On June 13, according to Reuters, Pedro Felicio, head of the Economic and Property Crime Unit at the European police agency Europol, stated that “huge inflows of criminal money” are principally entering Europe from Russia and China. Felicio, whose duties include combating money laundering in Europe, said that “[t]here are billions of criminal money that are being taken out of the Russian economy,” and “warned of the dangers of a repeat of scandals involving tainted Russian money in the Baltics . . . .”
Although he recognized that anti-money laundering (AML) oversight has improved since the Danske Bank scandal that came to public attention last year, Felicio reportedly noted that “there are still gaps particularly in the Baltic states.” In his words, “Some of the banks in the Baltic area are very vulnerable to money laundering activities especially coming in from Russia. It has improved but it is far from being solved.” He also commented that “It is just a matter of time until we see another scandal coming in from the area and it will probably be very similar to the scandals we have seen in the past.”
In addition, Felicio observed that while the Baltics were in the “front line” for receiving criminal proceeds, those proceeds were being invested elsewhere, particularly via real estate in London and Rome. He cited two factors that were exacerbating the money-laundering problem in Europe: the high burden of proof in European states, and “zero cooperation from Russia in providing . . . evidence.”
Note: Felicio’s remarks should serve as a reminder to financial institutions with European operations that they need to maintain vigilance in monitoring international financial transactions that, like the funds that flowed through Danske Bank’s Estonian branch, may have their origin in nations such as Russia and China but transit through third countries as part of the layering process. They also highlight one of the continuing challenges for the European Union in devising and implementing a more robust and effective system of AML oversight and enforcement.