Supported by Eurojust, as well as Europol’s European Cybercrime Centre (EC3) and the Joint Cybercrime Action Taskforce (J-CAT) and the European Banking Federation (EBF) the second coordinated European Money Mule Action (EMMA) culminated in the arrest of 178 individuals. Law enforcement agencies and judicial authorities from Bulgaria, Croatia, France, Germany, Greece, Hungary, Italy, Latvia, Moldova, the Netherlands, Poland, Portugal, Romania, Spain, United Kingdom, Ukraine, the United States Federal Bureau of Investigation (FBI) and United States Secret Service participated in the international operation.
Across Europe, 580 money mules were identified and the national law enforcement agencies interviewed 380 suspects in the course of the action week (14-18 November 2016), with overall reported losses amounting to EUR 23 million. During the week of the joint action, Eurojust and Europol set up a command post and a judicial coordination centre to assist the national authorities, cross-check all incoming data against the databases and collect intelligence for further analysis. Europol also deployed mobile offices to Italy and Romania. The successful hit on this wide-spread crime was supported by 106 banks and private partners.
The second EMMA action week is the continuation of a project conducted under the umbrella of the EMPACT Cybercrime Payment Fraud Operational Action Plan [1] and was prepared through two coordination meetings at Eurojust and one at Europol. This priority area targets perpetrators of online and payment card fraud. From all reported money mule transactions in the scope of this operation, 95% were linked to cyber-enabled criminal activity.
Building on the success of the first EMMA operation, the second coordinated action banded together new partners among the police, judicial bodies as well as the banking sector. Starting today, the fight against money muling is underscored by a four-day prevention campaign in the participating countries. The multilingual communication campaign aims to raise awareness about the consequences of this crime both to the international, as well as the national audiences [3].
Michèle Coninsx, President of Eurojust, said: “To effectively tackle money mules, we need seamless cross-border cooperation among judicial and law enforcement authorities with the private actors. It is important to understand that money laundering may on the surface seem to be a small crime, but is orchestrated by organised crime groups, that is what we need to inform the public about. Therefore, the European Money Mule Action II is paramount to stop people being lured and recruited into aiding serious crime, to break this crime link, by being aware of who is behind this type of crime.”
Koen Hermans, Assistant to the National Member for the Netherlands, commented: “As money mules are an essential chain in every financial cybercrime criminal organisation, it is of the utmost importance to target these individuals as well. The critical success factor in this highly effective money mule action is the close cooperation between private, law enforcement and judicial actors, in order to deter offenders in Europe, and thereby reduce crime.”
Steven Wilson, Head of Europol’s European Cybercrime Centre, said: “The European Money Mule Action is a successful example of public-private cooperation at the closest level. The results of this second edition demonstrate a very strong connection between cybercrime and the illegal transactions identified. Law enforcement, judges and prosecutors working together with the banking partners can crack down on extensive criminal networks either knowingly acting as money mules or misusing people who are duped into facilitating financial and other forms of crime. Furthermore, education also remains a powerful tool for law enforcement: EMMA has now grown in participation, bringing the awareness campaign to a larger public.”
Keith Gross, Chair of the European Banking Federation Cyber Security Working Group, said: "EMMA is now seen as a benchmark and a prime example of how law enforcement agencies, the financial sector and other key stakeholders join forces in tackling the illegal activity of money muling across Europe. This initiative can only go from strength to strength as more and more countries participate strategically and operationally."
(Source: EUROJUST)
- The National Institute of Economic and Social Research's forecast of world output growth this year is unchanged at 3.0 per cent – the slowest annual growth rate since the 2009 recession. World growth is expected to strengthen to 3.2 per cent next year and 3.6 per cent in 2018, but to remain slower than before the global financial crisis.
- Downside risks to the forecast include economic downturns in the advanced economies that central banks may lack ammunition to counter, as well as financial instability as a result of low and negative interest rates. These point to a need for more balanced policies to promote expansion, with fiscal policy playing a greater role.
- With trade growth in recent years already reduced to half its pre-crisis rate, action to resist protectionist pressure and to promote further progress with international economic integration is vital.
In the advanced economies, growth has generally remained mediocre. International repercussions of Brexit have thus far been limited to the effects of a further fall in sterling. In the United States, recent data have been mixed: the appreciation of the dollar since 2012 has remained one restraining factor and political uncertainty ahead of the elections may have been another. In the Euro Area, there has been no progress since the spring in reducing high unemployment. Even where unemployment is low – notably the United States, Japan and Germany, as well as the UK – limited wage pressures raise questions about the true tightness of labour markets. Inflation has remained below targets, by wide margins in the Euro Area and Japan. Inflation is closer to target in the US, and the Fed is widely expected to raise rates in December for a second time in the current upturn.
The performance of some key emerging market economies has improved: deep recessions in Brazil and Russia are easing, with inflation falling towards targets. The gradual slowing of China’s GDP growth seems on track, but a rise in credit expansion has added to financial risks.
One set of risks that has increasingly come to the fore concerns monetary policy in the advanced economies. The scope for easing monetary policy further is limited. It could pose increasing risks to financial stability, including by threatening the profitability of banks. In addition, central bank asset purchases are increasingly constrained by limited availability of suitable assets. A further, developing, preoccupation as the economic recovery matures is that low interest rates could leave inadequate ammunition for central banks to counter recession if it were to strike. These considerations point to the need for more balanced macroeconomic policies, including expansionary fiscal policy in many cases and structural reforms that boost demand as well as potential output.
Risks related to the threat to the internationally open global economy arising from the advocacy of protectionist, nationalist, and inward-looking policies, including by ‘populist’ politicians, have lately gained increased attention. This is occurring in the context of already slowing expansion of international trade and finance. Growth in the volume of world trade since the global financial crisis has been half the average rate of expansion during the previous three decades, and has barely matched the growth of global GDP. History carries many examples of economic prosperity being stymied by defensive, inward-looking policies, and action to resume progress with international economic integration is vital.
Iana Liadze, Research Fellow at NIESR, said “With our forecast of world output growth unchanged for this year at 3 per cent we are witnessing the slowest annual growth since the 2009 recession. Even if world growth strengthens to 3.6 per cent in 2018 as we expect, it will remain slower than before the financial crisis. Low interest rates and the limited availability of suitable assets for central banks to purchase suggest the scope for easing monetary policy further is limited. As long as this situation persists it will be up to other arms of macroeconomic policy to minimise the effect from any future recessionary shock.”
Source: National Institute of Economic and Social Research
Fluctuations in the real estate market caused by the UK’s vote to leave the European Union are likely to be shorter-lived and less severe than many investors fear, according to LaSalle Investment Management’s mid-year Investment Strategy Annual (‘ISA’) 2016.
The correction in real estate pricing is expected to be largely restricted to the next 18 months, and medium-term capital inflows into real estate will only be interrupted, not reversed, the ISA finds. It also suggests that, given the ultra-low interest rate and bond yield environment, UK real estate yields are only expected to increase by 40-50 basis points by the end of 2017, even if the country’s political landscape remains unclear. Meanwhile in Continental European, investors will continue to edge up the risk curve as long as the economic recovery continues largely unaffected, but will have one eye on risk contagion from the UK.
Overall, the ISA suggests that some of the fears currently surrounding the real estate market in the country may be overdone. Other findings include:
-The overall impact of Brexit on the Private Rented Sector (PRS) should be limited given the ongoing undersupply.
-Real estate assets with long, index-linked leases are likely to outperform over the next few years.
-The predicted capital market re-pricing will lead to an opportune time to enter the UK market – particularly for US dollar-denominated and Japanese yen-denominated investors.
Elsewhere in Europe, the headwinds facing London’s financial markets should help support the real estate market in cities such as Frankfurt, Paris, Dublin, and to a lesser extent Amsterdam and Madrid. Even before the impact of Brexit, office demand across Europe was undergoing a strong renaissance in cities with strong trends in Demographics, Technology and Urbanisation.
Globally, the ISA says the lower for longer situation actually boosts core real estate returns in the short-run, even as it dampens the long-run outlook for rental income growth. As a result, real estate values for stabilized assets in major markets outside the UK may continue to increase or hold steady, but the cyclical recovery in fundamentals will be moving much more slowly now. At the same time, cross-border and domestic capital sources in many countries could narrow their range of target investments to focus on these traditional, core themes.
Jacques Gordon, Global Head of Research and Strategy at LaSalle, said: “Across the globe, the fundamentals of supply and demand appear to be well-balanced going into the second half of the year in most of LaSalle’s major markets. Furthermore, turmoil in capital markets might also open higher-yielding buying opportunities from distressed sellers as the implications of the Brexit vote in the UK ripple around the world. Although the UK has been the epi-centre for political and financial tremors since June 24th, the law of unintended consequences suggests that investors should also closely watch for ripple effects in the EU, North America and even all the way to Asia-Pacific.”
Mahdi Mokrane, Head of Research and Strategy for Europe at LaSalle, said: “The UK, and in particular a dynamic London, home to one of the world’s most liquid, transparent, and investor-friendly real estate markets, is likely to reinvent itself outside of the EU, and the overall prospects for the UK outside the EU could well be broadly more positive than what is implied by current market commentators.
“We expect the forecast correction in real estate pricing to be largely restricted to 2016-17 and medium-term capital inflows into real estate will only be interrupted rather than reversed”.
(Source: LaSalle)
Cruise Lines International Association (CLIA) has published its annual European Economic Contribution Report, revealing that the cruise industry is now worth €3.26 billion (£2.58 billion) per year to the UK economy.
The cruise industry’s direct contribution to the British economy including items such as goods and services purchased by cruise lines and the salaries of their employees, grew by 3.3 percent, making it the highest on record.
The cruise industry’s economic output in Europe reached €40.95 billion (£32.22 billion) in 2015, up 2 percent on the previous year, and an all-time high. The direct expenditures generated by the industry reached €16.89 billion (£13.39 billion), up from €16.6 billion (£13.17 billion) in 2014.
Employment in the UK cruise industry grew by 4.1 percent to 73,919 jobs and accounted for 20 percent of the market share in Europe. An estimated 16,397 of this total were directly employed by cruise lines and earned €605 million (£479 million), the equivalent of 22 percent of the total compensation impacts for Europe. 10,000 new jobs were created across Europe, with 360,571 now employed in cruise and cruise-related businesses. Wages and other benefits for European workers reached €11.05 billion (£8.72 billion).
The port of Southampton has maintained its position as the number one embarkation and disembarkation port in Northern Europe, with a total of 1.75 million passengers passing through in 2015. It was another successful year for British ports overall; in total over one million UK and international passengers visited a British port during a cruise, a figure that has more than doubled in six years.
“The figures released today bear testament to the cruise industry’s contribution to the UK economy. Cruise may have once been considered a travel niche but the multi-billion valuation shows that cruise is a major player within the travel sector” said Andy Harmer, CLIA Europe VP Operations.
He continued: “The success of the global cruise industry is set to continue with 50 ships scheduled for delivery between now and 2019, of which 48 will be constructed in Europe. The ability to maintain continued growth has been the result of decisive investments by cruise operators in innovation and constant improvement. Every year new ships enter into service, offering innovative activities and facilities and 2015 was no exception, with a number of significant developments for the UK cruise market including the naming of P&O Cruises’ Britannia by Her Majesty The Queen; Cruise and Maritime Voyages introducing Magellan and Royal Caribbean’s new ship Anthem of the Seas joining the world wide fleet.’
“The cruise industry continues to make significant contributions to Europe’s economic recovery,” said Pierfrancesco Vago, Chairman of CLIA Europe and Executive Chairman of MSC Cruises. “The impact is clear. More Europeans are choosing a cruise holiday, more cruise passengers are choosing Europe as a destination, and more cruise ships are being built in European shipyards. This translates into great economic benefits for the entire continent, including coastal areas that were hit disproportionately hard by the economic downturn.”
Europe’s economic contribution is a direct result of the impressive growth the cruise industry experienced in 2015 as it reached 23.2 million ocean cruise passengers globally.
There have been some interesting movements in the European government bond markets over the past 6 months, ranging from incredible negative yields on 10 year Swiss bonds through to almost 14% yields on Greek bonds.
The percentage yield on ten year government bonds (effectively, a measure of the cost of borrowing for governments), as reported at the end of each day of trading, for a number of European countries: France, Germany, Italy, Switzerland, the UK (all measured on the left hand axis), and Greece (measured on the right hand axis).
Up until the end of April, government bond yields in the Eurozone had been historically low, driven down primarily by the announcement of the ECB's quantitative easing scheme. In Germany, 10 year bond yields almost reached 0% in the middle of April. The Eurozone exception was Greece, where concerns about how the government would pay back their debt kept yields particularly high. Greek bond yields reached a peak of 13.6% on 21st April as fears of a default came to a head.
At the same time, Swiss bond yields have been negative for a large portion of the past six months. They have been driven down by currency conditions, but also because Swiss bonds are seen as a safehaven within Europe due to their status as a financial centre outside the EU. Negative yields on ten year bonds are extraordinary, but they have been the norm in Switzerland for almost the whole of 2015 so far.
At the end of April and the beginning of May, there was a strong shift upwards in bond yields for all the economies on the graph except for Greece (although it is generally more pronounced in Eurozone economies).
Tax transparency is becoming the new norm as the OECD, European Commission and national governments demand more data from businesses. However, many companies do not have systems or resources in place to meet new requirements, according to EY’s report, entitled ‘A new mountain to climb: tax reputation risk, growing transparency demands and the importance of data readiness.’ The report is the third instalment of the 2014-15 Tax risk and controversy survey series, which surveyed 962 tax and finance executives in 27 jurisdictions.
Amid increasing scrutiny of business’ tax arrangements by government and other groups, companies are more focused than ever on tax risk and controversy, with 83% reporting that they regularly brief the CEO or CFO about the issue. For many tax professionals normally accustomed to primary focus on meeting legal and regulatory requirements, this heightened scrutiny is a new and unfamiliar challenge.
Notably, 94% of the largest companies interviewed think that global disclosure and transparency requirements will continue to grow in the next two years. Not surprisingly, 71% of all respondents expressing an opinion said that they would need additional resources in order to gather and provide the information required.
Jay Nibbe, EY’s Global Vice Chair of Tax, says: “We are at a critical stage as the global tax environment evolves. Increasing transparency readiness presents an opportunity not only to comply with new disclosure demands but also to proactively work to mitigate reputation risk. Getting prepared will require some additional investment in technology, data extraction capabilities, and new skills in people resources. It also involves increased awareness on how you think about your tax position, and how it could be perceived by a wide range of stakeholders.”
Law enforcement and prosecution authorities from Germany and the Netherlands, supported by Eurojust and Europol, have dismantled a gang responsible for defrauding Member States of approximately €150 million in a joint action targeting VAT fraud. Nine individuals were arrested and 26 premises searched.
The coordinated action was initiated by the Prosecution Office for Serious Fraud and Environmental Crime in Zwolle and the Fiscal Information and Investigation Service in Almelo in the Netherlands, in close cooperation with the Public Prosecutor’s Office of Augsburg and the Bavarian State Criminal Police Office in Germany. In total, 11 territories were involved, including nine Member States.
This action is part of a large-scale investigation on organised VAT fraud named Operation Vertigo, formed by the Czech Republic, Germany, the Netherlands, Poland, Eurojust and Europol.
Combating carousel fraud is an EU priority in the fight against serious and organised crime. Following the operation, Mr Michael Rauschenbach, Head of Operations for Serious and Organised Crime at Europol, said: “This action sends the clear message that Europol and its partners are determined to pursue criminals involved in organised VAT fraud. Europol strongly supports EU Member States’ investigations in this area and, for the past six years, has had a fully dedicated team of specialists to tackle this form of crime. Operation Vertigo is an example of how working in close cooperation with EU Member States and partners such as Eurojust from the early stages of the investigations achieves excellent results and operational successes. Europol will continue to offer its unique capabilities and full assistance to eradicate carousel fraud.”
Carousel fraud is financial fraud that is an abuse of the VAT system resulting in the fraudulent extraction of revenue. It may involve any type of standard-rated goods or services. As with acquisition fraud, goods or services are acquired zero-rates from the European Union, with the acquirer then going missing without accounting for the VAT due on the onward supply.
Simon Michaels, Managing Partner at BDO
Mid-sized businesses in the UK have weathered the global downturn better than those in the renowned German Mittelstand, according to new figures released by business advisory and accountancy firm BDO.
BDO’s snapshot of the European mid-market shows that the turnover of the UK's mid-sized firms (€1.92 trillion) now exceeds that of the German Mittelstand (€1.78 trillion). BDO defined the mid-market as firms with turnover between £10 million - £300 million (€14 million - €414 million) annually.
Since 2009, the Mittelstand has grown by 12% compared to the mid-market by 33%. The UK has also overtaken Germany in terms of the number of people employed in their respective mid-markets – the UK employing 9.3million people compared to Germany's 9.2million.
The Mittelstand forms the backbone of the Germany economy with approximately 43,500 companies and has traditionally led the way for mid-sized businesses in Europe.
However, despite faring better through the global recession than other European financial centres, the Mittelstand is facing fierce competition from elsewhere on the continent. Mid-market growth in Italy and France has surpassed that of Germany at 16% and 20%, respectively. Although their markets may be smaller, BDO's results give a clear indication that the potential for mid-market businesses is on the up across Europe.
Simon Michaels, Managing Partner at BDO, said: "The UK mid-market is leading Europe. This is a massive achievement – one that we should be proud of, but not complacent about.
"Germany has always invested in its mid-market; it has policies directly aimed at the Mittelstand and culturally the Mittelstand stands as the economic backbone of the nation. While the UK's mid-sized businesses are worth more than the Mittelstand for the time being, there is so much more we can do to cement our position as Europe's mid-market leader."
BDO has introduced its Mid-Market Manifesto, a set of policies that could unlock the potential of the UK's mid-market, adding over £1.3 billion (€1.8 billion) to mid-sized companies' GDP contribution and creating thousands of jobs.
Some of BDO's specific policy recommendations include:
- Temporarily reducing employers' National Insurance for manufacturing companies
- Awarding government contracts on the basis of the employment and training benefits to the supply chain, not cost alone
- VAT zero rating of supplies to companies that export
Chinese investors are doing a far higher value and volume of M&A deals in Europe than European investors in China, according to data from Deloitte. In 2014 Chinese companies and financial investors announced 79 deals in Europe, compared to 54 European deals in China.
In terms of value, in 2014 the average disclosed deal size for Chinese investors in Europe was £249 million (€332 million). This compared with £116 million (€155 million) for European investors in China. At the top end the difference is even more pronounced, with the five largest deals done by Chinese investors in Europe having total value of £6.6 billion (€8.8 billion), whereas the five largest deals done by European investors in China had total value of only £1.4 billion (€1.86 billion).
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Graham Matthews, lead China M&A Partner for Deloitte, commented: “In the space of a few years the tectonic plates between Europe and China have shifted, with Chinese deal activity surging in 2014. No European company or private equity fund has ever done a deal larger than £1 billion (€1.13 billion) in China, but last year alone there were five Chinese acquisitions in Europe of around this size.
“The shift in the balance has profound consequences for deal makers. Any seller of assets in Europe should be actively thinking about how to attract and include Chinese buyers in their sales processes.”
The alternative lending markets in Europe reported strong growth in 2014, according to Standard & Poor's ‘Alternative Lending Markets In Europe Are Increasingly Open To Mid-Market Companies’ report, published in January 2015.
"Given these positive market developments, expectations among regulators and politicians are high that alternative lending markets will support additional growth in Europe," said Standard & Poor's Credit Analyst Taron Wade, lead author of the report.
The French Euro PP market, for instance, has seen the emergence of unlisted deals, which has ushered in new and more international borrowers. And a number of initiatives from various industry bodies are building out a pan-European private placement market.
Overall in volume terms, private placement markets for European issuers, including the US private placement market and Schuldschein, have remained solid over the past few years, totalling €28 billion in 2014.
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In addition, the European direct lending market, where dedicated credit funds lend directly to predominantly sponsor-owned businesses, has grown to €10 billion across 200 deals in 2014, up from €5 billion a few years ago.
The amount of information and credit data on midsize companies who can benefit from this alternative funding is becoming increasingly critical because they generally have higher credit risk, S&P stated.
Investors can expect “Greek-led volatility” for six months according global independent financial advisory organisations. Greece elected anti-austerity party Syriza in its general election at the weekend. Syriza has formed a coalition government with the rightwing anti-bailout Independent Greeks.
“Investors can expect Greek-led market volatility for at least six months until a Syriza-led government is better understood,” said Tom Elliott, International Investment Strategist at deVere Group
“The Euro will weaken – perhaps to parity with the dollar – over the next six months as investors seek 'safe havens' as other populist parties in the Eurozone are likely to rise in the opinion polls and echo Syriza with their demands to end austerity.
“The sliding Euro will further boost exporters who got a leg-up from last week's shock and awe quantitative easing package unveiled by the ECB.
“Indeed, one of the ironies of the Euro crisis is that the more that Greece looks likely to cause problems for the single currency, the more Germany and the core economies benefit from resulting Euro weakness.”
Mr. Elliott added: “Despite Europe's main share markets rising - after initial falls – and the Euro recovering somewhat today, the announcement that Prime Minister-elect Alexis Tsipras's main coalition partner is the centre-right Greek Independents will generate more uncertainty, leading to more market turbulence. This is largely because the move will hinder Syriza's negotiations with the Troika and, I suspect, hinder reform.
Mr Elliott concluded: “It is early days and the story is just beginning. However, what history teaches us is that what is happening in Greece politically will have far-reaching effects on the capital markets and will impact investor returns.
“The changing political landscape in Greece, and across Europe, is presenting numerous risks and opportunities for investors globally. As such, the shifting dynamics must be monitored carefully to be able to benefit from these opportunities and to mitigate the avoidable risks.”
Germany’s Chancellor, Angela Merkel, talking at the 2015 World Economic Forum Annual Meeting.
Germany’s Chancellor, Angela Merkel, called for urgent fiscal reform in Europe at a special session at yesterday’s World Economic Forum Annual Meeting. Whatever the decision of the European Central Bank (ECB) on quantitative easing, she said that European leaders must not be diverted from continuing with meaningful structural reforms.
“Time is of the essence,” she said. “Every day we delay is a lost day. We need to promote growth and create long-term jobs.”
Europe has an opportunity to emerge stronger out of the crisis, the Chancellor said. While acknowledging progress by countries such as Italy, Spain and France, she stressed that Europe is not out of the woods yet. “The European single market needs to become less regulated and more open.”
The growth-austerity argument is a false dichotomy, she added. “Germany has shown that growth-oriented fiscal policy is possible,” she said. Pointing to internal demographic challenges, Merkel emphasized the need to manage debt levels to ensure that onerous burdens are not passed on to the next generation as six million German workers enter retirement age.
Merkel called on other European leaders to begin fiscal consolidation. She pointed to historic low interest rates and questioned how countries with large fiscal deficits will fare if rates rise. “Now is the time to get our houses in order,” she said.
The Chancellor added that Europe needs to grasp several immediate opportunities. The first is for more open trade via the Transatlantic Free Trade Agreements. The second is for Europe to become a standard-setter globally in digitization
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On Greece, she emphasized that Germany’s actions have always been oriented towards keeping Greece in the Eurozone. “We have to both show solidarity with Greece just as they show readiness to shoulder their responsibilities.”
Merkel concluded by affirming Germany’s position in Europe. “Germany will remain a stable anchor in Europe,” she said.
