The pandemic redesigns a new economic and financial context where organized crime are trying to develop new ways of laundering that money coming from illegal activities. Let us start with the figure of the launderer by answering a question: is the person who launders money usually a criminal? Let us see why this is not always true.
The recycler: an apparently respectable person
There is no such thing to recognize a person predisposed to money laundering. Individuals or criminal organizations can commit money laundering whether they engage in economic activity or not. Unsuspected and professionally established individuals can also carry out money laundering activities. Sociologist Edwin Sutherland in 1939 defined white-collar crime as “committed by a respectable person of high social status in the course of his business”.
Only the species that adapts to change survives
Because of the pandemic, the economy horizons and markets have changed. New dynamics of consumption grows and we grudgingly adapt to new relational formats.
The phenomenon of recycling is also adapting to the new scenarios.
New and old recycling strategies coexist
The phenomenon of money laundering also stems from the continuous and incessant search for the most innovative ways to “wash” dirty money, without renouncing the more traditional forms in a simultaneous use of old and new strategies that enhance the versatility of the phenomenon.
During this time, new ways of laundering emerges, and the organized crime uses alternative channels that exponentially increase the risk of what we usually consider safer assets: gold, precious metals, diamonds and art.
Gold in investors’ sight
While the Coronavirus brings uncertainty and central banks are printing money at a relentless pace, the ingot is back in the sights of investors after a period (mid-March 2020) of sales dictated by the need to offset losses or margin calls on other assets. The fact that gold has strengthen up reaching 1800 dollars an ounce, may suggest that money launderers have not lost sight on one of the refuge assets par excellence, driven by the need to place excess liquidity. In Thailand, for example, in mid-April 2020 there were queues outside stores to sell necklaces, rings and bracelets to parry the blow of economic crisis induced by the global pandemic.
Brick withstands the impact of the virus
In a situation of emergency and uncertainty such as the current one, the real estate market is once again attractive to investors, including organized crime. In periods of economic difficulty, real estate is an interesting investment as it less subject to monetary fluctuations. Until a few weeks ago, there were no great differences in cost between a fixed-rate mortgage and a variable-rate one. Today we are witnessing the paradox that fixed rates in some cases are lower than variable rates (source: Sole 24 Ore online of 2 April 2020). The increase in demand for real estate (due to the fall in the price of money), produces the rise in prices and organized crime can resell even realizing a surplus over the purchase price.
Art does not lose appeal
According to a study by Arts Economics, in 2018 the global art market reached a total value of $67.4 billion marking a +6% over 2017.
The art and collectibles market has always attracted investors wishing to diversify their asset portfolios. Art remain a sectors in which criminal organizations have a strong interest. The circulation of works of art leaves no trace. Sculptures, canvases and frescoes guarantee passages of money between a mafia group and the other and shelter them from any risk.
The work of art remains where it is, usually in a free port difficult to reach, even if it changes formal ownership.
In this way, million-dollar deals happens with a signature and a handshake. Sellers and buyers thus shield themselves behind names and faces, routes and provenance remains difficult to reconstruct.
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