Money Laundering and VAT Fraud: EPPO Expands International Reach with Cabo Verde Crackdown

A €35 million VAT fraud scheme centered on essential food commodities has now drawn international attention, as a sweeping enforcement operation in Cabo Verde brings asset seizures and interrogations directly linked to a sophisticated money laundering network. Initiated by the European Public Prosecutor’s Office (EPPO) in Lisbon, this cross-border effort reflects a growing determination by European authorities to confront financial crime even beyond EU borders, marking a significant escalation in global anti-money laundering (AML) enforcement.

The investigation—dubbed “Ambrosia”—originated in Portugal, where prosecutors began targeting a criminal syndicate accused of engineering a complex VAT carousel fraud using everyday staples like olive oil, sugar, and cooking oil. What first appeared as a localized tax evasion probe has now transformed into a global anti-financial crime operation, with EPPO collaborating closely with Cabo Verdean authorities to intercept the laundering of illicit proceeds and build international money laundering cases.

The scale and mechanics of the fraud point to a well-oiled machine exploiting trade and regulatory gaps to disguise the origins of criminal profits. European and African law enforcement agencies have increasingly recognized the critical connection between VAT fraud and money laundering. In this case, the criminal structure reportedly manipulated cross-border supply chains to falsely claim VAT refunds, generating millions in illegal gains. These proceeds were then allegedly funneled through financial systems and laundered through real estate and front companies in jurisdictions like Cabo Verde. “The ‘Ambrosia’ case offers a prime example of how VAT carousel schemes can generate vast amounts of illicit funds, which are then laundered through property, front companies, and financial institutions in multiple jurisdictions,” investigators noted.

As the EPPO traced the money trail to Cabo Verde, coordinated raids and seizures followed. In one of the operation’s most high-profile actions, authorities confiscated a property on Sal island worth roughly €2.7 million, containing 21 apartments and two commercial shops, along with another building. Authorities believe these real estate acquisitions were financed with proceeds from the VAT scheme, illustrating both the layering and integration phases of classic money laundering.

These laundering techniques follow familiar criminal patterns. VAT carousel fraud capitalizes on variations in tax policy across the EU, allowing fraudsters to import and sell goods while dodging VAT payments, then vanish before paying taxes. Meanwhile, criminals move funds abroad to obscure their origins. The Cabo Verde case reveals how geographic distance and perceived weak oversight in non-EU jurisdictions can be exploited to shield illicit proceeds from scrutiny.

The international operation was made possible through a network of legal cooperation agreements and shared enforcement frameworks. Authorities relied on the 2003 Portugal–Cabo Verde Judicial Cooperation Agreement, the United Nations Convention against Transnational Organized Crime, and the CPLP’s Convention on Mutual Legal Assistance in Criminal Matters. These legal instruments enabled investigators to act swiftly and cross borders with judicial backing. "These frameworks enable authorities to pursue assets and suspects beyond national borders, disrupting money laundering networks and supporting asset recovery," said officials involved in the case.

On the ground in Cabo Verde, the local Public Prosecutor’s Office led the effort, supported by the Sal division of the Judiciary Police. The EPPO deployed a case support officer to ensure that evidence collected would meet EU standards and withstand eventual court challenges. Authorities highlighted the importance of real-time coordination and bilateral trust in securing the success of such cross-continental investigations. “This operation illustrates the growing capacity of the EPPO to extend its reach beyond the European Union,” said sources close to the matter, noting that Cabo Verde’s proactive participation signals a shifting tide in African-EU AML cooperation.

Indeed, this latest crackdown reaffirms the strategic utility of supranational prosecutorial bodies like the EPPO, which play a pivotal role in navigating overlapping national legal systems, preserving evidentiary integrity, and recovering criminal assets. With criminals increasingly exploiting global supply chains and financial systems, such transnational coordination is not just beneficial—it’s essential.

From a legal standpoint, the Ambrosia case exemplifies how a combination of international and regional instruments can be activated to tackle money laundering linked to VAT fraud. Authorities referenced multiple frameworks, including the UN Convention against Transnational Organized Crime (UNTOC), the CPLP's Convention on Mutual Legal Assistance, and the bilateral agreement between Portugal and Cabo Verde. Within the EU, Directive (EU) 2018/1673 played a key role, laying down criminal law provisions for AML enforcement and defining VAT fraud as a predicate offense. These tools enabled investigators not only to pursue suspects but also to trace and seize criminally acquired assets across jurisdictions.

This investigation also throws light on the vulnerabilities in smaller or offshore jurisdictions, which are often targeted for their geographic position and perceived lack of oversight. Cabo Verde, however, demonstrated its growing AML enforcement capacity, disrupting what appeared to be a complex laundering infrastructure supporting criminal actors from Portugal and potentially beyond.

The Ambrosia investigation further carries significant compliance implications for financial institutions, especially those engaged in trade finance or servicing clients in food commodities and international logistics. Financial crime experts point to several red flags that institutions should monitor more closely: irregular trading volumes in low-margin goods, sudden wealth influxes into real estate in high-risk jurisdictions, and complex chains of ownership or fund flows across multiple borders. “VAT fraud, when combined with cross-border trade, creates fertile ground for complex laundering schemes that can be difficult to detect without advanced monitoring,” officials warned.

Specifically, institutions are urged to scrutinize unexpected client behavior—such as investments into unrelated sectors or property purchases in countries with emerging AML frameworks—and investigate clients operating in the agri-food trading space where VAT manipulation schemes have frequently emerged.

The involvement of the EPPO also sends a clear message to banks and regulated firms: expectations around compliance, due diligence, and proactive reporting are intensifying. Those operating in or with links to Portugal, Cabo Verde, or any CPLP country must ensure their internal AML policies align with both local law and European AML directives, particularly as cross-border legal enforcement becomes more aggressive and cohesive.

In conclusion, the Ambrosia case stands as a compelling example of what international cooperation can achieve in the face of organized financial crime. As VAT fraud continues to be a major gateway for money laundering, and as criminals exploit global trade structures to wash illicit profits, the necessity for legal interoperability and joint enforcement across continents has never been clearer. “The ongoing evolution of money laundering techniques means that international cooperation, supported by a strong and traceable legal framework, remains indispensable,” noted EPPO officials. With the criminal underworld constantly adapting, institutions that fail to invest in their compliance programs risk not only regulatory sanction but complicity in enabling the very crimes these coordinated efforts seek to dismantle.

By fLEXI tEAM