Spanish Branch of China's one of largest Banks - ICBC - Raided in Money Laundering Case

The Spanish police raided the Madrid subsidiary of one of China’s largest banks on Wednesday and arrested five of its directors as part of a broad investigation into money laundering.

The Madrid branch of the Industrial and Commercial Bank of China is accused of helping several Chinese and Spanish criminal syndicates commit financial fraud, according to Europol, the police agency of the European Union, which helped the Spanish police in its investigation.

The investigation, code-named Operation Shadow, builds off a case last year by the Spanish police that claimed that a group had laundered 40 million euros of earnings from discount stores operated by Chinese businessmen across Spain. The group was also accused of importing goods from China without declaring them to Spanish customs authorities, avoiding the payment of import and tax duties. Thirty people were arrested in that case.

After last year’s operation, the Spanish police said they followed “the money trail” and found that the syndicate had deposited its earnings at the Spanish subsidiary of ICBC. The bank then sent it to China “without checking their origin as required by law,” according to Europol.

Europol also accused ICBC Spain of helping several other Chinese and Spanish criminal syndicates, without identifying the groups specifically. According to Europol, they all used ICBC Spain “to introduce into the financial system funds earned through the crimes of smuggling, tax and excise fraud and labor exploitation, allowing the transfer of the funds to China in a way that appeared legal.”

“Operation Shadow shows all the challenges that modern transnational financial investigations entail: criminal activities that generate cash, which is then injected into the financial system through the misuse of complex corporate structures; the complicity of several professionals who move the funds across different jurisdictions completes the picture,” Igor Angelini, head of the financial intelligence group at Europol, said in a statement.

Europol confirmed that five directors of ICBC were detained in Madrid on Wednesday, although the investigating judge declined to disclose the names. The Spanish police did not exclude making further arrests as part of the investigation.

ICBC could not immediately be reached for comment.