Indicative Signs of Organized Crime Infiltration into Business Activities

The increasing sophistication of criminal organizations, which mimic legitimate corporate structures, requires companies to adopt a multidimensional and proactive approach to avoid engagement with front partners, suppliers, or clients.

We have prepared a list containing examples of situations that exemplify potential red flags for the infiltration of organized crime in legitimate business contexts. Below are the main indicators that warrant special attention from managers, auditors, and compliance professionals:

• Frequent changes of shareholders or directors, especially without clear justification or with incompatible profiles to the company’s line of business. 
• Presence of undisclosed final beneficiaries or difficulty in identifying who actually controls the company. 
• Relatives or close associates under investigation appearing as partners or managers, often without the experience or financial capacity to support the business.

• Excessive cash transactions, incompatible with the sector standards. 
• International transfers lacking commercial justification, especially to tax havens or jurisdictions with low financial transparency.
• Complex financial flows involving multiple accounts, circular transactions, or operations without plausible commercial explanation. 
• Overbilling or underinvoicing of goods and services to disguise the movement of illicit funds. 
• Discrepancies between tax documents and accounting records, suggesting manipulation of financial information.

• Lack of physical infrastructure compatible with the company’s declared size (e.g., few employees, poor facilities, no inventory). 
• Unexplainable business volume with the sector or the operational structure presented. 
• Shell companies: entities created solely for money laundering, with no real commercial activity or with simulated operations.

• Contracts with suppliers or clients without a verifiable track record or with ties to individuals/companies under criminal investigation. 
• Relationships intermediated by third parties without clear justification. 
• Reluctance to comply with due diligence requirements or to provide documentation and information regarding operations.

• Resistance to internal and external audits, or difficulty providing detailed information on financial and corporate operations. 
• Repeated failures in compliance standards and tolerance of recurring irregularities. 
• Employees or managers with a lifestyle incompatible with their declared income.

• Operations in sectors or regions known to be vulnerable to criminal infiltration, such as transportation, mining, fuel distribution, real estate, and agribusiness. 
• Association with individuals or companies already involved in illicit activities. 
• High turnover of contracts and atypical transactions for the industry standard.

The presence of multiple red flags, especially when combined, requires thorough investigation and, if necessary, reporting to the competent authorities. Omission or “willful blindness” on the part of management may result in criminal liability and cause irreparable damage to the company’s reputation and business sustainability. 

We are available to support our clients in implementing mitigation measures and in developing a specific policy to prevent infiltration by criminal organizations. This includes considering the need to restructure documentation and contractual clauses, adjust risk indicators, use data as an intelligence tool, training/capacity of strategic departments, and strengthen the corporate culture itself as a central element in risk prediction. 

This article was prepared by our Compliance, Corporate Investigations, and White-Collar Crime team.