Front companies in Cyprus embroiled in money laundering, say Greek police

A cross-border tax evasion and money laundering scheme involving Greece, Cyprus and Slovakia has led to the arrest of 21 people, Greek police said on Monday.

Greece’s police said the case amounts to a €26 million tax fraud, in which at least 430 front companies were set up across all three countries.  

Unemployed and dependent persons were listed as administrators so as to conceal the identity of the real ‘masterminds’ behind the case. Fake transactions amounting to €150 million had been declared.

Authorities carried out a months-long investigation, and eventually detained 21 people in Greece on Thursday.

Cyprus’ police spokesman Christos Andreou said he could not comment on the case at present, while Greece’s police press office was not immediately available to say how many of the front companies were listed in Cyprus.

Nonetheless, of the 21 people arrested, three are considered to be the leaders of what Greek authorities have said is a criminal organisation. Another 41 people are facing charges in connection with the case.

Beyond the front companies, the organisation also carried out a ‘carousel fraud’ exploiting intra-community VAT rules applied across the EU. The companies operated as ‘missing traders’ declaring fictitious transactions to illegally collect VAT or request returns.

Money reaped from the operation was funnelled through accounts of the front companies while encrypted networks (VPNs) and anonymous sim cards were used as part of the operations.

Members of the organisation also physically transferred some of the money, to conceal the origin of the illicit revenues.

Additionally, false, inaccurate or incomplete tax return forms were submitted, and forged invoices were issued to aid in requests for income tax returns. As such, the organisation managed to illegally obtain more than €4.4 million in VAT refunds from the Greek government.

During the execution of 39 search warrants, 46 mobile phones were found, a pistol, luxury car, 62 stamps of legal entities and €139,696 in cash.