International investigations shedding light on Malta’s dirty money flows

The report of a former general counsel of Venezuela’s state-owned oil company who has agreed to repay millions of euros he kept in a Maltese bank account is the latest in a series of recent reports of large sums of money being laundered through Malta, brought to light by international investigations and reports.

Alvaro Ledo Nass, a lawyer who also served as secretary of Petroleos de Venezuela, S.A. (PDVSA)’s board of directors, admitted to playing a pivotal role in a $1.2 billion money-laundering conspiracy. Close to half of those funds, over €500 million, were being laundered through Malta.

Venezuelan oil money

This is not the first instance of Venezuelan oil money being laundered through Malta’s financial system. In 2018, it was revealed that former Venezuelan president Nicolás Maduro had been implicated in an American investigation for laundering some €160 million through Sliema-based private wealth management firm Portmann Capital Management.

The US criminal complaint alleges that Maduro’s stepsons helped launder US$1.2 billion stolen from Venezuela’s state oil company, Petroleos de Venezuela, S.A. (PDVSA), through a series of fake investment schemes.

According to the US authorities, the specific deposits for Maduro’s three stepsons were among ten wire transfers amounting to approximately €511 million that were wired to and laundered through Malta.

Africa’s richest woman

The Luanda Leaks exposed how Isabel dos Santos, once Africa’s richest woman, and her late husband – Congolese businessman Sindika Dokolo – set up a complex web of shell companies to channel illicit funds from embezzlement, money laundering and trading in influence.

According to the investigation by the International Consortium of Investigative Journalists, the couple had a stake as shareholders in 14 companies set up in Malta, making it the third-highest number of companies linked to the couple’s business empire, following Angola (81 companies) and Portugal (17 companies).

Angola is now trying to recover those funds. The Angolan attorney general’s office has requested cooperation with Malta as the African country searches for billions in funds that its former president’s daughter embezzled out of the country.

Turkey’s cryptocurrency scams

The founder of one of Turkey’s largest cryptocurrency exchanges who absconded with the funds of some 390,000 clients from across the country stashed €13 million in Malta, according to charges in an indictment against Thodex exchange founder Faruk Fatih Özer.

In an indictment by the Anatolian Chief Public Prosecutor’s Office, Özer is accused of defrauding hundreds of thousands of Thodex clients, following an investigation conducted by MASAK – Turkey’s Financial Crimes Investigation Board, the country’s financial intelligence unit, which is part of the Ministry of Finance and Treasury.

The investigation found Özer transferred the client’s crypto assets worth €13.2 million (253,714,909 Turkish lira) from three separate accounts to wallets in a crypto asset service provider based in Malta. According to MASAK’s investigations, those crypto wallets belong to Özer and co-defendants Cem Uzunoğlu and Zuhal Özer.

In another instance, The Shift reported in November last year that a Turkish organised crime gang had been laundering illegal gambling proceeds through a Malta cryptocurrency exchange.

Approximately $30 million in cryptocurrency in Malta that belonged to the murdered Turkish crime boss Halil Falyalı, assassinated in North Cyprus, has been seized by Turkish authorities as part of an investigation into an illegal gambling ring.

The accounts were receiving the proceeds of gambling, which is illegal in Turkey, through the Papara free money transfer app, after which they were converted into untraceable cryptocurrency.

Italian investigators’ assessment

According to the Direzione Investigativa Antimafia’s (DIA) report for the second half of 2021, Malta’s proximity to Italy, the ease with which customs controls are avoided, and the ins and outs that come with EU membership “has facilitated the ‘migration’ of various matrixes of Italian organised crime to Malta”.

The report outlined how, over the last few years, investigations have shown how the Italian mafia widely uses Malta’s online gaming sector, where mobsters linked to the Calabrian ‘Ndrangheta clan are most prevalent.

This assessment echoes the annual report published in early 2022 by the Central Directorate for Anti-Drug Services, a joint organisation comprised of personnel from the Italian Police, the Guardia di Finanza, and the Carabinieri tasked with the prevention and prosecution of drug trafficking.

One investigation detailed in the report (operation CRYPTO) found that the ‘Ndrangheta proved capable of planning and executing massive imports of cocaine from Northern European ports (Holland, Germany, and Belgium) and Spain, destined for drug markets located in Lombardy, Piedmont, Emilia-Romagna, Lazio, Campania, and Apulia, but also in Malta.

Malta the mafia’s El Dorado

A study commissioned and published by the European Parliament’s co-chair of The Left in the European Parliament (GUE/NGL), Martin Schirdewan, showed how Italian mafia clans laundered billions of euros of ill-gotten, illicit funds through online gaming platforms in Malta between 2015 and 2022.

“This is a massive amount of blood money that ‘Ndrangheta, Camorra and Co are trying to cover up through online gaming and funnel back into the legitimate economy,” Schirdewan said.