into custody.

Lithuanian authorities seized a restaurant, two hotels, two apartments and 10 other properties in Vilnius as part of the case on Feb. 27, while their counterparts in Latvia seized four of their properties in Riga.

Italy’s Guardia di Finanza described the joint operation as “a precautionary measure ordered during preliminary investigations,” and noted that all suspects are “presumed innocent until a final sentence is reached.”

Fintech hub

Trustcom Financial’s downfall threatens to reawaken longstanding concerns over the financial crime-related risks that both plague and emanate from Lithuania, which now hosts more than 270 EMIs, payment processors and other fintechs.

For the past two years, the Bank of Lithuania, the country’s central bank, has more thoroughly examined EMIs and other fintechs for compliance with AML regulations and ramped up enforcement to accounts for the larger volume of payments flowing through them.

Data obtained from the central bank and reviewed by moneylaundering.com shows that Trustcom Financial processed nearly €400 million for customers in 2019, making the EMI one of the 10 largest in Lithuania in terms of transactional volume.

Trustcom Financial handled €656 million in 2020, the platform’s fourth full year of operations in Lithuania, and more than €513 million in 2021, its last.

In January 2021, 14 months before the Bank of Lithuania revoked Trustcom Financial’s license, the Financial Crimes Investigation Service, which coordinates the Baltic nation’s overall campaign against illicit finance, fined the EMI €128,000 for violating the country’s law against money laundering on at least 10 occasions.

Ben Cowdock, head of investigations for Transparency International’s office in London, told moneylaundering.com that Trustcom Financial’s alleged business model, “a suite of services perfect for laundering money,” strongly resembles that of ABLV in Latvia, Danske Bank’s erstwhile affiliate in Estonia and other scandal-ridden, now-defunct lenders in eastern Europe.

“With the convergence of shell-company services, international payments and regulators initially applying less scrutiny to the fintech sector, the warning signs were all there that organized criminals would seek to exploit the payments sector,” Cowdock said. “Regulators around the world seem to finally be catching up.”

Contact Koos Couvée at kcouvee@acams.org