Lithuania and Beyond – The EU Busts 'E-Bank' 2.6> Billion Laundering Machine

European police recently busted an international money laundering network centred around a Lithuanian financial services company that allegedly cleaned billions of euros for organised crime groups.  

Late in February, European police busted an international money laundering network they believe cleaned as much as 2.6 billion euros for criminals using a Lithuanian financial institution and a network of shell companies.

Europol said in a statement. 

• Hundreds of law enforcement officers in Italy, Latvia and Lithuania raided 55 locations as part of what Italian police codenamed “Operation Freedom.”
• Eighteen people were arrested and 11.5 million euros in real estate, luxury cars and funds were frozen,
• https://www.europol.europa.eu/media-press/newsroom/news/full-scale-action-against-money-laundering-network-lithuanian-financial-institution-for-over-eur-2-billion#:~:text=enEnglish-,Full%2Dscale%20action%20against%20money%20laundering%20network%20via%20Lithuanian%20financial,for%20over%20EUR%202%20billion&text=Judicial%20and%20law%20enforcement%20authorities,around%20a%20Lithuanian%20financial%20institution

At the heart of the purported money laundering operation was a Lithuanian financial services provider named Trustcom Financial UAB, which an Italian organised crime group allegedly set up.

According to Italy's financial police, Trustcom was part of a network that laundered some 2.6 billion euros between 2017 and 2022.

Europol said the network disguised profits from “tax evasion, cyber fraud, fake bankruptcy and organised crime such as drug trafficking” using a worldwide web of shell companies.

It’s unclear if the cases have progressed in the ensuing weeks. Europol did not respond to requests for comment.

Trustcom went into liquidation in 2022. But police say the EU’s industry of professional money launderers is only growing.

Operation Freedom

Set up in Lithuania’s capital Vilnius, Trustcom was granted a licence to operate as an electronic money institution in 2017 – opening the door for it to provide digital banking services to clients across the EU.

On the face of it, Trustcom was a legitimate enterprise, with an app customers could use to mind their money and operations in multiple countries, including the Netherlands and the UK.

But behind closed doors, police say it provided a money laundering service for criminals.

The company was founded by two Italians – Neapolitan Michele Scognamiglio and Marco Spinola, from southwestern Gallipoli – who police allege were part of an organised crime syndicate.

Although legally based in Lithuania, Italian police say Trustcom was run from a suburb of Naples.

According to Neapolitan prosecutor Nicola Gratteri, half of Trustcom’s more than 6,000 clients were Italians, including suspected criminals and members of the ‘Ndrangheta and Camorra mafia clans.

Among the suspects arrested in late February was a tax consultant who allegedly used Trustcom’s network to launder 15 million euros of fraudulently obtained Italian state subsidies for renovating and insulating buildings.

If Trustcom processed 2.6 billion euros, that would come down to between 130 million and 520 million euros in commission. 

Police say Trustcom disguised the origin of illicit funds using fictitious transactions between a web of shell companies run by frontmen. The money was then allegedly funnelled to tax havens, far from the prying eyes of European law enforcement.

It’s unclear how much money Trustcom’s owners made, though Europol says money launderers tend to charge between 5 per cent and 20 per cent of any transaction. If Trustcom processed 2.6 billion euros, that would come down to between 130 million and 520 million euros in commission.

Trustcom’s Italian owners didn’t respond to Follow the Money’s questions. The Lithuanian lawyers who helped it obtain a digital services licence also declined to comment.

• https://www.sorainen.com/deals/trustcom-financial-obtains-e-money-licence/

Professional money launderers

If the allegations are true, Trustcom operated as a “professional money launderer”: a financial service provider who, for a fee, launders money and regularly links the criminal underworld with the licit economy.

Europol said in a report published last year.

• “Professional money launderers have established a parallel underground financial system to process transactions and payments away from surveillance mechanisms governing the legal financial system,”
• “These service providers offer up-to-date expertise, while distancing the criminal network from the illicit funds.”
• https://www.europol.europa.eu/cms/sites/default/files/documents/The%20Other%20Side%20of%20the%20Coin%20-%20Analysis%20of%20Financial%20and%20Economic%20Crime%20%28EN%29.pdf

Facilitated by globalisation and the digitalisation of the financial sector, professional laundering networks are on the rise. Europol estimates around a third of the criminal networks that operate in the EU use professional money launderers or the underground banking system to clean their ill-gotten gains.

“I was then sent an information package and spoke to the founders via phone or Skype. Signatures were then added digitally.” 

“Organised crime depends on financial secrecy, and untraceable shell companies are the primary means used to provide that secrecy,” wrote the authors of Global Shell Games, published in 2014. “Empty companies whose owners hide are one of the most common means of money laundering, paying and receiving bribes, violating sanctions, evading taxes and financing terrorism.”

Dutch raids 

After receiving its Lithuanian financial services licence in 2017, Trustcom swiftly set up companies across the EU. The group’s holding company was created in the Netherlands, registered in a coworking space near Amsterdam’s Olympic Stadium.

Former notary Robbert van der Weide, who set up the Dutch company, said he never met its owners in person.

“I was then sent an information package and spoke to the founders via phone or Skype. Signatures were then added digitally,” he said. “I talked to the supervisor then about whether it was a good idea to do it this way. I didn’t get a definitive answer.”

A FAMOUS BRITISH LETTERBOX

Trustcom’s mobile app was operated by a British company called Trastcom Limited. Many financial investigators will be familiar with Trastcom’s registered address: 29 Harley Street, London. Though many have tried to visit, hardly anybody has made it past the front door.

The address pops up in countless fraud and money laundering cases as the home of a formation agent that incorporated thousands of companies, including for criminals.

In 2016, the British newspaper The Guardian published an extensive article on the agency at the address, where more than 2,000 companies were registered at the time. https://www.theguardian.com/business/2016/apr/19/offshore-central-london-curious-case-29-harley-street

They were followed by another international investigation three years later.  https://www.financeuncovered.org/stories/the-british-company-that-set-up-firms-for-international-criminals

READ MORE

Italian police started investigating the organised crime group behind Trustcom’s network in 2021, according to Europol. But a separate case shows the financial institution was already on Dutch law enforcement’s radar by then.

Late the previous year, Dutch police had swooped a nondescript home in the city of Venlo, near the Netherlands’ southeastern border with Germany. A 34-year-old man was arrested, accused of laundering euros and bitcoins that had been stolen via online fraud.

German police had asked their Dutch counterparts to carry out the raid after discovering that some of the allegedly stolen money had been moved through German banks.

According to a later ruling from the Maastricht District Court, detectives had been looking for a plethora of evidence, including bank cards, text messages, emails and bank records, as evidence for the case. Of particular interest, it noted, were records from Trustcom Financial.

A lawyer for the suspect said the case was now closed, but declined to give more details due to attorney-client privilege. Asked where his client was, the lawyer replied that he was unsure.

“I no longer have any contact with the client, nor do I know how to get in touch with him,” the lawyer told Follow the Money.

Licence revoked 

Lithuania’s central bank revoked Trustcom’s financial services licence in March 2022, citing the police investigations into whether the company’s two beneficiaries “may have organised money laundering.”

In a statement announcing the decision, the Bank of Lithuania said that already customers had not been able to withdraw a total of 2.3 million euros from their accounts. The bank went into liquidation later that year.

By that point, Lithuania’s Financial Crime Investigation Service had fined Trustcom nearly 130,000 euros – its largest fine in 2021 – for violating no less than ten sections of the Lithuanian anti-money laundering law.

According to the investigative agency’s annual report, https://fntt.lrv.lt/media/viesa/saugykla/2023/11/eC2zdUAgMVE.pdf

Trustcom failed to properly monitor “complex or unusually large transactions and transaction patterns” often used to disguise the movement of dirty funds, such as fake invoicing for goods that are never delivered.

Follow the Money found one potential example of this hidden among leaked records from international mining company Solway.

Solway’s suspicious transactions

Switzerland-based Solway, which operates mines in Ukraine, Indonesia, Guatemala and elsewhere, has long faced accusations of corruption and influence peddling.

In early 2022, an international media investigation into Solway uncovered nearly 2 billion dollars worth of suspicious transactions linked to the company between 2007 to 2015. Many of these were with companies that had been flagged to the U.S. Treasury’s financial crimes bureau or were part of major Russian money laundering scams.

Months later, the U.S. Treasury Department sanctioned two officials from Solway’s Guatemalan business – Dmitry Kudryakov and Iryna Litviniuk – alleging they “ran various bribery schemes over the course of several years involving politicians, judges and government officials.”

Leaked invoices from inside Solway show the pair made 23 orders totalling nearly a million euros from British company Derpilan Limited between 2019 and 2020.

On paper, the orders were for computer equipment, though the products on Derpilan’s website appear unspecific and outdated, while the company is registered in a coworking space.

Solway and Derpilan did not respond to requests for comment.

The payments were not listed in Derpilan’s public accounts, which say its turnover was only a few thousand euros a year. The leaked Solway records, however, show the purchases were paid for by shell companies from Poland and Hong Kong.

And where did the money end up? In Derpilan’s account at Trustcom.

Source

https://www.ftm.eu/articles/italian-money-laundering-bank-with-amsterdam-contacts-taken-down?utm_source=nieuwsbrief&utm_medium=email&utm_campaign=ItalianMoneylaundering&share=yxfQpl%2FeF%2FS9GY52BtJNOTE1pir%2F5%2BjlhHFj1RN3BAM%2BErfoz%2BP8ETfsGjCpPNk%3D