Spanish authorities break into Europe’s ‘Narco Bank’

0

More than 4 million euros in cash was seized of a large criminal network providing illicit financial services in a joint operation between the Spanish Civil Guard (Guardia Civil) and the German Criminal Bureau (Landeskriminalamt) in Hamburg. The disorganized organized crime network that ran the “bank” provided financial services to various criminal organizations primarily related to drug trafficking.

During a day of action in May 2022, 44 people of Chinese, Spanish, Moroccan and German nationality were arrested following 50 house searches in Spain and Germany. Authorities also seized 23 luxury vehicles and jewelry.

An underground banking system

According to authorities, the criminal network moved large sums of money through a sophisticated underground banking system that allowed criminal groups to make payments, receive funds and even have their profits laundered. The underground banking system relied heavily on funds from the illegal drug trade. Part of the organization sent up to 200 kilos of cannabis and hashish per week from Spain to other parts of Europe.

Those involved in the criminal network collected physical cash directly from criminal organizations and then transported it in vehicles equipped with hidden compartments. The illicit funds were then paid into a shared cash pool dispersed across various international locations. The banking system allowed criminal organizations to use common treasury to finance illegal activities or make cross-border payments.

A few days after the day of action, the police seized 650 kilograms of cannabis and 51 kilograms of hashish.

Professional money laundering

The Financial Action Task Force (FATF) has previously identified four main types of money laundering organizations and networks identified through case study analysis, including:

    • Money transport networks and cash controllers – Generally, the structure of these networks is made up of individuals who control, coordinate, collect and transmit illicit funds and operate together to negotiate agreements with organized criminal groups.
    • Money mule networks – Money mule networks have been used to open numerous individual bank accounts locally and in global financial centers to facilitate the movement of proceeds of crime.
    • Digital currency and virtual currency networks – In many cases, online payments for illicit drugs are transferred to e-wallets and held in fiat or virtual currency. Then the virtual currency is transmitted through a complex chain of e-wallets, which may include the use of mixers and cups to further enhance the anonymity of virtual currency transactions.
    • Proxy networks – The main task of proxy networks is to move customer funds to the predetermined final destination and obscure the financial flow trail. In many cases, these schemas are supported by TBML mechanisms.

The report also highlights underground banks and alternative banking platforms as tools often used by professional money launderers (PMLs).

Key points to remember

The investigation was carried out within the framework of the European Multidisciplinary Platform against Criminal Threats (EMPACT). Europol provided operational expertise and analytical and operational support to Spanish and German authorities, demonstrating the importance of collaboration and cross-border information sharing.

Ongoing geopolitical events, such as tensions between the United States, Russia and China, and the economic fallout from Brexit, have made anti-money laundering (AML) information sharing more critical than ever. With this in mind, compliance teams should be aware that industry and policy groups will likely focus on new and innovative ways to share information about cross-border financial crime.

More than 4 million euros in cash was seized of a large criminal network providing illicit financial services in a joint operation between the Spanish Civil Guard (Guardia Civil) and the German Criminal Bureau (Landeskriminalamt) in Hamburg. The disorganized organized crime network that ran the “bank” provided financial services to various criminal organizations primarily related to drug trafficking.

During a day of action in May 2022, 44 people of Chinese, Spanish, Moroccan and German nationality were arrested following 50 house searches in Spain and Germany. Authorities also seized 23 luxury vehicles and jewelry.

An underground banking system

According to authorities, the criminal network moved large sums of money through a sophisticated underground banking system that allowed criminal groups to make payments, receive funds and even have their profits laundered. The underground banking system relied heavily on funds from the illegal drug trade. Part of the organization sent up to 200 kilos of cannabis and hashish per week from Spain to other parts of Europe.

Those involved in the criminal network collected physical cash directly from criminal organizations and then transported it in vehicles equipped with hidden compartments. The illicit funds were then paid into a shared cash pool dispersed across various international locations. The banking system allowed criminal organizations to use common treasury to finance illegal activities or make cross-border payments.

A few days after the day of action, the police seized 650 kilograms of cannabis and 51 kilograms of hashish.

Professional money laundering

The Financial Action Task Force (FATF) has previously identified four main types of money laundering organizations and networks identified through case study analysis, including:

    • Money transport networks and cash controllers – Generally, the structure of these networks is made up of individuals who control, coordinate, collect and transmit illicit funds and operate together to negotiate agreements with organized criminal groups.
    • Money mule networks – Money mule networks were used to open numerous individual bank accounts locally and in global financial centers to facilitate the movement of proceeds of crime.
    • Digital currency and virtual currency networks – In many cases, online payments for illicit drugs are transferred to e-wallets and held in fiat or virtual currency. Then the virtual currency is transmitted through a complex chain of electronic wallets, which may include the use of mixers and cups to further enhance the anonymity of virtual currency transactions.
    • Proxy networks – The main task of proxy networks is to move customer funds to the predetermined final destination and obscure the financial flow trail. In many cases, these schemas are supported by TBML mechanisms.

The report also highlights underground banks and alternative banking platforms as tools often used by professional money launderers (PMLs).

Key points to remember

The investigation was carried out within the framework of the European Multidisciplinary Platform against Criminal Threats (EMPACT). Europol provided operational expertise and analytical and operational support to Spanish and German authorities, demonstrating the importance of collaboration and cross-border exchange information sharing.

Ongoing geopolitical events, such as tensions between the United States, Russia and China, and the economic fallout from Brexit, have made anti-money laundering (AML) information sharing more critical than ever. With this in mind, compliance teams should be aware that industry and policy groups will likely focus on new and innovative ways to share information about cross-border financial crime.

Originally published September 16, 2022, updated September 16, 2022

Share.

About Author

Comments are closed.