Drug markets and financial flows: underground banking in the Netherlands
Drug markets generate enormous (cash) money flows. Scholars have suggested that drug trafficking payments are widely done by underground banking, a way to transfer money outside of the formal financial system and without any currency actually moving. Underground banking essentially has an international component and the system is attractive for money with an illegal origin as it offers the opportunity to move (cash) money in a quick and anonymous way. In recent years, these illegal kind of transactions have become harder to make via the regular system as a result of a) globally implemented stricter regulations for and sanctions against money laundering via the regular financial system, and b) a decrease in the use of cash money in Euro-countries. This has led to an increase in underground banking, a trend visible in Europe, including in the Netherlands. However, scientific knowledge on the up-to-date nature of the phenomenon and the actual relationship with drug markets is scarce.
We conducted a qualitative study on underground banking related to organized, drug-related crime in the Netherlands. Aim of the study was to gain insights of the current phenomenon, focusing on the (social) network of underground bankers, the modi operandi, the role of new technologies, and the relation with drug-related organized crime.
Interviews with key informants and police file analysis were the empirical foundation. We firstly interviewed a total of 18 professionals who based on their profession had a good view on the research topics. Subsequently, 9 police files on recent underground banking cases were selected and studied for an in-depth exploration.
Our results show on the one hand how underground bankers use multiple methods to virtually move (cash) money around the world and on the other hand how money flows derived from criminal activities, often drug-related crime, seep through into regular financial structures. In this presentation, I will elaborate on the structure of networks of underground bankers and zoom in on the most common methods used in underground banking systems currently active in the Netherlands, and their connection with drug markets.
