EUROPOL Spotlight: Shadow Money – the International Networks of Illicit Finance

The recent release of confidential information once more revealed the operations of vast international networks for illicit finance. They rely on offshore tax havens, complex webs of legal business structures and corruption to facilitate a variety of criminal activities including tax evasion, fraud and money laundering.

The Pandora Papers is a leak of almost 12 million documents that expose hidden wealth, tax avoidance and money laundering by prominent individuals and politically exposed persons (PEPs).
The Pandora Papers leak includes 6.4 million documents, almost three million images, more than a million emails and almost half-a-million spreadsheets.1 The international networks of illicit finance revealed by the Pandora Papers leak enable criminals to launder illicit proceeds, hide assets, engage in corruption and sustain a globalised criminal economy.

The total amount of wealth held offshore globally is estimated at EUR 7.5 trillion, with the EU share being valued at EUR 1.5 trillion. This represents over 10% of global GDP. The estimated revenue lost to the EU as a result of international tax evasion is EUR 46 billion in 2016.

Beyond tax concerns, where the scheme might be legal, offshore companies play a key role in money laundering schemes involving organised crime and are often used to hide the true origin of the funds. Money laundering sustains a complex and sophisticated criminal economy throughout the EU. Criminals rely on money laundering to be able to spend or invest their vast criminal profits.

The scale and complexity of money-laundering activities affecting the EU have previously been underestimated. For this purpose, professional money launderers have established a parallel underground financial system to process transactions and payments that is isolated from any legal financial oversight mechanisms. This parallel system ensures that the criminal proceeds cannot be traced.


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