The sun still shines in Europe’s money-laundering hub

Among the flaws the US State Department finds is that Spanish lawmakers have taken their time to incorporate new provisions in an anti-money laundering law that went into effect last year. Washington suggests that the government should focus more on confiscating properties and assets in criminal cases through civil forfeitures after defendants are convicted, and maintain and disseminate statistics on the number of drug and money laundering prosecutions.

Despite the downturn in real estate, drug proceeds are still being used to purchase properties across the country. US authorities say that many air passengers smuggle bulks of cash to Latin America and, with the money they make in Spain from drug sales, Colombian cartels buy goods in Asia to be resold at stores they own across Europe or in Latin America . “Credit card balances are paid in Spanish banks for charges made in Latin America, and the money deposited in Spanish banks is withdrawn in Colombia through ATM networks,” the report states.

Another interesting factor the US State Department found was that 20 percent of the 500-euro notes used in Europe were in circulation in Spain in 2009 and linked to money laundering activities involving property sales. International call centres, or locutorios, as they are known in Spain, continue to be one of the most popular mediums in transferring illegal funds to Latin America. Recently, authorities in Madrid confiscated 500,000 euros at one neighbourhood locutorio that was allegedly to be sent abroad. Police raided the centre and arrested about six people.

There is one positive observation. The State Department quotes a report issued by the European Monitoring Centre for Drugs and Drug Addiction that cocaine use is declining “due to effective demand reduction programs and the country’s weak economy.” A government survey released in November reflected that cocaine-consumption among the Spanish population dropped for the first time in 15 years. Successful interdiction efforts and tighter money laundering laws have help Spain combat the narcotics smuggling and cash schemes.

Spain has long been a haven for international criminals – a fact that has soured its reputation abroad. In times of crisis, some people amass great sums of wealth by many too-good-to-be-true get-rich schemes, albeit illegal. As I read the report, I wondered how long it will take Spanish lawmakers to wise up and take a harder look at the rampant financial crime that is plaguing this cash-strapped economy.