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Suspect Money Transfers

Although not immediately obvious that it is the case, the news in the Saturday edition of last week’s Plus 24, a supplement to Italy’s Financial Times equivalent, Il Sole 24 Ore, was potentially startling.

I was tipped off about the article by a contact of mine who thought I might have found it interesting.  He was right, I did, and you might too, even if the implications are worrying.

It has been some time since Osama Bin Laden’s terrorist network Al Qaeda has launched an attack, and some believe that something big is going to happen soon.  Indeed, the news from the Il Sole 24 Ore article may be evidence of this.  Hopefully it is not.

Suspect Fund Transfers up by 58% Since the Start of 2009

Italy’s anti-money laundering body, the Financial Information Unit, or Unità D’informazione Finanziaria, as it is known here, says that in the first quarter of 2009 reports of transfers of suspect sums of money went up by 58%.  A big increase.

The money is travelling from Italian banks, often via San Marino, an independent state within Italy, and out to places such as the tax haven of Madeira, an island some 700 kilometres off the coast of Portugal.

After landing in bank accounts in the island tax haven, it is not clear just where all this cash is ending up.

Mafia Hiding Ill Gotten Gains

There are a few possible explanations for the increase in suspect money transfers.

At present in Italy there is something of a crackdown on mafia activities, and part of this crackdown includes sequestrating assets.  Such assets include property, cars, and of course, raw cash.  All items which have been acquired with money earned illegally.

In the face of increasing police operations against the mafia; there was another yesterday (Monday); it is probable that mafia minions are doing all they can to move money out of reach of the Italian authorities to avoid cash being grabbed as part of future anti-mafia crackdowns.

This means that the huge increase in suspect operations may simply be down to the mafia stepping up attempts to hide their ill gotten gains.  But there is another possibility.

Project Financing and Fund Raising for Terrorism

The other possibility is that all this cash is being used to pay for something, and the income from this ‘something’ is being put towards other ‘projects’.  Just what these somethings, and other projects are, is open to speculation.

The money could be payment for raw materials for illegal drug production, such as opium, which is used to produce heroin.  Al Qaeda apparently uses Afghan opium to generate cash.

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Whoever is selling the drugs, on the basis of the huge increase in suspect transfers, must be having something of a sale, or they are on a fund raising drive.  If someone is fund raising, then just what are they generating all the money for?  If that ‘someone’ happens to be Al Qaeda, then it could be that a new attack is being planned, either with conventional weapons, or, more worryingly, something involving nuclear or biological/chemical weapons.

Whilst I was chatting with my contact, Al Qaeda’s name did come up, as did the possibility of some form of attack.

Actually, the UK has been on a high state of alert for a few months now too, which suggests certain concerns.  Some may remember the blunder committed by the most senior counter-terrorism officer in the UK, Bob Quick, who, rather stupidly, got out of a car and inadvertently revealed the contents of ‘Top Secret’ documents to waiting photographers while on his way into 10 Downing Street, the British Prime Ministers home office.

The result of this error was the need to round up a number of terrorist suspects rather sooner than investigators hoped.  Many of the suspects were then later released without charge.  Either the blunder caused the security services to strike too soon, or to round up the wrong suspects.  Still, the fact that the British security services were carrying out top secret investigations means that they believed something was on the cards.  Somebody was cooking up something, and funding must have been coming from somewhere.

By the way, Bob Quick resigned over the affair.

Is Someone Paying for Arms and Equipment?

Again, with terrorism in mind, it is possible that all the suspect transfers relate to income derived from direct payments for arms and munitions.  This too would indicate that a new act of terrorism is to be unleashed on the unsuspecting.

It is no secret that the mafia does a little arms trading either.

Not Sizeable Sums?

Before abandoning cities and running for the hills, you may be pleased to hear that Giovanni Castaldi, the head of the Italian Financial Information Unit, stated that the sums being transferred were not that sizeable.  However, if one plays with the figures a little, the sum of money concerned begin to look pretty darn sizeable.  I hasten to add that this is a worst case scenario.

Under Italian law, transfers of money in the sum of €12,500 or more, and which are not clearly justified, have to be reported as suspect.

In 2008, some 14,600 suspect transactions were so identified.  Let’s assume for a moment that this is equal to 1200 suspect transactions per month.  So the total number of suspect transactions for one quarter would have been, say, 3,600.  Now, let’s up this by 58%, which, you may remember is the increase in suspect transactions which occurred in Q1 of 2009.  By my calculations this brings us to around 5,700 suspect operations so far in 2009.  Right, let’s now multiply 5,700 by the minimum amount which attracts the attention of the Italian authorities, so we have:  €12,500 times 5,700.  Result: over 70 million Euros.  Not exactly an insignificant sum.  One must be able to pick up quite a quantity of explosives for a sum like that.

Remember though, that the figure of 7o million Euros is a worst case scenario, in that different people may have reported the same transactions as being suspect.  Then again, it would be interesting to know just how many of these suspect transfers exceeded the 12,5oo Euro alarm bell threshold, and by how much.  Actual figures were not provided in the Il Sole 24 Ore article, which is interesting.  There are also Q2, Q3, and Q4 2009 suspect movements to take into account, don’t forget.

Yes, a lot of the above is pure speculation, but somebody is moving lots of money around in Italy.  The sixty found thousand dollar question is: Why?

For some background on the illict movement of money in Italy, you may like to see the Right Code, Wrong Code post, which I also wrote after reading an earlier, but related, article in Il Sole 24 Ore.

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