Offshore firms are the main vehicle for money laundering

Although some progress has been made in catching money launderers in past years, the sums actually retrieved are pitiful compared to the money being laundered because the greatest source of money laundering – offshore companies – is out of justice’s reach, a prosecutor told members of Parliament yesterday. Assistant Appeals Court prosecutor P. Nikoloudis, the outgoing head of the Commission Combatting the Legalization of Revenues from Illegal Activities, told members of the Parliament’s Institutions and Transparency Committee that, from the cases his commission sent to the courts, 23.48 million euros in money whose laundering was attempted had been seized in 2002, up from 12.62 million in 2001 and 7.34 million in 2000. Most of the seized amounts came from illegal trade in cigarettes, but there are several other ways to launder money which are not as easily detected. Recently, Nikoloudis told MPs, laundering has been taking place through winning state lottery or soccer pools. The winner is persuaded by a pools agent who is in the know to transfer the winning slip to the launderer who pays the winner. Then the launderer appears as the winner and gets back his or her money legally. Detecting and combating laundering sometimes involves international cooperation, which is not always forthcoming, especially from several ex-communist states. A few years back, a Ukrainian citizen attempting to deposit a huge amount in a Greek bank was arrested. Authorities had credible information that the money had been embezzled from a former Ukrainian prime minister. The amount was confiscated. However, a few months later the Ukrainian authorities intervened, saying no such embezzlement had taken place and giving a plausible explanation about the origin of the money. Many cases of money laundering are discovered at currency exchange businesses, but very few at banks. Nikoloudis said he was certain a lot of laundering involved insurance firms but there could be no proof of that. The best the authorities can do is close some loopholes in the law that currently prevents prosecution. For example, under current law, if a ship full of cocaine is seized, the owner may admit he intended to trade but claim that, due to the seizure, he had not been able to sell any. Authorities cannot look into this person’s bank accounts. Changing the law would allow the state to look at bank accounts of people convicted for drug smuggling and to prosecute them for laundering, in case there was no convincing explanation about the origin of the money.