In its 2012 annual report Tracfin, the French Financial Intelligence Unit (FIU) pointed to an increase in suspicious transaction reports (STRs) connected to the sale of vineyards in south west France, home Cotes de Gascognes and Jurançon regions and close to Bordeaux among other world renowned names.
Foreign investment groups have bought up huge swathes of French ‘vignobles‘ formerly owned by French families, according to the Tracfin analysis. Groups are acquiring vineyards through complex legal corporate structures – itself often a red flag for money laundering – fronted by holding companies domiciled in offshore secrecy havens. In such cases, the beneficial owner of the asset is difficult to ascertain.
A global market for vineyards
Fine wine, like fine art, has great value. The sale of luxury goods is a well known conduit for dirty cash, so it is no surprise really that organised crime is moving into the wine trade to launder money.
According to the FIU, foreign groups are buying the lands and selling them to each other for increased prices. Wine consumption has dropped in France, and more wine is now sold for export. The economic crisis in Europe is forcing families who have owned terroirs for generations to sell them on to keep afloat. Foreign investors are snapping them up, much as they are buying up property in London. The price of land is elevated by the new owners which allows them to sell the vineyards on for a higher price to another similar group, for example. This offers one channel to launder money.
A second avenue would come from selling the wine itself. A huge increase in the demand for wine in China by the nouveau riche and emerging middle class has created a strong trade channel between the two countries. Although Central European wines can be found in Russia and Ukraine easily, they do not have the same caché as a French label, and so the privileged classes are importing French wine wholesale. This provides a trade based money laundering (TBML) opportunity. Customs officers in Odessa or Shanghai are unlikely to know the value of a wine shipment based upon the label on the bottle. So savvy criminals can manipulate the value in order to move their dirty cash in and out of France.
The South China Morning Post has more on this story.