Focus on
limitations and problems of the European investigation system in relation to international money laundering
There exists a society that has
accomplished a very meaningful evolution in terms of integration,
trade relations, overcoming borders, reducing bureaucratic procedures
and administering justice.
This
society is not the one we all are living and working in. On the
contrary, our society has not been able to evolve; indeed, it tends
to regress and continues to raise fences, to build walls and to
obstruct trade relations and judicial cooperation.
The
evolved society referred to is the criminal one. It is a fully
working and functional microcosm which has evolved in the interests
of fixers, of common criminals and organized crime, captains of
industry, who transformed their core business from a productive to a
speculative one; politicians and heads of state for whom corruption
is the only reason for their existence, the only means for them to
retain power, allowing them to continue to exercise it more and more
forcefully.
All
these subcultural forms, because we are talking about a subculture,
have one common element; the only means for them to manage their
profits, whatever their nature or origin: the international banking
and financial system.
States,
which continue to erect walls and to restrict the freedom of movement
of honest people, have made very little progress in opposing
international money laundering.
There
is a lack of skills and tools, both operational and legislative. This
is a situation that impacts the investigative and disciplinary
system, and it is why only a tiny number of criminal proceedings for
money laundering ever reach a court judgment.
I
believe we can count them on the fingers of one hand.
In
theory, the available human resources would be able to identify and
oppose the money laundering networks, but even the most competent
investigators and judges are often not provided with the information
or frameworks they need to conclude their investigations or bring a
successful prosecution.
It
occurred to me that I had to explain to highly placed and extremely
busy individuals in the legal system the meaning of terms and of
financial tools such as MTN (Medium Term Notes), which have been
widely used in company fraud, or SWIFT (Society for Worldwide
Interbank Financial Telecommunications), the global provider of
secure financial messaging services.
Euroclear
is an English holding company, which consolidates similar European
companies. Financial management companies manage the internal central
repository clearing, a gigantic clearing house from which almost all
the banking and financial transactions transit.
Over
the years, the international banks, especially in those countries
that survive only thanks to the profits made from financial assets,
have built a dense and complicated banking network which has spread
world-wide.
They
have taken advantage of local laws and tax breaks accorded to archaic
entities kept alive solely for this purpose, and they have managed to
ensure an almost complete independence from national and
international regulations.
It is
difficult to establish the jurisdiction of a particular asset if this
is liquid, easy to move and comes under no identifiable jurisdiction;
indeed, it is very difficult, but it is not impossible.
Criminal
organizations, the corrupt, the tax evaders, make no distinction as
to race, colour, language, habits and flags. They quickly adapted to
the international banking system, they acquired it and they made
their own.
A
close examination reveals that in the same banking network, in the
same "financial highway", the funds of executives, of
criminals and of corrupt politicians merge. All the funds travel on
the same channel, they arrive in the same havens, they are ready and
available if required with a simple click, there is no need to move
from your home. The system allows you to purchase goods or services;
an apartment block, a cruise, a luxury car, a bank. Anything is
within reach.
The
chart that you see here is a faithful reconstruction of a network of
international money laundering, purpose-built for at least two banks,
or former banks: the Hottinger Bank in Geneva and the Azimut Bank in
Moscow.
It
only takes 3 to 6 months to create such a sophisticated network,
while 10 years would not be enough to dismantle it, at least with the
current instruments.
We
personally investigated on the first bank on behalf of a German
client and we investigated the cash flows that had resulted from the
fraud that the client had suffered.
In
this chart, you can see money laundering of at least 1.5 billion
Swiss Francs.
The
Hottinger Bank alone generated about 500 million Francs, diverting
them into a hive of the companies established for the purpose in
remote countries, where the legal cooperation is non-existent, such
as Santo Domingo, and in other tax havens around the world.
In
the course of this investigation, we came across a number of money
laundering structures that have been operating for a long time
between Switzerland and Italy. The Baron Filippo Dolfuss is a huge
money launderer and in 2014 he was caught red-handed and arrested by
the Guardia di Finanza in Milan. The Officers of the Guardia di
Finanza had discovered money laundering to the tune of about 850
million Euro, which involved popular entrepreneurs based in Milan and
important structures belonging to the financial empire of a famous
tycoon in the area.
Considering
the confluence of the characters and structures, we had seen fit to
lodge our legal actions/complaints to region’s Judicial Police –
a decision which subsequently proved to be a poor one.
The
officers, excellent professionals, more than diligently received our
legal actions/complaints and presented them to the magistrate working
on the case of the money laundering Baron.
We could not know that there was an ongoing agreement between the Public Prosecutor and defence and that this agreement would allow the financial criminal an extremely favourable plea bargain.
After
months of investigations conducted all over in the world and after
having spent about 1 million Euro, we had come to at least 5 Italian
subjects residing in Italy and to a number of companies related to
them.
These
characters had the audacity to receive laundered money in their
personal and corporate current accounts, though not before these
funds had been funnelled through various companies and offshore
accounts.
At
this point, a Magistrate of Milan entered the scene who, faced with
the complexity of an investigation, preferred to dismiss the case
thus neglecting and abandoning the duty to exercise his mandate.
One
might choose to believe the magistrate preferred to dismiss the case
in the interests of procedural economy, but strong doubts about the
case remain.
Based
on the prerogatives prescribed by the law that regulates the
registration of the acts of the Public Prosecutor’s Office, this
Magistrate, kept the legal actions/complaints on hold on his desk,
without responding to the repeated requests of the Judicial Police.
He then decided, "Ictu Oculi" – at a glance – that it
was not possible to detect facts that constituted a crime. He
therefore gave instructions to dismiss and file the case, according
to the form 45/k without the counter check of the Magistrate for
Preliminary Investigations.
In
our opinion, and not only ours, serious facts that are pertinent to
the sprawling money-laundering network that you can see in the
illustration, were dismissed “Ictu Oculi”.
How
and why did the Public Prosecutor decide not to proceed when he was
provided with all the necessary data: current accounts, amounts,
dates, transaction numbers? It remains a mystery.
Anyone
knows that Italian companies are required to declare and document
their revenues, so you can at least wonder: how did that particular
company in Milan manage to hide transfers of billions coming from a
Lithuanian account held by an off- shore company undoubtedly created
for money laundering?
The
only possible way would be false invoicing. “Ictu oculi”, then,
at least that crime should have been taken into consideration.
Moreover, the Italian subjects that we reported on in our legal
actions/complaints were summoned to testify in the trial against the
Swiss bank, and they candidly admitted in the minutes that in the
previous 15 years, they had deposited money, liquid and undeclared,
at the above-mentioned bank. We provided these acts to the Public
Prosecutor’s Office of Milan.
The
Public Prosecutor, ignoring not only our requests, but, and this is
more serious, also the repeated requests of the diligent Guardia di
Finanza, preferred to dismiss the case probably in order to allow the
huge money launderer caught red-handed to plea-bargain for a lenient
penalty and a ridiculously inadequate fine.
What
are the advantages for the State in settling for a mere 400,000 Euro
when faced with to tax evasion for many millions of euros that is
easily detectable as part of an overall money laundering of
approximately of 1.5 billion Swiss francs and capital assets that we
identified in Italy of a value between 20 and 50 million euro?
Yet
also, this happens in Italy.
The
globalization of financial flows does not often allow for a rapid
assessment following in-depth investigation, and it often prolongs
the time needed to investigate, so that the statute of limitations
period expires.
The summit
This
Summit has one prerogative, it is not without a purpose, at least
that is our wish, it produces ideas, suggestions and proposals. The
suggestion that I want to make to the politicians and friends who are
present tonight, is first of all, to adjust the crime limitation
period for all the tax and financial crimes. At the same time, I
would like to raise awareness of the investigative and judicial
bodies so that their employees can attend professional development
courses. Last, but not least, we need to promote the implementation,
in the shortest possible time, of enhanced collaboration agreements
and of more timely exchange of information and coordination with
other states. The current agreements are not enough; they are
insufficient and slowed down by bureaucracy.
It
would also be instructive to question the Public Prosecutor who
dismissed and archived the case.
Claudio
Loiodice
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