Smuggled Cash, Gold & Silver Seizures Soar at Italy's Borders -- Eurozone Crisis Escalates -- Diamonds Are Forever?

London, UK - 15th August 2012, 00:01 GMT

Dear ATCA Open & Philanthropia Friends

[Please note that the views presented by individual contributors are not necessarily representative of the views of ATCA, which is neutral. ATCA conducts collective Socratic dialogue on global opportunities and threats.]

Panicked savers are smuggling cash from Italy resulting in 41 million euros being seized in random spot checks in the first seven months of 2012, which is almost 80 per cent up year-on-year. For each seizure by the border-control authorities and Guardia di Finanza -- Italian financial law enforcement -- it is likely that at least ten more cases slip under the radar of overworked and, in some cases, sympathetic police and border guards. Italian police are now deploying cash sniffing Labrador dogs that are trained to sniff out bank notes to counter the rising flight-of-capital from Eurozone's third largest economy. A number of seizures have been made at Leonardo da Vinci di Fiumicino airport in Rome and Malpensa airport in Milan where smugglers frequently attempt to get to the banking safe haven of Switzerland, which lies outside the clutches of the European Union and the Italian state. Once the money reaches Switzerland it can either be deposited in "secret" Swiss bank accounts for safe-keeping or be swiftly wired across to other perceived safe havens across the world outside the reach of European governments. The recent haul covers bank notes and hundreds of kilograms of gold and silver. In one smuggling instance alone, 50 kilograms of gold was found in a single hidden compartment under the seat of an Italian food store owner driving his car to cross the border into Switzerland at Ponte Chiasso. Some veteran observers are claiming that this escalation of physical flight-of-capital out of the Eurozone peripheral nations is reminiscent of war time stories last heard of during the time of fascist dictators like Mussolini in Italy and General Franco in Spain in the 1930s and 1940s.

Diamonds Are Forever?

Is This the Tip of the Iceberg?

What the Italian authorities may be apprehending by way of relatively meagre cash amounts from the middle class may be only the tip of the iceberg. Nine tenths of the physical flight-of-capital may be taking place through alternative means right under their collective noses. Precious gem stone traders in diamond centres like Amsterdam in Netherlands and Antwerp in Belgium report a rising interest from established European families in the Eurozone -- including Germany, France, Italy and Spain -- that are seeking safety and security in regard to their personal wealth by implementing capital preservation strategies to diversify into alternatives like precious gem stones. In some cases those wealthy families also want to be able to move tens of millions worth in hard currencies either out of euros or move that type of quantum of cash across European national borders in easy to carry -- dog-non-sniffable -- precious gem stones including multi-carat rare and significant diamonds that can fit inside a concealed pocket within a bespoke business suit or be worn as sophisticated customised jewellery. Diamonds probably have the highest value-to-weight ratio amongst most physical asset classes and hold their value well over time.

Is Switzerland the New Casablanca of Eurozone Financial Refugees?

Italians are trying to take their money into Switzerland because not only is it outside the European Union and has its own independent currency -- the Swiss Franc -- but it also boasts a more confidential banking system which is outside the regulation of the European Union and less likely to confiscate EU citizens' savings. Although the cognoscenti would argue that Swiss banking secrecy -- like Swiss cheese -- has just as many holes at present post the relentless efforts of the US Department of Justice (DoJ) and the American Internal Revenue Service (IRS) acting against eleven Swiss banks. However, this does not seem to deter the average wealthy European citizen who remembers the experience of his parents and grand-parents during the first and second world wars when neutral Switzerland was one of the main safe havens in the middle of an extremely polarised global geo-political and financial firestorm. The issue of countering Swiss banking secrecy is also of rising interest to the German, French and British tax authorities who have involved their intelligence agencies to ferret and to purchase, where necessary, the precious databases of names of belligerent tax evading citizens. A study by the central "Bank of Italy" has revealed most of the country's "500 euro" notes are in circulation near the Swiss border. In the first seven months of the year border guards including the Guardia Di Finanza made more than 2,600 spot checks at various crossings between Italy and Switzerland, and also at the country’s main international airports in Rome and Milan, to catch the smugglers heading for Switzerland's safe haven. For every stash of cash and ingot of gold that is apprehended and confiscated there are many more equivalent booties belonging to desperate and scared savers that successfully pass border security undetected into Switzerland. Is Switzerland now going to come under increasing pressure from powerful Eurozone neighbours given that the flight of capital is accelerating towards it? Is the opening up of its confidential databases of bank customers and banking staff to the US tax and justice authorities the thin edge of a wedge that the European powers will now seek to replicate and to exploit?

Why the Cash & Precious Metals Crackdown?

Italian police are cracking down on cash smugglers out of Italy who are now using their shoes, underwear and even cigarettes to avoid:

1. Paying rising taxes as a result of newly introduced austerity measures of the technocrat government headed by Prime Minister Mario Monti; and
2. The shock of losing the purchasing power of their savings in case the euro devalues significantly or collapses in coming months as trillions are printed by the European Central Bank (ECB) to salvage the Eurozone.

Guardia di Finanza chief Lt Colonel Giorgio Salerno says, "We are discovering new and imaginative methods of smuggling cash and precious metals into and out of the country every few weeks!"

Circumventing the Euro 10,000 Cash Limit

Italian police have announced an alarmingly steep increase in seizures as thousands of middle-class and wealthy Italians are getting involved in smuggling cash in and out of the country in a bid to beat the European Union regulations, which require the movement of any more than 10,000 euros or equivalent in cash across borders to be declared when entering or leaving a member country. The bringing in of cash could be happening for a variety of reasons including the repatriation of liquidated assets from other Eurozone countries. A heavy tax duty needs to be paid on any amount above the EU threshold. If an individual is caught with any more physical cash or equivalent -- than that which is allowed to move undeclared -- there are heavy fines, confiscations and even jail sentences.


Italian customs seizure of tens of millions of euros from savers after thousands try to smuggle banknotes and gold out of the country shows just how much of a battle Prime Minister Mario Monti faces in his attempts to solve Italy’s escalating financial crisis. This relentless flight of capital cannot be good for the Eurozone's stability and sustainability as it afflicts the Eurozone's third largest economy which is simply too big to rescue. Tax evasion is seen as a national sport in Italy, with an estimated 120 billion euros evaded each year. Italy has 40 million registered taxpayers, but more than 28 million claim to earn 20,000 euros or less. No wonder there is so much cash flying around in Italy's so called "black economy" that is now seeking a physical exit. However, this national sport of Italy is about to get even more complex and interesting as the Eurozone crisis escalates step-by-step. Are we going to see a similar flight-of-capital and exodus of cash not only from Italy and Spain but also richer economies in the Eurozone like France and Germany as this crisis continues to evolve at a breathless pace?

ATCA Background Reference

The rise in cash and precious metals smuggling across Italy's borders is entirely consistent with the two recent ATCA 5000 briefings:

1. "Capital Controls, Border Controls and Bank Freezes: European Union Prepares For Emergency"; and
2. "European Bankers & Top Politicians Fear Collapse of the Euro: Flight-of-Capital and Silent Bank."


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