After Danske Bank: the next money laundering scandal

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To put a clean shirt upon the character: this, according to Ambrose Bierce, is the diabolical meaning of dissembling. When it comes to hiding the origin of a sum of money, making it wear a clean shirt can become complicated, tiring and above all expensive, unless if you use a certain amount of imagination. This resource certainly is not what the best criminal minds lack. In the Danske Bank scandal, the money laundering scheme was based on zero controls: a very efficient loophole. During my career as a financial investigative journalist, lasted over a quarter of a century, I have personally verified that the most efficient money laundering systems — until investigators discover them — are based on a simplifying idea. Here’s a short list of some of these cheap tricks. Please don’t consider them as suggestions, because they have all already been used (but not discovered).

Art for Art’s sake?

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Mr. A is a Russian billionaire who’s got something to hide about his wealth’s origin. One day at Art Basel show in Hong Kong he meets Mr. B, art dealer, and Mr. C, owner of a chain of modern art galleries. They introduce him to Mr. D, a young talented artist coming from the academic scene whose pieces begin to be noticed by the critics. Mr. A starts to buy Mr. D’s works through a network of figureheads, then he informs the art magazines of the purchases and pays for a series of enthusiastic reviews to be published. Mr. B is in charge of proposing the works at the auctions, raising the prices and the related evaluation parameters, while Mr. C organizes Mr. D’s exhibitions in London, New York, and Shanghai. At this point, when Mr. A holds an extensive collection of Mr. D’s pieces, he asks his figureheads to export them to one of Switzerland’s free ports, Chiasso, Zurich, Basel, or Geneva, where the most significant quantity of works of art in the world is said to be concentrated. Since it’s a matter of contemporary artworks, no country can use its laws to prevent their export as it would happen in the case of historical pieces. The lack of taxation of these free ports allows transactions that do not need the physical presence of the assets. Even if a free port is considered a duty-free place, when a work of art is extracted and definitively sold, customs duties and import taxes must be paid on the value of the artwork. This amount must be calculated at the time of the piece extraction and transfer and could be considerably higher than it was at the time of its first entry of the piece into the free zone. All the works are deposited in the free ports after appropriate Aml controls but, in the deposit period, certificates of ownership and custody and the related insurance policy can be used as collateral to guarantee financial transactions without having to physically move either the artworks or the corresponding amounts. In this way, Mr. A uses these documents to make his wealth migrate and increase without being intercepted by the Aml authorities. If and when Mr. A will deem it appropriate to make it re-emerge, he will ask his figureheads to sell the artworks to third parties and will recover the money invested by selling other works to the same figureheads.

The benefits of investments’ losses

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Mr. E is the equivalent of the CFO of a Mexican drug cartel. His problem is to get back to Mexico the vast amounts of cash that the cartel accumulates in the United States. Through his network of drug dealers al Norte, Mr. E hires an adequate number of drug users to whom he opens up numerous online trading accounts using the dirty money of the cartel. Mr. E gives his online trader network daily drug supplies and other benefits in exchange for transactions on financial markets. With the cooperation of Mr. F, head of the trading desk of a leading Mexican financial institution, through encrypted online messaging systems Mr. E gives his traders’ phalanx adequate daily instructions on the transactions to carry out. It doesn’t matter if there’s the cost of incurring small losses, provided these are lower than the average price that Mr. E would have to bear if he’d use the “traditional” money laundering channels. When the money has been adequately cleaned, Mr. E arranges for the account of Mr. F the IPO of a company that will then go appropriately bankrupt, so as not to reimburse US shareholders who have subscribed its shares and bonds. In this way, without any direct involvement, through the online cross-border trading of a network of “unlucky,” small investors who had lost money in a failed IPO, the capital managed by Mr. E will return home correctly rinsed.


Photo by Hitesh Choudhary on Unsplash

Mr. I is an Italian entrepreneur in the fashion industry with a large foreign reserve of money that he has not declared to the Tax Office. Since banking secrecy is gradually disappearing in the European Union, on the advice of its financial adviser Mr. J, Mr. I creates through Mr. K, Swiss trustee, an anonymous company in the canton of Zug. The company’s purpose is to issue a cryptocurrency formally used to convey information on the respect of corporate social responsibility standards throughout the clothing sector. Each garment item will be followed from the fabric manufacturer to the packer up to the exporter, then to the wholesaler through the retailer to the final consumer through codes crystallized on the blockchain. Hired bloggers make an appropriate media hype and the savings of thousands of small investors, allured by the prospect of high financial returns, are channeled into the initial coin offering. What Mr. I does not tell anyone is that ICO tokens are initially sold to the public by a network of brokers who own them on behalf of his “family and friends.” In this way, Mr. I’s noncompliant money is brought to light in the financial system and poured into thousands of unsuspecting small investors. Whether the ICO targets are effectively reached or not is of no importance, because Mr. I has already achieved his initial goal.




Investigative journalist and whistleblower who proved criminal offenses committed by the ousted Chair, Ceo and editor in chief of his former media company

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Nicola Borzi

Nicola Borzi

Investigative journalist and whistleblower who proved criminal offenses committed by the ousted Chair, Ceo and editor in chief of his former media company

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