The big-short: money laundering and organized crime risks in the securitization sector

• In Event: Money laundering: the role of facilitators and financial intermediaries

Abstract

Securitization is the process of taking an illiquid asset or group of assets and, through financial engineering, transforming it (or them) into securities which could be sold on the financial market, nationally and internationally. What if the assets which securities are backed on were related to ineligible public expenses, or to public procurement contracts with possible involvement of mafia organized crime groups? This paper sheds light on the risk that mafias, and other criminal networks, could launder their money through complex securitization schemes on the global financial market. It carries out an in-depth analysis of few case studies, and a screening of special purpose vehicles (SPVs) which are involved in securitization processes in Italy. It studies the characteristics of these firms, of the assets and credits securitized, and of the ‘servicers’ and intermediaries involved in the schemes, highlighting their roles and their possible exposure to organized crime actors and areas. While most of existing research stresses the banality of money laundering schemes, at least those related to mafia-type organized crime, this case may constitute an exception, with a potential disrupting impact on the international financial industry. Analysis carried out in the framework of EU co-funded project DATACROS II.

Authors

• Michele Riccardi, Transcrime - Università Cattolica del Sacro Cuore

• Michael Lo Giudice, Transcrime-Università Cattolica del Sacro Cuore

• Matteo Berbenni, Transcrime-Università Cattolica del Sacro Cuore

• Antonio Bosisio, Transcrime - Università Cattolica del Sacro Cuore