Prosecutors smoke out money launderers

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Federal prosecutors have accused ten men of laundering more than $1 billion (SFr1.13 billion) in connection with an international cigarette smuggling ring.

The investigation, which began in Switzerland in 2002, has brought to fruition the largest case of organised crime ever heard before a Swiss court.

Officials said on Monday that the defendants – five Swiss, three Italians, a Spaniard and a Frenchman – have been accused of belonging to a criminal enterprise and using Switzerland to launder the illegally acquired money.

The ten allegedly funnelled money into bank accounts in the Ticinese city of Lugano for the powerful Italian-based Camorra and Sacra Corona Unita criminal organisations, prosecutors in Bellinzona said.

The defendants have not been identified by authorities because of Switzerland’s privacy laws. Earlier, however, lawyers for three of the defendants identified them as Fredi Bossert, owner of a money exchange business, financier Franco Della Torre and his Italian colleague, Michele Antonio Varano.

The ten are accused of having laundered well in excess of $1 billion in Ticino from the early 1990s until 2001, the Federal Prosecutor’s Office said.

For a decade, “nearly the total flow of money from cigarette smuggling the criminal organisations Camorra and Sacra Corona Unita were running via Montenegro went through Switzerland”, authorities said in a statement.

Unimpeded

That flow of cigarettes, and money into Switzerland in particular, occurred unimpeded at least in part as a result of how Swiss authorities viewed the problem, according to Mark Pieth, a professor of criminology at Basel University and an expert on money laundering.

Pieth told swissinfo that cigarette smuggling had in the past not been regarded as particularly important.

“Few people actually considered that it might not be just cigarette smuggling but organised crime,” Pieth said, referring to Swiss authorities.

“It used to be quite the thing to do because Switzerland was a kind of a safe haven before the change of attitude,” he argued, adding that not only did officials in Ticino turn a blind eye to illegal activity, but that a judge in the Italian-speaking canton maintained “very good” relations with one of the key smugglers.

“There is a very concrete corruption angle to it,” he said.

Swiss authorities say they broke up the smuggling ring in 2004 but the Federal Prosecutor’s Office on Monday declined to speculate on how the gang could have operated unhampered for over a decade.

Sophisticated

According to authorities, using sophisticated systems and financial couriers, the group funnelled mafia money into the Swiss financial system, where it was invested in the so-called “grey market” business of illegal cigarettes through third parties.

Swiss authorities said the gang had first bought the cigarettes in the United States and South America, with purchases handled by front companies in Switzerland, Liechtenstein, Cyprus, Canada and Belgium.

Italian officials allege that the gang then illegally transported cigarettes between Italy and Montenegro using speedboats, with Montenegrin authorities collecting money on exclusive licences and transit fees. Officials in Montenegro deny wrongdoing.

The contraband cigarettes were then stored in Montenegro before being ferried into Italy to be sold on the black markets in Naples and Puglia.

“You simply saved a lot of money – up to four francs per package,” Pieth said. “It doesn’t mean the goods necessarily had to pass through Switzerland. Frequently the money did. That’s why the figureheads sat in Lugano.”

Swiss authorities issued their indictment at the end of September although no date has been given for the trial, which will be held at the Federal Criminal Court in Bellinzona.

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Money laundering

The Money Laundering Reporting Office Switzerland (MROS) says there were 795 reports of money laundering in 2007, a 28 per cent increase over 2006.

Reports from the banking sector were up 37% in 2007, primarily related to investment fraud.

Authorities say that 79% of reports were forwarded to law enforcement agencies.

The total asset value of suspected frauds reported was SFr921 million.

In 2006, 619 suspicious activity reports were submitted.

There were 729 reports in 2005, 821 reports in 2004 and a high of 863 reports in 2003.

In 1999, 303 reports were received.

MROS

Under Swiss law, firms that know of or suspect money laundering are required to notify MROS.

When the agency receives a report from a financial intermediary, it has five days to deal with it.

MROS is only a reporting office and does not pass judgement.

It looks at the facts of a case and examines connections between individuals and firms. MROS says that technology has made it easier to gather this information.

MROS then forwards its findings to authorities after which point, the agency is finished with the case.