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Europol’s First Financial and Economic Crime Threat Assessment

Author: Niall Hearty  28 September 2023
2 min read

Niall Hearty of financial crime specialists Rahman Ravelli considers the picture that the agency paints of organised crime in Europe.

Europol, the European Union Agency for Law Enforcement Cooperation, has issued its first European financial and economic crime threat assessment, which is based on intelligence from across European Union (EU) member states and Europol-partnered authorities.

The report highlights the way that crime has been assisted by technological developments. But it also recommends ways of tackling the criminal networks’ use of such technology.

It states that almost 70% of European criminal networks were found to be using money laundering techniques, with 60% furthering their interests through corruption. But Europol also emphasises that more than 80% of criminal networks were using legal businesses in their schemes.

The report also says that new opportunities for criminal activity have been prompted by geopolitical changes. These opportunities, which criminal networks have taken advantage of, include the need for some to try and evade EU  sanctions. This has led to a demand for concealing the beneficial ownership of assets, fraudulent documents and intermediaries, use of third countries to send transactions from Russia and money laundering networks.

The report identifies asset recovery as a crucial weapon in the battle against organised crime, as depriving criminal networks of their assets can be a major deterrent. It argues that there should be a greater use of this approach, with less than 2% of the annual criminal proceeds in the EU currently being recovered by European authorities.

Digital Assets

While criminal networks are taking full advantage of a variety of technological advances to support their illegal activities, Europol says digital assets are increasingly being used in organised and financial crime. This is due, in part, to their fast-moving nature and the idea that they offer a degree of anonymity. The report cites the closing of a crypto conversion service this year because analysis by the authorities linked approximately 46% of the assets it exchanged - worth about a billion euros - to criminal activity.

The report adds that stablecoins, non-fungible tokens (NFTs), privacy coins, crypto mixers, peer-to-peer marketplaces and crypto exchanges are particularly attractive to organised crime. Crypto exchanges are popular as they can offer various features and stages that can be used to disguise any connection between the funds being laundered and their criminal origins. Laundering through crypto ATMs is another commonly-used option, as is the trading of NFTs virtually for real-life assets.

Warning

The report provides a comprehensive assessment of the links between organised crime, corruption and sanctions evasion in Europe.

While the report is an illuminating snapshot of the situation in the EU, it can also be seen as a detailed warning to the business world about the risks of complacency or ignorance when it comes to the omnipresence of organised crime. It is a sharp reminder of the need for those in business to seek ways of looking to remove such dangers - by either devising their own preventative measures or seeking out examples of good practice and adopting them.

The scale of such dangers was illustrated with the dismantling of Encrochat, the encrypted communications tool that was widely used by organised crime groups. This operation, led by French and Dutch authorities, led to more than 6,500 arrests worldwide and almost 900 million euros of criminal funds being seized or frozen, according to reports in recent months.

Such investigations are also of value in providing unprecedented insight into the systems that sustain the finances of organised crime. While law enforcement agencies are working to untangle such underground financial ecosystems, they are hugely dependent on information sharing and the resulting ability to focus on key criminal actors. There is also a requirement on them to develop the necessary technical knowledge and expertise and for public-private partnerships to help in the fight against such wrongdoing.

 

Niall Hearty C 07998

Niall Hearty

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Niall has a wealth of corporate crime expertise and an ability to coordinate global bribery and corruption cases. His achievements in such investigations have made him a logical choice for corporate clients.

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