Money Laundering in Spain

Brant Hadaway DroneLaw blog
Spain is now one of the top European nations impacted by money laundering. The depth and extent of the illegal activities that encompass “money laundering” have perplexed Spanish authorities. Although the Spanish government has adopted a number of measures to control money laundering, the failure of such efforts is evident. Recent statistics show that money laundering has become the most prevalent illicit activity in Spain.

Money laundering in Spain occurs through “the acquisition, use, conversion or transfer of any property derived from criminal activities related to drugs, armed gangs and terrorist organizations or groups, to hide or disguise its origin or helping a person involved in criminal activity to evade the legal consequences of his acts, and the concealment or disguise of his true nature, source, location, disposition, movement or ownership or rights over them, even when generating activities that take place in the territory of another State.” This definition embraces Spain’s current challenges. Not only is money laundering being initiated in Spain, but tainted money arising from activities outside of Spain’s borders are being hidden within Spain.

Spain’s largest law enforcement operation against money laundering took place in March 2005. The operation, code-named “White Whale” (Ballena Blanca), helped to dismantle the country’s largest network of money launderers. The White Whale trial began five years after the police investigation that uncovered a network of operations that laundered more than 250 million euros in Marbella. White Whale led to the arrest of fifty individuals of multiple nationalities for their alleged involvement in this plot involving assets ranging over 350 million dollars. At least nine criminal organizations used a recognized law firm as a source to launder their illicit proceeds both within and outside of Spain.

Spain has now been labeled a heaven for money launderers. It would be imprudent to talk about the supposed “success” of the White Whale operation because it only revealed the government’s lack of control over prolific money laundering in the nation. The authorities thus far have been outwitted and outrun by some of the most powerful money laundering organizations in Europe. The White Whale operation evidenced that proper supervision of social organizations such as law firms, notaries, estate agents, registrars, jewelry stores, casinos, and accountants is lacking in Spain. Furthermore, the case showed that the Spanish government still lacks the tools necessary for the detection of suspicious money transactions.

Nevertheless, Spain has taken great strides in battling money laundering. The Economy Commission of the Spanish Congress recently passed a bill allowing federal authorities to seek out individuals who are using the Spanish financial system and other economic operators for laundering activities. The new regulations seek to control the financial entities that are highly exposed to laundering activities.

Yet, more must be done. During the last week of December 2010 alone, a new money laundering scheme emerged in Spain. The money, which came from the profits of drug trafficking, was being reinvested in Spain through the purchase of real estate and cars.

Spain must continue to improve the situation before bigger and more sophisticated schemes take hold. The government must propose new and innovative measures that will fulfill the needs of the European nation. It is impossible to determine what the future will hold for Spain and whether the newly proposed regulations will overcome Spain’s money laundering problems.