We have been receiving a number of reader inquiries from Northern Italy regarding our article entitled Another Clue explains Italy's Focus on Malta Money Laundering (October 7, 2020), and asking for more details about the subject. Given that Fashion House money laundering continues unabated, perhaps a masterclass is in order.
To begin with, money laundering through retail is pretty straightforward:
(1) You take your criminal profits and integrate them into the legitimate receipts of a retail business by depositing them into the business accounts as sales.
(2) You grossly inflate profits after you dissolve the dirty money into the pool of good money, creating additional records to cover the supposed receipt of that money as sales.
(3) You pay taxes on the new total, and, having cleaned the proceeds of crime, repeat the process.
(4) If you are really ambitious, having the wealth, you now look to acquire power to protect it, by making political contributions, publicly donating to worthy charities, and participating in "giving back" to those in the community most in need. You may even run for public office.
Of course, this scheme depends upon a cooperating and reliable source of finished goods, in this case, Italian fashion houses that will (A) falsify invoices to increase the amount of inventory you bought from them, and (2) allow you to greatly increase the retail prices, which facilitates the laundering of even more dirty money. We are talking about high-end Ready-to-Wear, not Au Couture, which are goods custom made to order by craftsmen in their studios, and thus not amenable to bulk shipping for units to the retail store.
Certain fashion houses and individuals residing in Northern Italy have been closely monitoring this blog, and were particularly interested in our articles about money laundering through fashion. We have previously reported at length on this subject, and the interest taken of late by Italian investigators.
To add to the mix, we now have a report that an individual holding diplomatic status and senior diplomatic rank has assisted in the payment phase of the scheme.As you know diplomats may pass through international borders without submitting to Customs inspection, and we are advised that this loophole has been repeatedly exploited by laundrymen and their associates.
Given that many of the participants in the scheme appear to be powerful Politically Exposed Persons (PEPs), we do not expect it to be terminated by arrest and prosecution, with rare exceptions.
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