Fraud, tax evasion, drug trafficking behind majority of reports to FIAU

Fraud was the leading predicate offence in reports linked to money laundering which it receives, an analysis by the Financial Intelligence Analysis Unit has found.

A predicate offense is a criminal activity that generates illicit proceeds.

The Financial Intelligence Analysis Unit (FIAU) published a new strategic analysis titled: ‘The Landscape of Organised Crime in Malta: An FIAU Perspective’.

The report provides an overview of organised crime trends linked to Malta. The FIAU analysed 540 suspicious reports which it received between 2021 and 2024, relating to organised crime, for the report.

The aim of the document, the FIAU said, is to raise awareness towards key money laundering trends, patterns and red flags frequently encountered by the FIAU in relation to organised criminal groups.

The analysis found that remote gaming operators and credit institutions are among the main contributors in identifying organised crime-related activity, reflecting varying exposure levels across sectors. They submitted 31 per cent and 17 per cent of all reports respectively.

The FIAU said that remote gaming operators play a significant role in identifying threats from both international and national organised crime groups, “which are not necessarily operating within Maltese borders.”

Similarly, it said, credit institutions “appear to demonstrate a strong capacity to detect illicit activities featuring elements of both domestic and international organised crime.”

Fraud was the predicate offence in 22 per cent of reports linked to money laundering in relation to organised crime it received, it said.

The FIAU said that organised crime groups, “both domestic and international, typically engage in various fraudulent activities, including card payment and online payment fraud, fraudulent investment schemes, identity theft and the use of forged documentation to launder money.”

The FIAU also noted that illicit trafficking in narcotic drugs and psychotropic substances featured in 20 per cent of reports. Tax crimes, it said are noted to have featured in 17 per cent of reports.

In terms of specifically foreign organised crime, the analysis revealed that illicit trafficking in narcotic drugs and psychotropic substances was the suspected primary predicate offence in reports linked to money laundering, accounting for approximately 28 per cent of cases. Fraud followed at 23 per cent, and a link to robbery and theft was found in 8 per cent of the reports.

In reports linked to domestic organised crime groups, tax evasion was the leading suspected predicate offence, representing 40 per cent of cases. Fraud accounted for 16 per cent, while Illicit trafficking in narcotic drugs and psychotropic substances accounted for 12 per cent of reports.

In addition, when looking at reports which involved both domestic and international organised crime groups, tax crimes were the leading suspected predicate offence, amounting to 33 per cent. Fraud followed closely, with 31 per cent of reports linked to suspected fraudulent activities.

Fraud was in second place for all three categories, becoming first overall.

The analysis also makes a distinction between international and domestic organised crime exposure in Malta.

It found that international organised crime reports generally indicate relatively low-value financial flows, with most cases involving suspected illicit funds in the range of €0 to €10,000. In contrast however, domestic organised crime reports consistently reflect significantly higher monetary exposure, with a substantial proportion of cases involving amounts between €100,001 and €500,000, the report reads.

It said that this disparity suggests that international cases are more likely to reflect transactional or intermediary activity with a limited financial footprint, “whereas domestic organised crime appears to generate and retain more substantial proceeds within the local jurisdiction, resulting in higher-value laundering activity being captured in intelligence reporting.”

The analysis found that, on average, each report concerning organised criminal groups contained approximately three triggers which prompted suspicions.

Among these triggers, are adverse media surrounding the subject of the report, transaction monitoring-based triggers and suspected beneficial ownership concealment.

It said that the predominance of multiple suspected predicate offences within the same report, coupled with the frequent use of various suspicion indicators, underscores the complexity and evolving nature of organised criminal groups.