Business World

Monday 27 January 2020

Taking out the money launderers

Italy brings out big guns to beat the mafia's latest 'banker' role

An unidentified man covers his face with an arrest warrant outside the police headquarters in Reggio Calabria, southern Italy,
following one of the biggest operations ever against the powerful 'ndrangheta crime organisation
An unidentified man covers his face with an arrest warrant outside the police headquarters in Reggio Calabria, southern Italy, following one of the biggest operations ever against the powerful 'ndrangheta crime organisation

Steve Scherer

The mafia has cranked up money laundering activities in Italy after the credit crunch prompted banks to stop lending, leaving a funding gap that criminal capital has filled, according to the Bank of Italy.

"The crisis has given organised crime room to thrive because access to credit has become more difficult," said Anna Maria Tarantola, the central bank's deputy general director, in a July 12 interview in her Rome office.

"Whoever holds large amounts of cash, like crime groups, can make investments that aren't possible for others. They can now invest in fully legal businesses."

The central bank's financial intelligence unit tracked 15,000 suspicious transactions in the first half of 2010, up 52pc from a year earlier, and exceeding the total for all of 2008, said Ms Tarantola, who is in charge of banking oversight.

Last year, investigators seized Rome's Cafe de Paris, famous for its appearance in Federico Fellini's 1960 film 'La Dolce Vita', alleging it was owned by the Calabrian 'Ndrangheta mafia.

Sicily's Cosa Nostra mafia has used supermarket chains it owns for similar purposes, according to court reports in Palermo.

Smuggling cocaine

Italy's economy, Europe's fourth biggest, shrank more than 5pc last year and the central bank forecasts growth of 1pc for 2010. Bank lending slowed in 2008 and 2009. Central bank governor Mario Draghi said on July 15 during a speech to Italy's banking association that "demand for credit is increasing, but there's the impression that for many businesses, especially the small ones, demand isn't being fully satisfied."

Organised crime groups boosted their revenue by 4pc to €135bn last year, according to estimates from Rome-based anti-racketeering group SOS Impresa.

Mob arrests have underscored the growing role of the mafia and money laundering in the legal economy. A sweep against the 'Ndrangheta, Italy's wealthiest organised crime group, netted more than 300 suspects last week and showed how the organisation has taken root around Milan, the country's financial capital.

Authorities consider the 'Ndrangheta to be Italy's most dangerous mafia, surpassing Cosa Nostra, because of funds earned from smuggling cocaine from South America.

Investigators in Rome have accused managers at Telecom Italia Sparkle and FastWeb of running a €2bn tax fraud and money-laundering programme from 2003 to 2007, according to a February arrest warrant. Lawyers for the companies said they were unknowingly involved in the scam and denied any wrongdoing.

The financial intelligence unit alerted police about suspicious operations involving Telecom Italia Sparkle and FastWeb, Giovanni Castaldi, head of the unit, said.

Of the 21,000 suspicious reports in 2009, the central bank judged that 14,800 warranted further investigation and 4,000 were later labelled crimes and reported to prosecutors -- proof that the Bank of Italy is succeeding in the crackdown, Ms Tarantola said.

"More than 20pc of the reports have led to criminal investigations," she said.

The International Monetary Fund estimates that money laundering amounts to an annualised 2pc to 5pc of global GDP. Laundering in Italy may equal as much as 11pc of its GDP, said former chief mafia prosecutor Pier Luigi Vigna.

Big bills

The central bank is conducting its own studies to evaluate the scale of the problem in Italy, Ms Tarantola said. Credit costs are higher and growth is lower in southern Italy, where organised crime is most prevalent.

The financial intelligence unit has ordered banks to scrutinise withdrawals or deposits that involve €500 bills, Ms Tarantola said.

Big bills facilitate money laundering since they make large sums of cash easier to hide and transport, the Bank of Italy said in a 15-page internal report last year.

As much as €6m can fit in an overnight bag, and €10m in a 45cm safe-deposit box, the document said.

Italy's government passed a law last year granting amnesty to tax evaders who agreed to repatriate savings stashed abroad. That led to about €100bn being declared to authorities and more than €5bn in tax revenue.

But of the 206,000 transactions related to the amnesty, 340, or 0.2pc of the total, have so far been flagged as "suspicious," Mr Castaldi said.

Irish Independent

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