1. Introduction

Since 2009, CTIF-CFI has received many disclosures with regard to companies or natural persons in the construction or industrial cleaning industry, always with a link to Brazil, either as the country of origin of the individuals involved, or as the country to which money is sent.

Analysis of these files reveals the existence of networks specialising in the exploitation of illegal Brazilian workers.

Since 2009, CTIF-CFI has found that the modus operandi has changed and that these files increasingly feature more complex money laundering schemes.

This text provides an overview of the evolution since 2009 of the modus operandi and the money laundering schemes in these files, contains CTIF-CFI’s statistics on the files disseminated to the judicial authorities between 2009 and 2017 (in particular to the Public Prosecution at a labour tribunal) and discusses jurisprudence regarding the economic exploitation of Brazilian networks.

2. Evolution of the modus operandi and money laundering schemes

From 2009 to 2010 the files mainly involved companies in the building or industrial cleaning industry, led by Brazilian or Portuguese nationals, which were used to exploit illegal workers. Using fake Portuguese identities and front men these “entrepreneurs” took over companies under Belgian law, often via specialised fiducies and for relatively small amounts. If required, the company objects were changed to include building or industrial cleaning activities. Once these initial procedures were completed these companies were briefly used to commit social and fiscal fraud. They were subsequently declared bankrupt because of significant debts with the tax authorities. When they were declared bankrupt the one in charge of the company had disappeared because he was protected by a front man, he had a fake identity or had already resigned and sold the company to another Brazilian.

These files often featured the following flows: “credit transactions of corporate customers” followed by “cash withdrawals”, in particular to pay workers employed by subcontractors who use undeclared / illegal workers (Brazilians who reside in Belgium illegally).

Initially the suspicious transactions were ordinary transfers from other companies in the same industry (often with a good reputation), followed by cash withdrawals used to pay workers who work for the company illegally.

Given the nationality or the origin of those involved in these files money was often remitted (Western Union) to Brazil and Portugal. This way part of the proceeds of these fraudulent activities was sent back to the country of origin of the people involved in these fraud mechanisms.

From 2011 onwards CTIF-CFI found that these networks used an increasingly professional approach by using secondment (through Portuguese companies who officially used seconded members of staff) and bogus self-employment (Brazilians worked as bogus self-employed staff for these companies and did not pay any social security contributions).

Since 2013 CTIF-CFI has identified the use of (inter)national “offsetting” schemes (also referred to as “compensation” schemes). This technique involves criminals with large amounts of cash they wish to launder without raising suspicions getting in touch with criminals who need cash for their illegal activities without their bank noticing. The cash is handed over in exchange for (inter)national transfers. Offsetting cannot be detected by the financial sector as it takes place outside of the financial system. International transfers carried out with the use of suspicious invoices or international transfers that are not consistent with the customer’s usual company objects, should attract the financial sector’s attention. After reconstruction CTIF-CFI was able to link the offsetting schemes with laundering the proceeds of various predicate offences, including the exploitation of illegal workers.

In 2015, CTIF-CFI found that the international offsetting schemes were becoming increasingly complex and more regularly involved illegal financial flows with Asia, mainly China and Hong Kong. In Asia the financial flows could be combined with financial flows from concealed commercial transactions with the vast Asian market. Sometimes the money was sent to Asia, from where it was subsequently transferred to an unknown final destination.

Transactions are also directly carried out on the accounts of the managers of these companies, who are mainly Brazilian or Portuguese nationals. Layering is also a well-known technique in these files. The money is channelled to various accounts and is subsequently withdrawn in cash, or transferred abroad.

CTIF-CFI hardly identified any money remittance transactions in recent years though, which were so typical of the files reported to the judicial authorities between 2009 and 2012.