x2 Former Monaco bankers were convicted for laundering Italian money and x4 others for failing to report

Bloomberg has reported that two former Monaco bankers were convicted for their part in laundering millions of euros deposited in the Principality in cash by two Italian businessmen.

• https://www.bloomberg.com/news/articles/2024-10-08/monaco-bankers-convicted-over-laundering-of-italian-client-cash

Bloomberg states that

• Alexandre Balga, who previously worked at Banque Havilland and Nicolas Gelso, formerly of Mediobanca SpA’s CMB Monaco office, were both
• Fined €10,000 and
• Handed suspended jail sentences of up to 6 months by the Monegasque courts.
• In addition, four bankers were accused of failing to report the suspicious deposits.
• Three were convicted by the Monegasque courts, two of whom worked for Edmond de Rothschild at the time, with fines of between €5,000 and €7,000 each.
• The judges cleared the highest-profile banker in the case, Patrick Dauguet, the current CEO at Havilland Monaco. The banks themselves do not face any allegations.

The Monaco case came about after a tentacular Italian investigation, known as ‘Mafia Capitale’.

• https://en.wikipedia.org/wiki/Mafia_Capitale#:~:text=The%20Mafia%20Capitale%20is%20the%20name%20given%20to,illegal%20works%2C%20and%20bribery%20in%20the%20public%20administration.
• https://www.ft.com/content/4cf9b6de-6d5f-11e7-bfeb-33fe0c5b7eaa

It is reported.

• The two Italian businessmen, Fabrizio Amore and Maurizio Fratti each received a one-year sentence, with six months suspended, and a €500,000 fine.
• Amore and Gelso, through their lawyers, have announced their intention to appeal.
• Amore was named as a suspect in 2015, although his defence lawyers stated that he was never convicted. They claim, “no guilty verdict should have been reached in Monaco for the main reason that money laundering is a secondary offence that requires [their] client was convicted in Italy in the first place, which is not the case.”
• Secondary or not, the offence took place in the Principality, which is keen to show renewed vigilance about the origin of incoming funds and that it can effectively bring convictions on the strength of recent new laws.

As Monaco’s Chief Public Prosecutor Thibault pointed out at the start of the new judicial year,

• “It is the risk of being checked, arrested, prosecuted and severely sentenced, with confiscation penalties in particular, that will prevent criminals and delinquents who wish to hide and launder their money in Monaco from doing so.”

The ultimate aim is for Monaco to be taken off the Financial Action Task Force (FATF) “grey list”. Half a billion euros had already been seized in Monaco over the last year.

BACKGROUND REPORTING FROM 2023

1. Six bankers face a criminal trial in the city-state on the Mediterranean Sea, where some are charged with helping Amore launder money and others are accused of failing to alert the government about suspicious transactions.
2. The allegations and order for the group to stand trial, reported here for the first time, are based an 88-page judicial document seen by Bloomberg News. It shows that the investigation began in 2015 and formal charges were first brought in 2016, and that authorities spoke with dozens of witnesses and obtained e-mails, account statements and audio recordings.
3. Even as the Monaco bankers welcomed Amore, police in Italy were investigating him. For years, gangsters and builders had bribed and threatened politicians in the city of Rome to win contracts for municipal construction projects and services. Known as the Mafia Capitale case, the investigation led to about 80 arrests and its tentacles extended across the country, unearthing corruption in housing, garbage collection and even park maintenance, Italian prosecutors alleged in court filings.
4. Amore was named as a suspect in the Mafia Capitale case in June 2015, according to a court document filed by an Italian judge. He was not formally charged in that case, however, but Monaco authorities say Italian detectives mounted a “parallel” investigation into Amore’s dealings with the city of Rome. Italian law enforcement discovered that he was involved in an allegedly rigged contract to renovate the “Julius Caesar” wing of the building where the city council meets, according to the Monaco document.
5. An attorney for Amore, Giorgio Martellino, told Bloomberg in an emailed statement that “he was acquitted in the proceeding” of the Julius Caesar case. Three people with direct knowledge of the matter said the case is ongoing; one of them said that one count, for bid rigging, had been dropped. The people asked not to be named because details of the case are not public. The next hearing is scheduled for November, the people said.
6. In March, Italian authorities announced they had seized €60 million from the businessman’s bank accounts after financial police in Rome said they believed he had developed a 30-year scheme to “obtain illicit profits” and that his assets were “completely disproportionate to the declared income.” Martellino said that the seizure case “will certainly be annulled as totally unfounded.”
7. In Monaco, Amore, 66, is accused of money laundering and providing forged documents to banks. Martellino said that Amore’s deposits in Monaco “are entirely lawful sums” that “had been duly declared to the Italian state” with the “relevant taxes paid.”
8. Two of the Monaco bankers—one who worked at a Mediobanca unit and another at Banque Havilland—face money-laundering charges.
9. The four others are alleged to have failed to report suspicious transactions while holding compliance roles at Banque Havilland and Edmond de Rothschild.
10. The banks themselves haven’t faced prosecution and, while Societe Generale also held some of Amore’s funds, none of its staff members were accused of wrongdoing.
11. A spokesperson for Banque Havilland said the institution “has fully cooperated with the relevant authorities in their investigation and rejects any allegation of wrongdoing.” Representatives from Edmond de Rothschild, Societe Generale and Mediobanca declined to comment.

Scathing report

1. The trial in Monaco, which doesn’t yet have a date, promises to be a flashpoint and comes on the heels of a scathing assessment of the city-state’s ability stem the flow of dirty cash. In January, European inspectors found that Monaco struggled to address money laundering, with a “low number of prosecutions” and a “very low” number of convictions.
2. Unlike in the US, criminal charges in Monaco are not announced to the public and there is no publicly available docket to track a case’s progress. While courtrooms are open, the only details provided—usually just days in advance of a trial—are an accused person’s initials and the alleged offense.
3. The two men who face money-laundering charges—Alexandre Balga, formerly at Banque Havilland, and Nicolas Gelso from Mediobanca’s CMB Monaco unit, previously known as Compagnie Monegasque de Banque—were banned from the industry after they were indicted in 2016, according to the Monaco document.
4. Gelso is accused of helping launder funds on behalf of other businessmen who held accounts at CMB Monaco.
5. Gelso’s attorney declined to comment. Neither Balga nor his attorney returned detailed messages requesting comment.
6. The maximum penalty for money laundering is 10 years in prison. A conviction for failing to file a suspicious transaction report can lead to a fine.

Opening doors

1. In 2012, a banker in Switzerland approached Edmond de Rothschild on Amore’s behalf and said a wealthy client was seeking to diversify his holdings by moving money into the city-state, the Monaco document says.
2. According to an internal filing reviewed years later by investigators, as far as the Monaco bankers understood, Amore was a construction and real estate entrepreneur seeking to stash away some of his savings. At Edmond de Rothschild alone he allegedly deposited a total of €657,000 between October 2012 and February 2015 in nine bundles of cash as large as €140,000.
3. Banks in most countries, including Monaco, are required to scrutinize large cash transactions to figure out where the money is coming from and how it is being used. But the bank had “shortcomings in the documentation, description or justification” for Amore’s behavior, authorities said in the document reviewed by Bloomberg.
4. At Banque Havilland, according to the document, Amore stockpiled almost €585,000 in cash over 18 months, including a seven-week period beginning in February 2014 during which he made three consecutive deposits of €150,000.
5. The deposits were never reported to the Monaco government, according to investigators. Originally, bank documents labeled Amore as “low” risk but someone scratched out the word “low” on the file and replaced it with “high,” the Monaco investigators found.

Avoiding alarms

1. As the inquiry ramped up, Monaco authorities pulled e-mails and other records from the financial institutions. They discovered audio recordings of a conversation between Amore and Balga, the account manager. A transcript of a May 2014 call, included in the document reviewed by Bloomberg, suggests how the banker may have come up with an idea to avoid triggering internal alarms:
2. “The next time we’ll see together whether it could be better to take a safe at the bank, put it all in the safe and then administer the cash together, quietly,” Balga said. “It’ll be easier.”
3. Balga had a second idea, according to the Monaco report. He connected Amore, who made large deposits of cash, with another customer who wanted to withdraw large amounts of currency. Soon, the customers were trading with each other, with Amore handing over currency and receiving a wire transfer or check. The exchanges happened in the bank’s office and at the Fairmont Monte Carlo hotel.
4. In the months following Amore and Balga’s conversations, Monaco’s anti-money-laundering watchdog, Service d’Information et de Contrôle sur les Circuits Financiers, or SICCFIN, began combing through accounts at Banque Havilland and at Edmond de Rothschild as part of one of its regular audits of banks’ systems. SICCFIN agents discovered what they termed anomalies—large cash deposits that should have triggered alerts—but no one at the banks had singled out Amore’s transactions as suspicious until news of his legal woes in Italy became public.
5. That was so despite at least some concerns raised by back-office staff. At Edmond de Rothschild, a compliance officer told authorities that he pressed the account manager for more information about Amore. Five times over six months into 2015, those requests went unanswered.

Information sharing

1. Around the same time, Monaco was nearing an agreement with Italy to share tax information. For decades, affluent Italians sought refuge from income taxes at home by parking undeclared wealth in the city-state. But the government of Monaco began negotiating with dozens of nations, including Italy, that sought to recoup their lost revenue.
2. Bankers would later tell investigators that they hadn’t felt it necessary to report Amore’s cash transactions to the government because they believed it was tax dodging and not money laundering. The former wasn’t a crime in Monaco, they reasoned, and the Monegasque government “tolerated” foreigners using banks in the city-state to hide their undeclared wealth, they said.
3. “As far as the bank was concerned, the funds deposited in cash stemmed from tax evasion and that didn’t trigger alarms at the bank—even for an amount of €450,000,” Banque Havilland’s then-chief financial officer, Patrick Dauguet, told investigators.
4. For some bankers, the information sharing agreement, signed in March 2015, landed like a bombshell. The Monaco document cited an Edmond de Rothschild compliance officer who told a colleague that they should stop taking in cash from Amore: “I don’t see how we can continue to accept such deposits.”

Source

• https://www.monaco-tribune.com/en/2024/10/former-monaco-bankers-convicted-for-laundering-italian-money/
• https://businessmirror.com.ph/2023/09/24/monaco-bankers-face-trial-with-client-linked-to-mafia-capitale/