The banking and credit crunch are lining the pockets of the “original bad guys:” the Italian Mafia. According to Bloomberg, money laundering activities in Italy are on the rise after the banks stopped lending. The gap between lending and borrowing is being filled by criminal capitalists.
A Bank of Italy spokesperson stated, “The crisis has given organized crime room to thrive because access to credit has become more difficult. Whoever holds large amounts of cash, like crime groups, can make investments that aren’t possible for others. They can now invest in fully legal businesses.”
Italian authorities investigated over 15,000 suspicious transactions in the first 6-months of 2010, doubling the number investigated in 2009 and exceeding the total number of investigations launched in 2008.
Hiding assets, or money, in Italy directly effects the country’s struggling economy.
The mafia are experts at money laundering, hiding ill-gotten income using legal and legitimate methods; last year, Italian authorities seized the famous Rome’s Café de Paris due to mafia ties and Cosa Nostra, of Sicily, are linked to supermarket chains.
Boasting the fourth largest economy in Europe, Italy experienced a 5% drop in 2009; Italy’s economy, Europe’s fourth biggest, shrank more than 5 percent last year and the central bank predicts mild growth (1%) in 2010. Lending dropped in 2008/2009, and earlier this month, an Italian banking spokesperson reported that “demand for credit is increasing, but there’s the impression that for many businesses, especially the small ones, demand isn’t being fully satisfied.”
Over the same period, the mafia revenues grew by 4 percent, as estimated by SOS Impresa, Italy’s anti-racketeering group.
Investigations into hidden assets led Italian authorities to arrest more than 300 suspects last week, showing all how the mafia centered itself around the Italian banking capital of Milan. Authorities are seeking 67 supposed mafioso’s in and around Milan and Calabria, seizing assets worth $327 million dollars.
The corruption runs deep; investigators claim that managers of telecom and web businesses ran over 2 billion dollars through their operations from 2003 to 2007, although company lawyers state the businesses were used without their knowledge. The financial intelligence unit alerted police regarding operations that involved companies Telecom Italia Sparkle and FastWeb.
Money laundering amounts to anywhere from 2 to 5 percent of Italy’s GDP according to a former mafia prosecutor, and the central bank is studying the problem in an effort to determine the role–and scale–the mafia plays in Italy’s economy. Organized crime activity is directly correlated to the Italian economy; from 1983-2007, five of the mafia’s most active regions showed the lowest per capita growth.
