A major development in the realm of anti-money laundering took place last week as an overseas joint coalition of European forces joined together to bring down one of the largest illicit financial operations seen in recent memory. The European Union Agency for Law Enforcement Cooperation (Europol) announced that judicial and law enforcement authorities comprised of a total of 250 officials from the countries of Italy, Latvia, and Lithuania took a concerted action in arresting 18 suspects with ties to a large-scale Lithuanian financial institution effectively serving as an international laundering hub.

The magnitude of these efforts cannot be overstated. Altogether, it is estimated that over €2 billion was collectively laundered through this illicit business since 2017 alone, with the program masterminded by two top suspects (each of which remain unnamed but are now in custody) utilizing a large and complex global web of shell companies to avoid detection. The men are alleged to have started their own financial institution using the financial backing of an organized criminal. The business acted as a faux-consultancy firm offering various financial services to their prospective customers. As word of the true intentions of the operation spread through the shadows, the “business” quickly became established as a premier black-market bank for international criminals and politically exposed individuals. Given their early success, the criminals behind the enterprise continued to brazenly advertise their illegal services online, using their shell companies that were run by employees – most of which who did not exist – to file fictitious transactions and subsequently launder a significant amount of ill-gotten funds on behalf of their clients while pocketing substantial amounts of money in the process. While the two figureheads were themselves operating out of Lithuania and Latvia, respectively, the electronic money institution they created was offered as an online service which effectively extended its reach well outside of Europe. All told, the institution allegedly serviced thousands of criminals and laundered the proceeds of a variety of criminal activities that included cyber fraud, tax evasion, bankruptcy fraud, and drug trafficking.¹ Prosecutors have also alleged that the primary actors behind the operation would then launder their own proceeds made from processing these services through the international real estate market, investing into grandiose properties and purchasing luxury vehicles while subsequently injecting their illicit funds into the Latvian and Lithuanian financial systems.

It was not until several years later that authorities began catching onto the scheme. This began following the discovery of €15 million of laundered money that was unlawfully obtained from the Italian national authorities as part of a government program offering building “bonuses” to help cover expenses for energy-saving renovations made on existing properties. The criminals behind this specific operation applied for the government funds and made no subsequent repairs to these buildings, and in many cases neither the applicants nor the buildings themselves actually existed. The main perpetrator of this fraud scheme was a practicing tax consultant (also currently in custody), who arranged the awarding of bonuses for a total of 72 individuals who were aware of the abuse of the program.²

Investigations into the organized crime group subsequently began shortly thereafter in 2021, with Italy initiating the proceedings before enlisting the assistance of their counterparts in Latvia and Lithuania. In 2022, authorities in Lithuania moved to close down the electronic payment institution, revoking its banking license and initiating bankruptcy procedures over non-compliance with money laundering prevention regulations, which ultimately led to the identification and freezing of millions of Euros worth of funds and the seizure of tangible assets that were then available to be confiscated. Both Europol and Eurojust – a European Union agency dealing with judicial cooperation across more serious EU criminal matters – also picked up the case 2022 and began working closely with the authorities of each involved nation to uncover the true scope of the plot which then led to the enforcement actions recently taken. This included creating a joint investigation team and coordination center to support the actions taken in the three countries.

The Head of Europol’s European Financial and Economic Crime Centre at Europol, Burkhard Mühl, commented:

“Europol firmly believes that the ‘follow the money’ approach, coupled with close cooperation between EU law enforcement agencies and Europol, constitutes the most powerful strategy for combatting transnational criminal threats and frauds related to public funds. By pooling resources, expertise, and intelligence, we can effectively disrupt illicit financial flows and dismantle criminal networks.”¹  

Altogether, the sting’s success further points to the importance of cross-border information sharing and tactical coordination on behalf of government bodies and law enforcement agencies in the ongoing global battle against both organized and white-collar criminal activity.

Citations

1. “Full-Scale Action against Money Laundering Network via Lithuanian Financial Institution for over EUR 2 Billion.” Europol, 28 Feb. 2024. 
2. Rae, Stephen. “Latest: €2bn Laundered Thru Lithuania Financial Institution, 18 Arrested, Raids across Italy, Latvia.” AML Intelligence, 27 Feb. 2024.