In a coordinated sting, the European Public Prosecutor’s Office (EPPO) has dismantled a VAT fraud network allegedly orchestrated by a Chinese underground banking network in Italy, evading €113 million through ghost companies and money laundering schemes. Coordinated searches across 20 Italian cities led to arrests and a €116 million asset freeze.
Key Points:
- Operation Scope: Coordinated raids in Bologna, Milan, and other Italian cities targeted a network suspected of €113 million in VAT evasion and laundering across Europe.
- Arrests: Seven arrested, including two alleged masterminds; five under house arrest, two with regular police check-ins.
- Methodology: Fraud scheme utilized ghost companies to import Chinese goods, evading VAT, with funds laundered through a clandestine Chinese banking network.
- Asset Seizure: Authorities froze €116 million in assets, including luxury cars, real estate, bank accounts, and seized properties across Italy.
- Collaborations: The operation involved Italian Financial Police, plus law enforcement agencies in Bulgaria, Germany, and Greece.
Short Narrative:
In a significant crackdown on EU financial fraud, EPPO’s latest enforcement action exposed a Chinese-backed underground banking network responsible for siphoning €113 million through elaborate VAT evasion and laundering schemes. For nearly €500 million in turnover, ghost companies funneled goods through complex triangulations across Europe, masking origins and avoiding customs duties. Illicit profits moved through shell companies, bypassing anti-money laundering regulations, before landing in Chinese bank accounts. Some funds circled back to Italy for reinvestment, highlighting the scale and sophistication of the scheme.
Actionable Insight:
This operation underscores the need for strengthened EU-wide anti-money laundering protocols to dismantle complex, cross-border fraud networks. Increased scrutiny on “missing trader” schemes, particularly in high-risk sectors like textiles, could prevent similar large-scale evasions.
Call for Information:
Do you have insights into underground banking networks or similar VAT fraud schemes? Connect with FinTelegram as we continue our in-depth coverage of financial transparency and regulatory enforcement.
