Portugal’s Hidden Financial Crime Landscape: An In-Depth Look

Portugal, known for its beautiful beaches, sunny climate, and rich history, has been attracting international attention in the global financial sector. However, beneath the picturesque facade, a complex web of financial crimes poses challenges for local and international authorities. In this article, we explore the various types of financial crimes prevalent in Portugal.

Portugal’s Transformation as a European Financial Hub

Portugal’s strategic location and relaxed business environment have made it an attractive destination for businesses and investors. The increase in financial transactions has unfortunately led to an increase in financial crimes such as money laundering, tax evasion, and insider trading.

According to the European Union’s Anti-Money Laundering Authority (AMLA), Portugal has the second-highest number of suspected money laundering cases in the EU, after Spain [1].

Financial Crimes in Portugal

Money Laundering

Portugal’s strategic location and complex network of banks and shell companies provide an ideal cover for money launderers [2]. The Portuguese banking sector has been a popular target, with a significant number of cases involving offshore companies and complex financial structures [3].

Tax Evasion

Portugal’s relatively low corporate tax rate (19%-21%) compared to other EU countries makes it an attractive destination for tax savings. However, this has also led to an increase in tax evasion [4]. According to the European Commission, Portugal’s tax revenue was estimated to be about €4 billion lower than expected due to tax evasion and fraud.

Insider Trading

Insider trading has been a concern in Portugal. In 2019, the Securities Market Commission (CMVM) fined a former vice-president of BPI, Portugal’s largest bank, for insider trading [5]. The case involved trading of shares in Portugal Telecom, a company in which the bank had a significant stake.

These financial crimes not only pose a threat to Portugal’s economy but also undermine Portugal’s reputation and commitment to combating financial crimes.

Addressing Financial Crimes in Portugal

To address these issues, the Portuguese authorities have taken steps to tighten their regulations and strengthen their enforcement mechanisms. In 2013, Portugal transposed the European Union’s Fourth Anti-Money Laundering Directive, strengthening the legal framework for preventing and prosecuting money laundering and terrorist financing [6].

Sources:

[1] European Union’s Anti-Money Laundering Authority (AMLA), Annual Report 2021 [2] Europol, Europol’s European Serious and Organised Crime Threat Assessment (SOCTA) 2022 [3] Transparency International Portugal, Relatório sobre Avaliação da Implementação da Disposições Legais sobre Lavagem de Dínheiro no País [4] European Commission, Taxation in Portugal, 2022 [5] Securities and Markets Authority (CMVM), Decision 1267/2019 of 13th March 2019, penalizing the former vice-president of BPI for insider trading [6] Government of Portugal, Lei n.º 35/2013, de 8 de Agosto, reforming the legal framework for the prevention and prosecution of money laundering and terrorist financing.