Italian authorities announced on Thursday the discovery of a tax fraud scheme involving 85 suspects and a staggering €1.7billion in false invoices. The intricate operation utilised a network of so-called Chinese shadow banks for money laundering.
Guardia di Finanza (GdF) police based in Ancona, on Italy’s eastern Adriatic coast, disclosed the seizure of assets totalling €350million. These seized assets included cash, luxury vehicles, and real estate, Reuters reported.
As part of their crackdown, authorities also took action by freezing 1,569 bank accounts, initiating the sequestration of 140 companies suspected of issuing false invoices. They also conducted searches in various locations such as Milan, Lombardy, Florence, Padova, and Sicily.
According to the press release, there were both Italian and Chinese entrepeneurs involved. Ongoing investigations aim to identify Italian customers who used this illicit service for money laundering purposes.
Chinese shadow banks system
In recent years, Italy has grappled with the emergence of an underground banking system orchestrated by unlicensed Chinese money brokers. Multiple investigations across different regions of Italy have shed light on a broader range of services provided by Chinese-linked organisations. These services include facilitating tax evasion and masking cross-border payments for entities like drug cartels.
The Ancona prosecutors, as revealed by the GdF, uncovered that fictitious “paper” companies generated false invoices, directing customers to deposit funds into specified Italian bank accounts.
Once the money was received, the fraudulent company would transfer an equivalent amount to an account in a Chinese bank, ostensibly justifying it as payment for non-existent product imports.
The original sum, minus a commission, was then returned in cash by couriers to the initial paying customer. This completed the cycle of an intricate financial deception, as detailed in the police statement.