A German citizen in the service of the mafia
A bank's suspicious transaction report to the Money Laundering Reporting Office (MROS) revealed transactions linked to the 'Ndrangheta between Switzerland and Eastern Europe. Here is the story.
On the account opened in the name of a construction company, transactions were carried out to pay salaries, orders and other subcontracts. The account had been opened at a Swiss bank for the Swiss subsidiary of a Bulgarian construction group. The analysts at the MROS communication office had their doubts about this initial information. The profile of the German citizen who held 95% of the Swiss subsidiary’s shares and was its controlling owner did not seem to match up with the activities of the account. Was he really just a simple nominee? The investigations conducted by the MROS analysts revealed that he was a frontman used to launder the ‘Ndrangheta’s money.
The unmasking of the frontman
The information sent to MROS came from a small deposit bank. The mafia favours these banking institutions, which leave it a measure of discretion. The transactions on the account in question were small. MROS had doubts as to the real identity of the account holder and wondered about the activity of the group’s account. A closer examination drew the fedpol analysts’ attention to a second shareholder of the group, an Italian citizen. After various exchanges with its foreign counterparts, MROS learned that the German citizen actually owned only 5% of the group. The other 95% belonged to an accountant, an Italian citizen who served a prison sentence in Belgium for having been the accountant of the 'Ndrangheta. During his time in prison, the accountant’s wife continued her husband’s business. The continuity of this business brought to light transactions with other accounts.
Money laundering
MROS went on to identify the Swiss business relations involved in the case, i.e. all the accounts opened in the name of the identified counterparties. After sending some requests to the cantonal tax authorities, checking the turnover, benchmarking and receiving information from several foreign counterparts, MROS’ suspicions were confirmed: more money was coming in than was actually declared. These construction companies were in fact being used by the 'Ndrangheta to transfer mafia cash through the Swiss banking system. MROS reported the matter to the criminal prosecution authorities. This is a good example of the importance of national and international cooperation in following the money and discovering its origin.
Sock puppet strategy
The mafia uses sock puppets (or frontmen) for the sake of discretion and as a cover-up for its illegal actions. The mafia tends to have nominees initial forms to open accounts in the name of operating or offshore companies, which are used to launder money and to hide the real beneficiaries of the accounts, with the letter A (verification of the beneficial owner for accounts opened in the name of offshore companies) or the letter K (controlling owner of operating companies, i.e. persons who hold 25% or more of the company's shares). The mafia uses offshore structures, operating companies and nominees and sometimes combines legal operational activity with inflows of funds from mafia operations (particularly in the construction sector). This makes it difficult for banks to spot illegal activity. It should be noted that there is no central register of company shareholders in Switzerland. It is the responsibility of the banks to verify the natural identity of the persons representing a company that opens an account. However, as in our example, the information given by the clients can be false.