Cannabis trafficking and money laundering (an overview)

Around 8% of adults, 22.6 millions of citizens, within the EU have used cannabis at least one time over 2022, while 1.3% of adults are daily consumers (as per the European Drugs Report 2023).

Alexandre PAMART, Compliance Specialist, PhD program at CEDS Paris

All rights belong to the author, Alexandre PAMART and Institut Talleyrand.

The below content is part of the ongoing thesis prepared by the author at CEDS.

INSTITUT TALLEYRAND - TOUS DROITS RÉSERVÉS

In Europe networks trafficking cannabis are usually laundering money first through investments in the trafficking ring to enhance the technical set-up and to extend the geographical scope.

Then other methods, some of them discussed below, are used to launder the proceeds.

Real estate sector to launder dirty cash

Real estate appeared as a sensitive sector for laundering proceeds of hashish (and potentially cocaine) in Morocco, in Algeria (as pointed out in the research thesis mentioned), in Spain (7), in Albania and in Dubai. Since begin of January 2023, real estate agents in Morocco are requested to communicate any suspicions linked to transactions, so as to better monitor the laundering risks associated to the sector. In addition, the new regulation expects real estate agents to perform identity checks on the entire customer base and act with vigilance. Transactions with shell companies or unidentified customers is prohibited (8).

In Dubai, recent reporting rules expect the real estate agent to fill in a report when the transaction is performed with a cash value of USD 15 000 or more (or with virtual assets, or with funds derived from a virtual asset) (58). Real estate is a sector praised for laundering, even more when the circuit involved some construction / real estate company.

Spain : cannabis production hub for Europe, especially for Germany

Spain is also a producer of cannabis. The blurred legal framework attracted criminal organisations (9, 11), establishing farms in Spain. In Spain consumption in privacy is tolerated (10). Some shops were selling the equipments for cultivation in private locations (11). Seizures of unlawful production sites have been multiplied by four over 2014-2018 with particular activity in Catalunia and in Malaga. 70% of the production is exported to Europe (Germany being the main export market) (12).

The usual connections to arms, violence, corruption were identified by the police. A peculiarity of cannabis in Spain is the relation to human trafficking (people working in the underground clandestine farms). The papers were stolen to foreigners lured into Spain (surely with a job perspective).

The Netherlands : cash-intensive shops

In the Netherlands some specific shops are suspected to launder substantial amount of drug money : the souvenir shops of which the city is full (30). Often these shops are opened from time to time, or do not care much about selling products efficiently…however the owner expects payment only in cash, potentally mixing dirty cash with cash from tourist buying souvenirs. Recent controls of these shops evidenced practices of fraud, counterfeiting and clues (codes) about hawala / underground banking system were detected etc)…

Alexandre PAMART, Compliance Specialist, PhD program at CEDS Paris

All rights belong to the author, Alexandre PAMART and Institut Talleyrand.

This contet above is part of the ongoing thesis prepared at CEDS by the author.

INSTITUT TALLEYRAND - TOUS DROITS RÉSERVÉS

Bibliography

(1) Europol, 11 arrested in Spain and France for flying cannabis into Europe, 11/01/2022

(6) Le Parisien, Ile-de-France : l’argent du cannabis partait au Maroc, 17/10/2017

(7) Le Figaro, Nantes : après une saisie de drogue, les enquêteurs découvrent que l'argent du trafic servait à construire un bien immobilier en Espagne, 10/03/2023

(8) LE360, Les agents immobiliers désormais impliqués dans la lutte contre le blanchiment d’argent, 30/01/2023

(9) Actu, Comment l'Espagne est devenue la "ferme de cannabis" de l'Europe, 17/10/2020

(10) Senat, La dépénalisation et la légalisation du cannabis - Étude de législation comparée n° 306 - juillet 2022, July 2022

(11) 20minutos, El 'boom' de la marihuana en España y el riesgo de ser la fábrica de Europa, 15/12/2021

(12) 20minutos, Un marco legal y cultural "permisivo", el fenómeno okupa, el clima... ¿Por qué España es el paraíso de la marihuana?, 15/12/2021

(30) RTL Nieuw, Witwassen via dubieuze winkels: zo pakt Amsterdam de souvenirshops aan, 12/12/2022

(58) The National News, UAE issues new reporting rules for real estate transactions to combat money laundering, 08/08/2022