The European Police Office (Europol)’s first-ever threat assessment on the topic, ‘The other side of the coin: an analysis of financial and economic crime in the EU’, aims to shine a spotlight on a EUR 188 billion-plus international underground criminal economy.
Europol describes a vast underground sector that, from the shadows of the Dark Web, sustains the finances of criminals worldwide. The report is based on operational insights and strategic intelligence contributed to Europol by EU Member States and Europol’s partners. It analyzes all financial and economic crimes affecting the EU, such as money laundering, corruption, fraud, intellectual property crime, and commodity and currency counterfeiting.
Europol’s Executive Director Catherine De Bolle says: “Organized crime has built a parallel global criminal economy around money laundering, illicit financial transfers and corruption. With modern technology, they have diversified their modi operandi to evade detection. The report serves as a roadmap to foster cooperation that will derail the world of criminal finances, intercept illicit profits, and – above all else – Make Europe Safer.”
According to the report, almost three-quarters of criminal networks operating in the European Union (EU) make use of one form of money laundering or another to fund their activities and conceal their assets, while 80 percent of criminal networks active in the EU misuse legal business structures for illegal activities.
Europol also focuses on the ways in which technological advances are making it easier for international criminal networks to cover their tracks. Europol reports that the digitalization of the economy is slowly but steadily reshaping the known money laundering process, “making the various steps of the procedure much more blurred.”
Illicit proceeds laundered through football clubs
“Money laundering is a pivotal activity for the full spectrum of serious and organized crime, enabled by globalization and the digitalization of the financial sector. Almost 70% of criminal networks operating in the EU make use of basic money laundering techniques, and about 30% engage with professional money laundering networks and underground banking systems,” says Interpol.
The report adds that criminal networks invest their ill-gotten gains in cars, jewelry, and other luxury items as well as in more solid investments such as real estate, precious metals, cash-intensive businesses, the gaming sector, charity funds, and digital assets, with Illicit proceeds sometimes being laundered through football clubs.
In January 2023, law enforcement authorities took down Bitzlato, a crypto platform suspected of being used by criminals to launder illicit funds belonging to Russian entities under EU sanctions. Europol estimates that the crypto exchange platform has received assets worth a total of EUR 2.1 billion. While conversion of crypto-assets and that about 46% of the assets exchanged through Bitzlato, worth around EUR 1 billion, were linked to criminal activities.
Europol has finally woken up to the fact that cybercrime has evolved into a well-established multi-billion-euro global business, constantly using the latest technologies to stay several steps ahead of international law enforcement.
“Encrypted messaging apps, dark web marketplaces, cryptocurrencies, and other privacy-enhancing technologies protect their identity, make law enforcement detection increasingly challenging. Besides, illicit digital products and technical services can also be hired or purchased by criminals in a crime-as-a-service business model, allowing criminals who are not particularly tech-savvy to perform illicit activities that entail knowledge of technology,” reveals Interpol.
The EU law enforcement agency is particularly concerned that young EU citizens, frustrated by a lack of opportunity resulting from the economic challenges that now face the EU, may be drawn into a life of cybercrime, confident that, statistically, their chances of being caught are extremely slim.
“Vulnerable demographics, and especially vulnerable youngsters who are lacking trust in societal institutions and confidence in the rule of law, are the perfect target pool for such a parallel underground society,” says Europol.
Europol does, however, acknowledge the difficulties faced by European law enforcement in tackling criminal networks based outside the EU and sees asset recovery as a way of deterring cybercriminals, as it deprives criminals of the proceeds of their crimes and prevents them from reinvesting them in further crime or integrating themselves into the mainstream economy.
The report highlights the efforts being made by EU legislators, Member States, and law enforcement to corrode the economic power of serious and organized crime through the recovery of confiscated assets. But, despite the optimistic tone of the report, Europol is forced to admit that seizing the assets of criminals based outside the EU remains an uphill task.
“The amount of captured proceeds still remains too low – below 2% of the yearly estimated proceeds of organized crime, according to a data collection carried out on seized assets for the purpose of the report,” admits Europol.
