MILAN (Reuters) – Drug cartels operating in Italy increasingly use a shadow network of unlicensed Chinese money brokers to hide cross-border payments, according to Italian judicial and law enforcement agencies. We are using.
The development highlights how issues that US authorities have fought in connection with Latin American drug groups have taken hold in Europe.
In Italy, authorities see increased use of remittance networks that lack easily traceable trails and facilitate quick payments, seven judicial and law enforcement officials said. told Reuters. Remittance methods involve depositing an amount with a money broker in one country, and another agent within the network elsewhere in the world paying an equivalent amount to the intended recipient.
“This phenomenon is on the rise,” said Barbara Sargenti, an Italian anti-mafia prosecutor who coordinates investigations nationally and internationally. In an interview at her office in Rome, Sargenti said the increase in related investigations was due to both increased activity and the authorities’ improved ability to detect such incidents.
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She added that money is transferred outside the banking system, making it very difficult for authorities to identify and track it. It undermines the entire international anti-money laundering system based on it,” she said. Such means are an important weapon in the fight against criminal gangs.
Italian authorities have released at least six investigations into drug cartels and Chinese payment networks since the issue first came to light about five years ago. Those investigations include alleged payments to drug suppliers in Latin America, Morocco and Spain, according to judicial documents seen by authorities and Reuters.
US officials say Chinese “money brokers” are one of the most concerning new threats in the drug war, as revealed in a 2020 survey by Reuters. U.S. Drug Enforcement Administration Director Ann Milgram highlighted the issue during a Senate committee hearing, saying that Mexican drug cartels are using Chinese money-laundering organizations “around the world” to make money from drug proceeds. He said he was promoting the ring.
It is also a problem for law enforcement agencies in Europe. The European Union’s police agency, Europol, told Reuters news agency that Chinese criminal networks were “increasingly involved in laundering criminal proceeds in Europe”, including drug trafficking.
The remittances are part of a wider range of services provided by China-affiliated entities, including facilitating tax evasion in what Italian authorities have dubbed the “underground” banking system, according to seven people familiar with the matter.
About a dozen additional investigations are underway, including money transfers and other illegal activities linked to undisclosed Chinese organizations, one of the people said. Those with direct knowledge of these studies estimate that tens of billions of euros are moved out of Italy each year via underground systems.
Chinese authorities have previously promised to crack down on underground banks.
China’s foreign ministry spokesman’s office said in a statement that China was aware of large amounts of money moving in Italy through unlicensed Chinese money brokers, including those by drug gangs, or that Italy was I was asked if I was helping to deal with it. I am not aware of the situation you mentioned. ”
Remittances are based on long-established informal payment systems, often referred to in Chinese terms as Fei Cheng or Fei Cheng. It stands for Flying Money and relies on a trusted network of remittance agents.
It is not necessarily illegal to transfer funds through a friend or family member in order to pass cash to a creditor on your behalf. it is illegal to
One of the first investigations into the use of Chinese money brokers by Italian mobs involved the Calabrian ‘Ndrangheta group, one of the world’s largest criminal gangs. Investigations resulted in the arrest of 90 people in Italy and other parts of Europe in 2018 and the seizure of 4 tons of cocaine worth an estimated €240 million ($261.96 million).
Among the ongoing investigations, more than 40 people were arrested in Italy and Spain last November on suspicion of drug trafficking. Among them was Rosario D’Onofrio, a former army officer and senior official of the Italian Referees Association, who police claimed was the logistical director of a drug cartel.
According to an October 2022 arrest warrant, D’Onofrio paid a Chinese broker 180,000 euros and a Spanish supplier for a shipment of hashish when he visited Milan’s Chinatown in March 2020. Brokerage The merchant texted its Spanish counterpart to hand over the corresponding amount to the supplier and charged D’Onofrio a fee of €2,700, equal to 1.5% of the transaction, the arrest warrant details. .
Donofrio is currently in custody. His attorney, Niccolò Vecchioni, declined to comment. Chinese intermediaries have not been identified.
Another investigation seized 720 kilograms of drugs and millions of euros in cash, according to an October 2021 arrest warrant, while police were criss-crossing Italy for a large amount of drugs sent from Morocco. tracked down a man. The funds were routed to Chinese companies in Tuscany and Rome, and from there to drug suppliers through “Chinese correspondents” in the North African country, officials said in a statement.
Authorities arrested eight people on suspicion of drug trafficking and money laundering in connection with the investigation.
The investigation also revealed what happened to at least some of the physical cash collected, which was packed in suitcases and given to Chinese nationals flying to Hong Kong.
Between October 2019 and October 2021, between October 2019 and October 2021, between 2.5 and 4 million euros were shipped each week from Rome’s Fiumicino airport, according to Carabinieri.
Chinese companies in Tuscany and Rome were part of an underground banking network, according to a 2021 arrest warrant. Authorities asked not to identify the companies as investigations into the remittance of cash to Hong Kong and its final destination are ongoing.
Money brokers are part of the larger Chinese diaspora living in Europe, America, Latin America, and elsewhere. Brokers are helping wealthy Chinese looking to move their wealth overseas to circumvent China’s currency controls, Western law enforcement said. Beijing limits the amount of money its citizens can transfer out of China to the equivalent of US$50,000 annually.
As a result, Chinese citizens use informal exchanges to transfer currency electronically in China, with the equivalent amount offered in cash to someone abroad and deposited into their bank account. Criminal groups obtain euros from activities such as drug sales, which helps meet their demand for foreign currency.
Genoa’s deputy chief prosecutor, Francesco Pinto, said: “Upstream of this clandestine banking activity, there is a large amount of liquidity available for these Chinese groups around the world.
According to three of the seven people interviewed by Reuters, in Italy there is a single large China-related business with a myriad of interconnected branches, or a multitude of them operating independently of each other. There is debate among authorities as to whether there is an independent organization.
However, all seven say money laundering is just one of the illegal services offered. There is a “parallel banking system” with different types of customers “from tax evaders to drug traffickers,” said Milan’s deputy chief prosecutor Laura Pedio. Last month, Milan public prosecutors announced they had arrested 22 people and seized 292 million euros following a tax evasion probe that allegedly involved Chinese brokers in Italy.
Official wire transfers between Italy and China have shrunk over the past decade, a senior researcher said, suggesting the Chinese community in Italy has reduced its use of the official banking system. I was. Remittances from Italy to China fell from 2.67 billion euros in 2012 to a total of 22 million euros in 2021, according to data from the Bank of Italy.
Italy’s financial police set up a special unit last year to monitor the underground banking system. And Italy’s new government has asked the country’s anti-mafia commission, made up of politicians, to investigate “the intrusion of Chinese into Italian society” for the first time.
(Writing by Crispian Ballmer. Additional reporting in Beijing by Laurie Chen. Editing by Cassel Brian Rowe)
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