The Israel Police arrested three people Monday morning on suspicion of conducting a money-laundering service on behalf of criminals in France who defrauded the French government out of millions of euros.
The suspects are believed to have used various cryptocurrencies to launder the money, and then return it as ostensibly “clean money” to the French fraudsters, the police said.
It remains unclear exactly how the alleged money launderers in Israel were remunerated for their services.
Several other suspects were detained for questioning regarding the scheme.
The French police began their investigations last year, and Israeli authorities opened their own undercover investigation earlier this year.
The Israeli investigation is being conducted by the Lahav 433 special crime unit and the Yahalom investigative unit of the Israel Tax Authority, in cooperation with the French police and the European Union Agency for Law Enforcement Cooperation (Europol), assisted by the cybercrime department and international crime department of the State Attorney’s Office.
According to the police, fraudsters in France took advantage of compensation offered by the French government to businesses that were negatively impacted by the COVID-19 pandemic and subsequent lockdowns in 2020 and 2021.
These criminal elements established fictitious businesses and were able to apply for and receive the COVID-19 compensation payments, since the French government disbursed these funds rapidly and with insufficient oversight, in order to immediately assist business owners suffering financially, given the severe economic downturn in the wake of the pandemic.
The fraudsters then availed themselves of the money-laundering services of the suspects now arrested in Israel.
The suspects allegedly used these illegally received funds to buy cryptocurrency and then further converted those funds into different cryptocurrencies in order to obscure the original source of the money.
Eventually, the funds were exchanged back into traditional currency and returned to the fraudsters, who had commissioned the money-laundering service.
The police have declined to more fully explain the precise cryptocurrency money-laundering mechanism, but have said that further details will be provided in the coming weeks.