Anti-Money Laundering Cases 

I-                  Banking

1. Tax evasion in Romania (Judgment of the Court (Second Chamber) of 2 September 2021. (Romania))

The request for a preliminary ruling concerns the interpretation of Article 1(3)(a) of Directive (EU) 2015/849 of the European Parliament and of the Council of 20 May 2015 on the prevention of the use of the financial system for the purposes of money laundering or terrorist financing, amending Regulation (EU) No 648/2012 of the European Parliament and of the Council, and repealing Directive 2005/60/EC of the European Parliament and of the Council and Commission Directive 2006/70/EC.

Moreover, the request has been made in a criminal proceedings brought against LG and MH, prosecuted for having committed and participated in the offence of money laundering.

On 15 November 2018, the Tribunalul Brașov (Regional Court, Brașov, Romania) sentenced LG to one year and nine months imprisonment, with a conditional suspension of execution of the sentence, for the offence of money laundering provided for in Article 29(1)(a) of Law No 656/2002 in respect of 80 acts committed between 2009 and 2013. The money in question was derived from the offence of tax evasion committed by LG. As so, the criminal proceedings relating to the offence of tax evasion were closed after LG had repaid the amounts due.

Furthermore, it has been found that during the period between 2009 and 2013, LG hadn’t recorded tax documents proving the receipt of income in the accounts of a company of which he was the manager. This is qualified as ‘tax evasion’ under Romanian law. The money resulting of tax evasion has been transferred to the bank account of another company, of which MH was the manager, and then withdrawn by LG and MH. This transfer was made out on the basis of a contract of assignment of debt concluded between LG, the company of which he was the manager, and the company of which MH was the manager. Thus, the sums owed to LG by the company of which he was the manager were paid by clients of that company into the bank account of the company managed by MH.          

The Tribunalul Brașov also found that LG had been aided by MH in committing the offence of money laundering. Nevertheless, it ordered that MH be acquitted on the ground that the condition of the offence was not satisfied because it had not been proved that MH was aware that LG had laundered money derived from tax evasion.

On 13 December 2018, appeals were brought against the judgment of the Tribunalul Brașov before the Curtea de Apel Brașov (Court of Appeal, Brașov, Romania) by the Parchetul de pe lângă Tribunalul Brașov (Public Prosecutor of the Regional Court of Brașov, ‘the Public Prosecutor’), LG and a civil party, namely, the Agenția Națională de Administrare Fiscală, Direcția Generală Regională a Finanțelor Publice Brașov (National Tax Administration Agency, Regional Directorate-General of Public Finances, Brașov, Romania).       

LG has subsequently withdrawn his appeal. As so, the Public Prosecutor’s appeal concerns, inter alia, whether MH’s acquittal of the offence of aiding money laundering was properly justified. Moreover, the civil party is challenging the treatment of the civil action following the criminal proceedings as regards the amount of damages which the accused was ordered to pay.

Decision: Article 1(2)(a) of Directive 2005/60/EC of the European Parliament and of the Council of 26 October 2005 on the prevention of the use of the financial system for the purpose of money laundering and terrorist financing must be interpreted as not precluding national legislation which provides that the offence of money laundering, within the meaning of that provision, may be committed by the perpetrator of the criminal activity from which the money concerned was derived.

2. A worlwild case : Danske Bank case

In France, a Paris court began investigating Danske Bank in October 2017 in relation to transactions of its Estonian branch, between 2008 and 2011, allegedly carried out for money laundering purposes. Danske Bank has been prosecuted in several worldwide countries. It is the largest financial institution in Denmark, with operations in sixteen countries including European countries. It has been in trouble resulting from alleged money laundering in its Estonian branch.

In January 2018, the court has downgraded the bank’s status from target of the investigation to that of “assisted witness.” In September 2018, Dansk Bank published a report of its own independent legal inquiry. The last concluded that non-resident customer had completed transactions totaling roughly EUR 200 billion through the Estonian branch in the period 2007-2015. A large proportion of this amount is suspicious and may be linked to money laundering activities.

This investigation also found that 42 of its employees and agents are involved in suspicious activities. The last were reported to the Estonian Financial intelligence Unit according to Estonian law. Moreover, 8 former employees were reported to the Estonian police by Danske Bank for suspected criminal acts. In December 2018, 10 former employees were arrested in Estonia.

However, in a statement dated January 11, 2019, Danske Bank reported that French authorities are reconsidering their decision. Indeed, at this time, the bank has been convoke to appear before Judge Renaud Van Ruymbeke for an interview. The summoning documents also specify that the scope of the investigation may be expanded to additional transactions, worth around 28 million euros, carried out between 2007 and 2014.

This investigation is one of many that Danske Bank is facing with respect to 200 billion euros of suspicious funds that were channeled through its Estonian branch. Authorities in Denmark, Estonia and Britain are also investigating these money laundering allegations. It also attracted the attention of regulators in the United States. In November 2018, the U.S. Department of justice had sought information concerning the relation between Danske Bank and funds transferred through correspondent bank accounts in the United States held at Deutsche Bank, Bank of America and J.P. Morgan Chase.

Moreover, the Federal Reserve Bank has opened an investigation and is seeking information from Deutsche Bank regarding the Danske Bank funds, and that the lead Republican member on the Financial Services Committee of the U.S. House of Representatives has requested that Deutsche Bank provide information concerning its anti-money laundering compliance efforts.

The Bank continues to be subject to inquiries, including a criminal investigation by the U.S Department of Justice in 2021. This case is known in the US as Plumbers & Steamfitters Local 773 Pension Fund v. Danske Bank A/S et al, 2nd U.S. Circuit Court of Appeals, No. 20-3231.The Bank defeated in the appeal in the US.

II-               Real Estate

1. Pollino (Ndrangheta) case

In a substantial operation against international drug trafficking and money laundering, Eurojust and Europol have supported the competent Italian and German authorities with the arrest of 31 suspects in both countries, alleged to be part of the ‘Ndrangheta mafia, operating in different regions of Italy and abroad. In addition, in the context of a joint investigation team (JIT) between Italy and Germany, 65 other suspects have been identified. As so, their places were searched during a important action, for which around 800 police officers and tax officials were deployed today in both countries.

These actions follow the Eurojust and Europol coordinated operation known as “Operation Pollino”.  84 suspects were already arrested in December 2018 in Belgium and the Netherlands, as well as Italy and Germany. In view of this operation, a European Arrest Warrant has been issued for one of the main and already sentenced Pollino suspects, who was recently taken into custody in Spain and is awaiting surrender to Italy.

During the investigations, Eurojust assisted Italy and Germany in setting up a JIT and to ensure proper coordination of investigations, concerning two particular strands of an organised crime group (OCG), which amongst others is suspected of involvement with international drug trafficking and money laundering activities.

During the least several years, the OCG is suspected of having organised the trade in cocaine between Italy, the Netherlands, Germany and Spain using encrypted EncroChat and Sky ECC communication tools. A string of building and hospitality companies was allegedly used to launder the proceedings in Italy. The investigations in Germany focus especially on drug trafficking and tax avoidance. The money made by trafficking has been used to buy restaurants and other real estate items in order to launder the money. This case is linked to drug trafficking.

Moreover, this operation was carried out on the ground in Italy by the Anti-Mafia Investigation Directorate (DIA) under the coordination of the Public Prosecutor of Turin and of the National Antimafia Bureau (DNAA). In Germany, the operation was coordinated by the Public Prosecutor’s Office of Konstanz, in cooperation with the Criminal Police of Friedrichshafen and the Economic and Financial Police of Ulm.

Europol and Eurojust have assisted the Italian and German authorities during the whole cycle of the investigations. Europol supported the operation by coordinating the international law enforcement activities and providing expertise through its dedicated Analysis Project on Italian Organised Crime (AP ITOC); Whereas, Eurojust set up a coordination centre and organised two coordination meetings, to prepare for the action day.

During these investigations, at least several hundreds of thousands EUR have been seized, along with weapons, cocaine, two luxury vehicles and jewelry. Furthermore, a full assessment of cash amounts seized is ongoing and bank accounts have been frozen.

This investigation is part of the Italian DIA Project ONNET, an EU-financed initiative to tackle mafia-type organised crime groups active in Europe. This project has been launched at Europol’s headquarters and targets, especially, the mafia-style criminal groups in their entirety, rather than one or more of their specific criminal activities.

Decision: This case is still ongoing, and no definitive decision has been taken in court.

2. McMafia case (United Kingdom)

Zamira Hajiyeva has been the first big spender to be slapped with an Unexplained Wealth Order. The Supreme Court has rejected her attempt to overturn it. Zamira Hajiyeva is the wife of a former boss of the Azerbaijani state bank.

The 57-year-old Azerbaijani expatriate spent freely, racking up £16.3 million in purchases at Harrods between 2006 and 2016. She had a particular weakness in luxuries. She bought items on at least 54 credit cards. In fact, she used 35 American Express, Mastercard and Visa cards issued by the bank of which her husband, Jahangir Hajiyev, was chairman. Moreover, she also logged the purchases on the department store’s loyalty-card scheme.

But while Harrods was delighted with her custom, her expenditure there was a mere bagatelle. Several weeks after her 2009 splurge on jewellery, she put down a £4 million deposit on an £11.5 million house on Walton Street in Knightsbridge. This purchase was made through a company based in the British Virgin Islands. She then also bought the Mill Ride Golf & Country Club in Ascot for a further £10.5 million. But, her husband has reported to British courts that he earned less than $71,000 a year in his job as a bank executive. This affirmation has surprised the Azerbaijani authorities, which in October 2016 jailed him for 15 years for fraud, embezzlement and misappropriation of £2.2 billion of public funds. Furthermore, Hajiyeva claims to have been a full-time mother since 1998. This means that she has no personal income and depends on her husband.

For the National Crime Agency (NCA), it was just one example of her ‘unexplained wealth’ and one of the reasons why she became the first recipient of an Unexplained Wealth Order (UWO). The last is a new legal tool the NCA can employ if it suspects someone living in the UK of buying assets using income illicitly gained. Serve one of these and, if the courts agree with the NCA, a freeze can be put on those assets, rendering ill-gotten gains unusable.

Decision: Zamira Hajiyeva’s case has gone the furthest. It was on 27 February 2018 that the Hon Mr Justice Supperstone agreed that the NCA could issue an Unexplained Wealth Order against her. Five months later, the same High Court judge was hearing an appeal by Hajiyeva’s lawyers to discharge the order, which ultimately failed. But her lawyers took the case to the Court of Appeal in December 2019, saying that the order was based on unsubstantiated claims about her husband benefiting from political corruption, and that their client denied all allegations of wrongdoing. Hajiyeva lost that appeal in February 2020. But her team continues to deny that she has done anything wrong, and is appealing to the Supreme Court.

3. Graham Whelan case (Irlande)

Dublin criminal Graham Whelan used crime cash to pay for a penthouse suite at a luxury Dublin hotel and to refurbish his home. He pleaded guilty in July 2019 at the Special Criminal Court to participating in the actions of an organised crime group by laundering money for the group and being in possession of €1,200 in cash and a €28,000 watch.

Whelan also pleaded guilty to paying €2,140 for a three-night stay at the hotel at Room 342, knowing or believing that the money was the proceeds of criminal conduct, contrary to Section 7 of the Act. When gardaí (detective for crim) asked Whelan on the night how he could account for the €1,275 in cash he had in his pocket, he told officers that he had gotten it from “up his Swiss roll” and told them to keep it.

Moreover, Whelan also pleaded guilty to possessing an Audemars Piguet Royal Oak gentleman’s watch, knowing that the property, valued at €28,000, was purchased with the proceeds of crime. A witness said that Whelan told gardaí that he was self-employed, that he had paid his taxes and had bought the watch on his credit card for €8,000.

The detective said that Whelan’s remarks referenced his arrest in March 2000, when he was arrested in connection with a two-kilo cocaine seizure and an ecstasy tablet seizure estimated at €1.5 million. Det Gda Donoghue told Ms Mullan that 18 searches were then carried out following the arrest. These included searches of the properties of Whelan’s mother and father and his sister’s house. He said that in 2001 Whelan was sentenced to six years’ imprisonment for a drugs sale or supply offence and had also been sentenced to three years in jail for a separate assault causing harm.

Decision: On November 15, 2021, the Special Criminal Court sentenced the accused, of Walkinstown Avenue in Dublin 12, to a total of three years imprisonment, suspending the final 18 month.

III-            Gambling

1. 888 UK Limited case

An online casino known as 888 UK Limited must pay UK£9.4 million after the UK Gambling Commission (UKGC) found it had failed to meet social responsibility obligations and breached anti-money laundering requirements. This firm, which operates 78 websites including 888.com, has also received an official warning and will undergo extensive independent auditing. In fact, this is the second time 888 UK Limited has faced enforcement action; in 2017 they paid a £7.8m penalty package for failing vulnerable customers.

The money laundering failures included:

• implementing a policy where customers were allowed to deposit £40,000 before carrying out SOF checks
• accepting verbal assurances from customers as to employment income and being reliant on open-source information to validate SOF
• not setting out which documents should be requested as part of SOF checks
• allowing one customer to spend £65,835 in just 5 months without SOF checks being carried out
• not effectively implementing its own policies which stated that customers have 10 days to present SOF documentation before their account was restricted. In one case a customer’s SOF were not requested until three weeks after the 10 day trigger and lost £15,000 during that period.

Financial penalty and warning:

Following a review of the operating licence undertaken against 888 UK Limited (the Licensee) the Commission found that the Licensee:

• breached paragraphs 1, 2 and 3 of licence condition 12.1.1 – Anti-Money Laundering (Prevention of money laundering and terrorist financing)
• breached paragraph 1 of licence condition 12.1.2 – Anti-Money Laundering (Measures for operators based in foreign jurisdictions)
• failed to comply with paragraphs 1 and 2 of social responsibility code provision of practice (SRCP) 3.4.1 – Customer Interaction
• failed to comply with SRCP 3.9.1 – Identification of individual customers – remote

Decision: In line with the Commission’s Licensing, compliance and enforcement policy statement, the Indicative sanctions guidance and the Statement of principles for determining financial penalties, the Commission has decided to:

• impose a warning under section 117 (1) (a) of the Gambling Act 2005 (the Act) in respect of the breaches identified
• attach an additional condition to the Licensee’s operating license under section 117(1)(b) of the Act requiring the Licensee to conduct a third-party audit within 12 months of the conclusion of the review, to examine whether the Licensee is effectively implementing its anti-money laundering and social responsibility policies, procedures and controls
• impose a financial penalty of £9,409,756.48 under section 121 of the Act.

2. Malta case

It is the first UE country to be on the watch-list for money laundering activities. In 2007, Malta has been said as the place to invest in online gambling. At this time, many companies have been relocated to Malta because of the higher output for companies in the lower tax level. Moreover, in 2007, there was no fix and unique regulation in Europe against money laundering. Indeed, as online gambling companies where numerous in Malta, corruption started to be a big issue. A journalist, Daphne Caruana Galizia, who investigated into this has been killed by a car bomb. After this event, a huge investigation has been settled and money laundering concerning online gambling has been taken into account.

In this case, major Malta’s investors and politicians have been liked to online gambling and used the money to launder. As every king of online gambling has been relocated in Malta, it was easy to take a percentage of gain and work with it.

It has been a major money laundering and corruption case. The Financial Action Task Force (FATF) has investigated into it and had placed Malta on the high-risked countries in 2017. Today, Malta is still on the list set out in schedule 3ZA of the Money Laundering, Terrorist Financing and Transfer of Funds (Information on the Payer) Regulations 2017 reamended in 2021.

Furthermore, Malta’s government has been taking into account this situation seriously and tries to secure online gambling. It also applies the European regulation about money laundering in order to be off the list of high-risk countries. Indeed, being on this list makes it harder for Malta to be attractive because companies and banks are suspicious and can’t easily transfer funds or companies into a high-risk country according to money laundering regulations.

Identification of crim :

• 16 Suspicious Player Profiles Flagged

FIAU has announced that its officials have identified 16 player profiles that exhibit trading patterns and betting behaviors that require investigation. However, officials said it was clear that the company did not scrutinize players’ transactions effectively and carefully. As no automated monitoring was available in the company, the company was unable to determine when the industry-wide threshold of €2,000 was reached and consequently was unable to implement effective monitoring. Basic due diligence checks must be performed under Anti-Money Laundering (AML) laws if a player deposits between €2,000 – €15,000.

Although the company’s money laundering officer said that players were demanding their tax returns, 80% of the requests went unanswered. In addition, the players’ accounts at the gaming company were not closed in time, and the operator did not provide any evidence, although it said it looked at the players’ social media profiles.

Among the suspicious behavior that was not properly monitored was a 25-year-old player who had withdrawn over 117,000 Euros after betting with prepaid cards. The FIAU found that the player made about 68 deposits using prepaid cards in just one month. The risky behavior should have prompted the company to perform enhanced ongoing monitoring on this player and to identify and verify the source funding the player’s gaming activity.

• Political Exposed Person (PEP) Players

The company also lacked in identifying the risks of users with Political Exposed Persons (PEP). The FIAU found that the PEP measures were not in line with Maltese legislation, but the checks consisted solely of checking new players against a document listing Greek ministers. Therefore, if a player were to be PEP throughout the employment relationship, the player’s new status would not be defined. Authorities conducting the investigation also found no record of the PEP screening undertaken. While FIAU reviewed the company’s customer risk assessments, 26 of 31 player profiles reviewed by investigators found other issues without risk assessment. The only risk assessments found were by another company operating under a Greek license. Although the company has documented policies, FIAU has not found any evidence of a client acceptance policy. As a result of the work done by FIAU, other shortcomings of the company were also revealed; it either did not comply with most of the regulations or had serious shortcomings.

• Easily Comply with Regulations Protect Yourself from Fines

Governments and regulators have strict Anti-Money Laundering (AML) and Counter-Terrorism Financing (CTF) regulations for the gaming and gambling industry. Gambling companies must comply with these regulations in countries where the Gaming and Gambling industry is legal. According to regulations, the identity checks of the customers should be made, and the risks should be determined at the customer onboarding process. In addition, the customers’ transactions should be monitored, and suspicious transactions should be reported to the competent authority

Decision: The Financial Intelligence Analysis Unit (FIAU) said Online Amusement Solution Limited did not report suspicious activity on gambling sites or properly monitor politically exposed players. Based in Birkirkara, the company owns several betting sites, including Champions Bet, Tip Bet, and Bet 14. After an on-site inspection of this institution in 2019, it was fined 386,567 Euros for violating the anti-money laundering rules.

IV-           Political parties financing

1. Bygmalion Case (France)

On 30 September 2021, the Tribunal correctional of Paris imposed a one-year sentence on former president Nicolas Sarkozy after finding him guilty of illegal campaign financing for his 2012 re-election campaign. The court will allow the ex-president to serve the sentence at home by wearing an electronic monitoring bracelet. The case is known as the Bygmalion affair, after the name of the public relations firm that set up a system of fake invoices to mask the real cost of the events. The verdict came six months after he was found guilty of corruption in a separate trial.

The court stated that Sarkozy “knew” weeks before the 2012 election that the legal limit was at stake and “voluntarily” failed to supervise additional expenses, with prosecutors accusing him of having ignored two notes from his accountants warning about the money issue. Prosecutors argued Sarkozy is “the only person responsible for his campaign financing” and that he chose to exceed the limit by organising many rallies, including giant ones.

During his hearing in June, Sarkozy told the court the extra money didn’t go into his campaign, but instead helped make other people richer. He denied any “fraudulent intent.” He also insisted he didn’t handle the logistics of his campaign for a second term as a president nor did he oversee how money was spent, because he had a team to do that.

In addition to the former president, 13 other people went on trial, including members of his conservative Republicans party, accountants and heads of the communication group in charge of organising the rallies, Bygmalion. They face charges including forgery, breach of trust, fraud and complicity in illegal campaign financing.

Decision: A series of lavish US-style election rallies caused his costs to spiral, with the final bill coming to at least €42.8 million ($49.7 million), nearly double the legal limit of €22.5 million. Prosecutors had sought a one-year prison sentence, half of it suspended, for the former president. The verdict is not the same as a suspended sentence, as it goes down in his record as a full prison term. Sarkozy, who has accused the judiciary of hounding him since he lost his presidential immunity, appealed that verdict.

2. VMRO-DPMNE political party case (the “Plots in Vodno” cases)

On 22 May 2017, the Special Prosecution Office (SPO) launched an investigation against 11 suspects and a legal entity, the VMRO-DPMNE political party, for the illegal financing of the party. The former party leader and prime minister Nikola Gruevski is the first suspect. He fled to Hungary in 2018 and was granted asylum by the Hungarian authorities. Moreover, he was investigated for money laundering and abuse of office. Furthermore, as president of the VMRO-DPMNE party, Gruevski accepted €4.9 million in illegal donations for his party between 2009 and 2015, while he was prime minister, indicating signs of state capture.

According to the SPO, there was reasonable suspicion that the money originated from a crime committed by a group of people who enabled money laundering through the party’s local organisations by depositing cash in the party account in the form of personal payments. Indeed, the allegations also point to negligence on the part of banks.

Moreover, the SPO investigation revealed that Gruevski, instead of returning the money to the national budget, used it to finance the VMRO-DPMNE party illegally. The SPO also said that the money was transferred to eleven people and used to buy real estate assets and pay for various party expenditures. The eleven people included nine direct perpetrators and two accomplices. Furthermore, the SPO also filed twelve requests to the courts to freeze the real estate assets (houses, apartments, office space), which the SPO estimated to be worth €17.5 million.

In this case, known as the “Talir case”, the first hearing was held on 18 February 2019. However, there were nine delays at the defence’s request because Nikola Gruevski, one of the defendants, was always absent. In addition to the absence of defendants, the trial’s start was also delayed for several months because of a change in VMRO-DPMNE’s lawyers and a request for authentic interpretation of a paragraph in the SPO law.

On 2 March 2020, more than a year after the first scheduled hearing in this case, the parties gave their opening statements.

Charges pressed by the prosecutor in the case: On 22 November 2018, the SPO submitted an indictment charging the defendants Nikola Gruevski, Kiril Bozinovski, Mile Janakieski, Ilija Dimovski, Leko Ristovski, Elizabeta Chingarovska and a legal entity, the VMRO-DPMNE political party, with the criminal offences of money laundering and other proceeds of crime (Article 273 of the Criminal Code) and abuse of official position and authorisation (Article 353 of the Criminal Code).

 Decision: On 21 December 2018, Chingarovska pleaded guilty to money laundering and received a probationary sentence of two years, which will not be executed if Chingarovska does not commit a new criminal act within five years from the effective date of the verdict. Moreover, a probationary sentence of two years for Chingarovska has been decided. The trail for other defendants is still ongoing in 2022.