Financial Crime World

Lithuanian Money Laundering Scandal: €2 Billion Laundered through Licensed EMI Unveiled by Eurojust

Brussels - In a major financial crime investigation revealed on February 27, 2024, Eurojust, the European Union Agency for Criminal Justice Cooperation, uncovered a money laundering operation involving an Lithuanian Electronic Money Institution (EMI). This alleged scam facilitated money laundering worth over €2 billion since 2017.

Operation Targeted Lithuanian EMI

This Lithuanian EMI, which held a banking license, is accused of laundering proceeds from various criminal activities, such as tax evasion and drug trafficking. The operation spanned across the European bloc and exploited a network of shell companies to create fictitious transactions. luxury vehicles and real estate in Lithuania and Latvia were acquired using the laundered funds.

Criminal Enterprise Operated Across Three Economies

  • Location: This criminal enterprise, initially set up in Lithuania in 2016, involved three European economies: Lithuania, Italy, and Latvia.
  • Scale: Over €2 billion was laundered. Thousands of criminals across the EU were reportedly involved.

Two Main Suspects, Aided by a Third Arrested in Italy

Two main suspects, with the assistance of a third arrested in Italy, orchestrated this global money laundering network.

The Take-Down

On February 27, 2024, Eurojust collaborated with Latvian and Lithuanian authorities, leading to the closure of the institution and the freezing of €11.5 million in assets.

  • Coordinated Raid: 55 locations were raided.
  • Arrests and Assets Frozen: 18 arrests were made. €11.5 million in assets were frozen.
  • Law Enforcement Involved: 250 law enforcement officers were engaged.
  • Coordination Meetings: Eight coordination meetings were held.

Significance of the Case

Eurojust and involved authorities emphasized the need for all financial institutions to have robust compliance systems in place to prevent and detect criminal activities. Fenergo, a leading CLM (Client Lifecycle Management) solution provider, also highlighted the significance of the case by recommending financial institutions to better manage their risk.

  • Effectiveness of AML Compliance: The case emphasizes the need for more effective AML compliance, as the EMI held a banking license and complied with AML regulations yet still facilitated money laundering.
  • Advanced Risk Management Systems: Solutions such as Fenergo CLM can assist firms in implementing effective risk management processes and minimizing compliance silos.

Regulatory Penalties and Fines

Lithuanian authorities issued $2.4 million in enforcement fines to financial institutions for non-compliance with AML regulations in 2023, with payments firms accounting for the majority of these penalties.

Conclusion

This case underscores the importance of effective AML compliance and the risks of viewing it as just a tick-box exercise. Even apparent compliance with AML regulations does not exclude the risk of illegal activities. Financial institutions need to adopt proactive measures against financial crimes to prevent potential scandals and protect their reputation.