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The Spanish-controlled city of Ceuta, in northern Morocco, has turned into a main destination for European online gambling companies. However, many of the businesses serve as a facade for money laundering schemes, an investigation by El Espanol revealed.
The report, published on January 11, details how recent tax reforms in Ceuta have turned the city into a fertile ground for money launderers. These individuals pay only half the taxes in the autonomous city compared to what they would have to pay in mainland Spain.
Growing tax haven
El Espanol inspected how some online gambling companies operate. The outlet focused in particular on the businesses that were set up in Ceuta in the past two years—after the lenient tax regulations went into force.
Ceuta’s President Juan Jesus Vivas introduced the tax reform in 2017, saying the updated laws aim to make the city more attractive for investors.
Besides lower taxes, the reform allowed companies, notably online gambling operators, to set up in Ceuta as long as they have a fiscal address in the city and at least half of their staff are legal residents of the city.
However, according to El Espanol’s investigation, the reality is different. Only nine online gambling companies fit all the requirements and are registered with the Spanish Ministry of Consumer Affairs. Yet, the Autonomous Organization of Tax Services of Ceuta (OATSCE) counts at least 25 companies that have fiscal addresses in Ceuta.
The operators with addresses in Ceuta come from Russia, France, Italy, Belgium, the UK, Malta, and Israel.
A source from the Ministry of Consumer Affairs told El Espanol that companies that have fiscal addresses in Ceuta, but do not fit the other requirements, are operating illegally.
The investigation provided several examples of businesses that are subject to Ceuta’s tax regulations but do not operate from the city, such as Betfred, Gaming1, Emara Play, and Playtech.
The majority of online gambling companies with fiscal addresses in Ceuta have provided addresses of private homes rather than offices, El Espanol claimed. Moreover, some of the addresses provided do not have any company nameplates.
“Most of the registered offices in the Official Trade Register (BORME) do not correspond to companies, but to private addresses. Therefore, there are no employees, and they should not benefit from tax reductions,” the report explained. It added that “there is even an address that does not exist.”
Online gambling for money laundering
The severity of the situation in Ceuta does not only affect tax revenues of the city, but it also helps foster cross-border money laundering.
“The amounts of money that can be moved unofficially is dangerous,” the investigation warned, “this booming sector is poorly controlled.”
To illegally transfer money between countries, the suspect online gambling businesses allegedly hire people to place bets using prepaid credit cards and cryptocurrencies. The individuals then “compete” against bots that play as anonymous individuals.
When the betting session is over, the money gets transferred between users located in different countries, El Espanol claimed.
Luis Rodriguez, an expert in financial crime prevention, told the Spanish newspapers that the suspects and the bots register in the online gambling websites using fake identification documents.
“They operate under false identities. They use fake identity documents or passports of deceased people. There is a trade of [identification] documents of dead people from Asia,” he explained.
“If the company does not verify the veracity of the information, it is possible to freely use the identity of a deceased person or pose as someone who does not exist,” El Espanol commented.
The threat of money laundering through online gambling companies is not limited to the crime itself, but extends to what the laundered funds are used for. According to the investigation, some of the illegal operations are used to pay for espionage services in foreign countries.
El Espanol alleged that Russian, Turkish, Israeli, British, and even Iranian spies use such services to finance their operations.
Unless Ceuta authorities implement preventive measures against the illegal practices, El Espanol warned that “we are going to see this much more.”