In the Netherlands, the colossal profits created by drug trafficking have seeped so deeply into the societal fabric that they merge flawlessly with the lawful economy, creating a veil of legitimacy. This seamless integration represents the essence of money laundering, acting as the lifeline for successful criminals.
Even seasoned investigators find themselves taken aback by the extent of the criminal network. A typical example is a recent probe, intended to trace a network of cocaine storage points, which instead unearthed a large-scale mortgage fraud in Amsterdam’s thriving real estate market.
Amsterdam’s underworld is as ancient as the city itself, and is no stranger to violence. The Dutch term “penoze” signifies a criminal brotherhood dating back to the 17th century, exerting control over weapons, drugs, prostitution, blackmail, money laundering, loan sharks, and even homicide.
The Central Statistics Bureau, earlier this summer, illustrated the enormity of this criminal operation when it evaluated the net contribution of “illegal activities” towards the Dutch economy in 2021, pegging it at a whopping €4.5 billion, equivalent to 0.5 per cent of the country’s GDP.
Amongst these unlawful actions, the simple production and distribution of cannabis added the most economic value. This was closely followed by activities associated with cocaine trafficking, and the manufacturing and sale of synthetic drugs such as amphetamines, methamphetamines, and ecstasy.
Detailed analysis of the bureau’s data on the economic contribution of cocaine reveals two different conclusions. In 2021, cocaine trafficking contributed a significant value of €1.2 billion to the Dutch economy. However, when considering the additional value exiting the Netherlands – money heading towards undetermined foreign locations where the masterminds preside, this €1.2 billion balloons to €10.7 billion, a profit margin befitting a peccant international business with abundant operations and high-risk leaders.
The Dutch government concedes they are engaged in an intense fight with increasingly ruthless criminal gangs enriched by cocaine, following the assassination of lawyer Dirk Wiersum in 2019 and journalist Peter R de Vries in 2021. Of particular notoriety is a gang led by Morocco-born Ridouan Taghi, once branded as Netherlands’ “most wanted”, currently serving a life sentence in a maximum-security prison for numerous murders. Yet, it is claimed that his threat persists unreduced, irrespective of his confinement.
In 2022, Taghi was identified by the US authorities, along with his Irish counterpart Daniel Kinahan (47) and the imprisoned Italian drug kingpin Raffaele Imperiale (49), as the key players of a Dubai-based “super cartel”, which is to blame for around one-third of the cocaine imported into Europe. This revelation prompted the Department of Justice in The Hague to target the criminal groups, which have repeatedly been blamed for converting the Netherlands into a “narcostate” in the opinions of law enforcement agencies.
In reference to the May statistics from the statistics bureau, then justice minister, Dilan Yesilgöz emphasised that penalties for serious drug crimes have remained relatively static in recent history, as the Netherlands has become a leading producer of synthetic drugs and a worldwide shipping centre for hard drugs. In her words, these are felons who consider extortion, intimidation, and murder as integral parts of their business operations. They are ruthless individuals who won’t hesitate to resort to any means to outperform their counterparts.
To probe into a seemingly minimal facet of this highly profitable cocaine-related criminality, an investigative team of Amsterdam detectives was created in 2018. Their mission was to unearth a network of illicit drug storage sites thought to be dispersed throughout the capital city.
The structures and concealed locations were utilised to safeguard drugs until such time as they were fit for premium market release. Occasionally, they also served as accommodations for the large group of migrant labourers integral to keeping the narcotics business functioning, and sometimes as safe havens for fugitive criminals. The winding alleys of Amsterdam, laden with bridges and split by countless canals, offered an almost guaranteed anonymity. The police presence was conspicuous, and their approach could be detected from a significant distance.
As it turned out, the most unceremonious yet effective means of evading detection was by bicycle. During this seemingly secondary investigation, the detectives in Amsterdam, some acting undercover as prospective property buyers, encountered a real estate agent who aroused their curiosity. Upon further investigation, it was revealed that this agent had previous engagements in the drug trade, but had seen an opportunity to transition into providing warehouses and houses to the drug community; while this was not surprising revelation per se, what stunned the officers was the sheer magnitude of his operation.
Spearheading his own illicit operation, the real estate agent utilised a diverse network that encompassed six discrete mortgage consultancy firms, an assortment of minor real estate representatives, and numerous financial services enterprises scattered across the city. Despite being substantial enough for efficacy, the network remained discreet enough to evade extreme scrutiny. There is no clue linking this deception to Taghi or his cohorts specifically. The police remain reticent about the precise position this fraudulent enterprise holds within the narcotics underworld, fully aware that several cases may be presented before a judicial panel.
Simplicity was the ultimate beauty of this deceit. The participating mortgage consultants would submit fabricated mortgage applications to banks, all supported by counterfeit documents such as employer confirmations, payslips and inflated account details, produced on a large scale with remarkable attention to detail.
“A multitude of times, we observed fabricated monthly salary payments being credited to applicants’ bank accounts”, admitted one investigator. “This was designed to present an illusion to the mortgage lender that the applicant was in a high-income job.”
Applicants were routinely charged between €7,000 and €12,000 for the doctored paperwork, on top of the standard broker fees and adviser commission. Police suspect that a minimum of 800 houses have been acquired this way since this former drug dealer turned real estate agent launched his enterprise in 2018. However, the authorities concede that this number is likely just the “peak of the iceberg”, given the operation continued “on a grand scale” into 2023. Realistically, the figure for properties procured is anticipated to be in the thousands, a minimum.
In May, ten individuals associated with the scam were apprehended, along with twelve others detained under allegations of fraud, money laundering, and forgery. Moreover, it’s important to mention that whilst law enforcement has primarily been concentrated on Amsterdam till now, the Dutch view the capital as part of what’s known as the Randstad — a sprawling metropolitan area encompassing the four largest cities in the Netherlands, Amsterdam, Rotterdam, Utrecht and The Hague, with a combined population of approximately 8.2 million.
“Therefore, it’s plausible the same fraud is being executed in other cities”, suggests Ursula Weitzel, public prosecutor in Amsterdam. Also, it’s crucial to remember that each approved mortgage secured by a dishonest applicant means a genuine applicant in the thriving Dutch market misses out.
As Dutch harbours experience a drop in cocaine confiscations, they become less appealing to smugglers in northwestern Europe. Weitzel highlights that everyday people are abiding by all applicable regulations; nonetheless, they witness their dream houses being missed out.
Banks currently struggle to differentiate between counterfeit documentation and legitimate paperwork during these instances, making the fraud incredibly tough to handle without knowing the exact properties to begin with. Unravelling this fraud issue will undoubtedly be a considerably arduous, lengthy and expensive endeavour.