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