Michele Riccardi

The real estate market, especially the luxury one, has long been a target for money laundering purposes. A frequent scheme involves the misuse of legitimate– often offshore– firms to conceal the ownership of properties and the illicit origin of the invested funds. Despite the abundance of investigations, empirical research in this domain remains limited. Our paper addresses this gap by empirically examining the secrecy of the firms owning approximately 500,000 properties in one of the most important European cities– Paris. The analysis combined a wide variety of data, ranging from land registry information to company ownership data, politically exposed persons’ records, crime involvement data and high-risk jurisdictions lists. The results show that (i) firms with real estate holdings characterised by higher levels of secrecy are more likely to be implicated in financial crimes than more transparent firms; (ii) 1% of properties in Paris, equivalent to almost 5,000, are owned by firms having links with high-risk jurisdictions known to be at the center of recent money laundering and tax evasion cases; (iii) approximately 10,000 properties and 300 properties are respectively owned by firms having at least two and three secrecy indicators. The results confirm the exposure of the real estate market to financial crime risks and the validity of anomaly indicators to detect high-risk properties. It also offers local administrations and supervisory authorities novel methods to monitor the investment of dubious money into real estate which can have negative socio-economic impact.

This article studies legitimate businesses confiscated from mafia groups in Italy to assess whether mafia investment patterns across industries depend on the characteristics of the geographical environment in which infiltrated firms operate. We carry out a spatial regression analysis of more than 1700 firms, with special emphasis on restaurants/hotels and construction, confiscated from mafia groups in Italy against a set of variables related to the social and criminal environment (with a special emphasis on mafia presence) after controlling for the local business structure and the economic/financial composition of the areas. Ceteris paribus, mafia investments in the construction industry are greater in regions with a higher level of mafia presence, infiltration of public administration and more protected markets; while investments in bars, restaurants and hotels are greater in areas characterized by less rooted mafia presence, higher violence, higher trade openness and cash intensity. The results suggest that mafia investments in construction can benefit from the opportunities offered by grip on the territory and on the public administration; and those in restaurants by concealment drivers, such as money laundering. This article contributes to the understanding of the geography of mafia economy and of the mobility of mafia groups beyond territories of origin, by highlighting the possible instrumental use of legitimate businesses, and the relationship between mafias’ migration and infiltration mechanisms.

Two images dominate discussion of money laundering. Investigative journalists and politicians stress the variety and sophistication of methods that have been used to launder money of corrupt officials and white collar offenders. The research literature, largely dependent on criminal cases, emphasizes how unsophisticated and routine are the laundering methods used by drug dealers and other illegal market participants. The discrepancy may reflect the incapacity of police to detect sophisticated money laundering but it may also represent the reality; different groups of offenders choose different methods. This paper presents a theoretical framework to explain how offenders choose to launder their criminal earnings. Specifically it asks: what determines the sophistication of the method chosen? Among the variables that we suggest influence the choice are: (a) the type of predicate crime and of crime proceeds, (b) the type of offender (age, education, social status), (c) his/her motivations, (d) the AML environment and the level of AML controls. The paper provides arguments from criminological and economic theory for how these variables might play a role. Without claiming that individual cases can test the theory, we offer some case narratives to suggest the plausibility of the factors that we propose.

Despite the wide reach of anti-money laundering legislation worldwide and increasing media attention, fostered by journalistic leaks such as Panama Papers, empirical knowledge on how criminals launder their illicit proceeds is still scarce. The few available empirical studies show that money laundering (ML) schemes are often less sophisticated than they are depicted in the political and media debate. To contribute to the empirical knowledge of ML behaviour, and test this hypothesis, the present study analyses the ML activities related to 2818 Italian offenders included in the ML section of the LexisNexis’ WorldCompliance database. Through a quantitative content analysis of textual information related to each offender's profile, it highlights the characteristics of the ML offenders, the methods (or ‘typologies’ in FATF terms) employed, the assets seized, the business sectors involved and the countries in which ML was conducted. The results confirm that criminals tend to employ unsophisticated typologies, as well as prefer Italy or jurisdictions that are close (geographically and culturally) to Italy for laundering their illicit proceeds. Tangible assets (first real estate and registered vehicles) are more frequent than financial assets. Finally, differences exist between the laundering by mafia-related ML offenders and non-mafia ones. The study provides empirical ground to progress in the knowledge of how ML offenders behave, and supports the idea that criminals, when laundering their proceeds, do not act as legitimate entrepreneurs, but may be driven by other constraints and drivers.