I think most of us moved on from the ‘traditional’ idea of the italian mafia some time ago, which isn’t to say that there isn’t a lot of interesting news and information here. One of the European countries to watch in this regard is the Netherlands. A few years ago the head of the police union said that the country was in danger of becoming a ‘narco state’, and the various Dutch drugs mafias have only become further entrenched and emboldened since then. A lot of their money is recycled into property which, in a sense, gives all property owners – including politicians – a vested interest in their ongoing success.
Most ordinary people have no concept of the amounts of money we are talking about. It is vast, so vast that it will undermine the State. The only solution I can see is to legalise much of the trade and tax it. Just as with prohibition in the 1920s USA it didn’t work.
J StJohn
3 years ago
‘So the gangs’ largesse isn’t altruistic.; Exactly the same as socialism then?
andrew
3 years ago
When a state is weak or weakened, organisations such as the various Italian mafias will take advantage
Phil Bolton
3 years ago
The same is happening in Latin America with the gangs there. It’s a global issue that needs a coordinated global response. But unfortunately there are too many countries which are more than happy to be the filter through which this dirty money passes. The UK isn’t whiter than white either !
“Coordinated global response” just doesn’t feel the same to me any more…
A Spetzari
3 years ago
Interesting article thanks. Two thoughts on this, neither particularly ground-breaking…
First, it always fascinates me that essentially the difference between large crime organisations and corporations is quite minimal – perhaps just the degree of legal/illegal activity undertaken is the key distinguishing factor. Organised crime works often for local people by being the least worst option for them. Southern Italy is more rife with this as the government has had less effect over the years from corruption and incompetence. Not that other governments elsewhere are perfect, but there’s definitely a scale.
Secondly this increase in organised crime is perhaps in part due to the erosion of the Nation State in the globalised world.
Organised crime has had less of an impact on Northern European countries over the years because the states are far more absolute in power, and general corruption is lower. That said, with the erosion of state power (not least through decreased democratic accountability) we may see this increasing. Such as Mr Bailey mentions about the Netherlands.
Lisa I
3 years ago
The social programmes (charity) are a feature of Islamist political organisations too. Particularly in poor and corrupt countries where state assistance isn’t great. Hamas gained popularity through their social programmes, paid for with foreign money. It’s a clever tactic.
Tony Taylor
3 years ago
Strozzini is the business model for China’s Belt & Road Initiative. Pour money into tin-pot African nations (and Australia) then move in for ownership when the country can no longer afford the largesse.
Jon Redman
3 years ago
One thing the EU and others could usefully do is close off the ready means these people have to stay anonymous.
If you set up a company in Cyprus it need have only two named directors. One can be a company and the other can be a nominee. Neither need be the actual beneficial owner. When looking into some of my company’s shadier clients a while back I found large numbers where the company named as a director had been wound up years ago, while the nominee was a lawyer from a brass-plate firm that had provided nominee directors to thousands of similar firms. In other cases the individual director appeared to be a non-existent person – an accountant with hundreds of directorships but no LinkedIn profile, for example.
Once established they’re as fungible within the EU as any genuine company. They’re properly established under Cyprus company law (or Maltese – much the same), so they can operate anywhere.
Likewise, under Liechtenstein law there is a type of legal entity called an Anstalt (‘foundation’, roughly). It need have only one director, who can be a nominee, and all that need be reported is his name (so he can be “John Smith”). Such an entity pays a flat rate of tax, about 15,000 euros a year I think, and has next to no reporting requirements. A landlord I used to know had 30-odd buy-to-lets owned by such an entity which received all the rents from his properties, and which paid them to him. If HMRC ever demanded to know who owned this owner of UK property, and what happened to the rent money it received, he expected to have to disclose neither, as Liechtenstein law didn’t oblige it.
I don’t know whether that ruse would actually work, but the Cyprus case is real. I struggle to think of a legitimate, genuine purpose for such structures. They are surely used only by financial criminals and tax fugitives. I am baffled why it is so hard to outlaw them.
Charles Rense
3 years ago
EDIT: sorry, I read that as “media” and made an irrelevant comment.
I think most of us moved on from the ‘traditional’ idea of the italian mafia some time ago, which isn’t to say that there isn’t a lot of interesting news and information here. One of the European countries to watch in this regard is the Netherlands. A few years ago the head of the police union said that the country was in danger of becoming a ‘narco state’, and the various Dutch drugs mafias have only become further entrenched and emboldened since then. A lot of their money is recycled into property which, in a sense, gives all property owners – including politicians – a vested interest in their ongoing success.
Most ordinary people have no concept of the amounts of money we are talking about. It is vast, so vast that it will undermine the State. The only solution I can see is to legalise much of the trade and tax it. Just as with prohibition in the 1920s USA it didn’t work.
‘So the gangs’ largesse isn’t altruistic.; Exactly the same as socialism then?
When a state is weak or weakened, organisations such as the various Italian mafias will take advantage
The same is happening in Latin America with the gangs there. It’s a global issue that needs a coordinated global response. But unfortunately there are too many countries which are more than happy to be the filter through which this dirty money passes. The UK isn’t whiter than white either !
“Coordinated global response” just doesn’t feel the same to me any more…
Interesting article thanks. Two thoughts on this, neither particularly ground-breaking…
First, it always fascinates me that essentially the difference between large crime organisations and corporations is quite minimal – perhaps just the degree of legal/illegal activity undertaken is the key distinguishing factor. Organised crime works often for local people by being the least worst option for them. Southern Italy is more rife with this as the government has had less effect over the years from corruption and incompetence. Not that other governments elsewhere are perfect, but there’s definitely a scale.
Secondly this increase in organised crime is perhaps in part due to the erosion of the Nation State in the globalised world.
Organised crime has had less of an impact on Northern European countries over the years because the states are far more absolute in power, and general corruption is lower. That said, with the erosion of state power (not least through decreased democratic accountability) we may see this increasing. Such as Mr Bailey mentions about the Netherlands.
The social programmes (charity) are a feature of Islamist political organisations too. Particularly in poor and corrupt countries where state assistance isn’t great. Hamas gained popularity through their social programmes, paid for with foreign money. It’s a clever tactic.
Strozzini is the business model for China’s Belt & Road Initiative. Pour money into tin-pot African nations (and Australia) then move in for ownership when the country can no longer afford the largesse.
One thing the EU and others could usefully do is close off the ready means these people have to stay anonymous.
If you set up a company in Cyprus it need have only two named directors. One can be a company and the other can be a nominee. Neither need be the actual beneficial owner. When looking into some of my company’s shadier clients a while back I found large numbers where the company named as a director had been wound up years ago, while the nominee was a lawyer from a brass-plate firm that had provided nominee directors to thousands of similar firms. In other cases the individual director appeared to be a non-existent person – an accountant with hundreds of directorships but no LinkedIn profile, for example.
Once established they’re as fungible within the EU as any genuine company. They’re properly established under Cyprus company law (or Maltese – much the same), so they can operate anywhere.
Likewise, under Liechtenstein law there is a type of legal entity called an Anstalt (‘foundation’, roughly). It need have only one director, who can be a nominee, and all that need be reported is his name (so he can be “John Smith”). Such an entity pays a flat rate of tax, about 15,000 euros a year I think, and has next to no reporting requirements. A landlord I used to know had 30-odd buy-to-lets owned by such an entity which received all the rents from his properties, and which paid them to him. If HMRC ever demanded to know who owned this owner of UK property, and what happened to the rent money it received, he expected to have to disclose neither, as Liechtenstein law didn’t oblige it.
I don’t know whether that ruse would actually work, but the Cyprus case is real. I struggle to think of a legitimate, genuine purpose for such structures. They are surely used only by financial criminals and tax fugitives. I am baffled why it is so hard to outlaw them.
EDIT: sorry, I read that as “media” and made an irrelevant comment.