200-million VAT fraud with a Hawala network: the first convictions for criminal organisation in an EPPO case in Germany

In short: on 23 October 2026 the European Public Prosecutor's Office (EPPO) announced that the Regional Court of Düsseldorf had convicted two defendants at first instance as members of a criminal organisation, in the «Goliath» investigation into an intra-Community VAT fraud which, according to the court, caused damage of 200 million euro to EU and national budgets between 2019 and 2023. The scheme used dozens of shell companies, in Germany and abroad, and a Hawala network to transfer the proceeds. The ruling can still be appealed. For those carrying out customer due diligence, it is a textbook case: façade companies, nominee directors and flows outside the banking system.

What happened?

The EPPO in Hamburg secured the conviction of two defendants, a Turkish national and a Danish national (arrested in Kenya on 23 May 2024), to seven years and two months and to five years and eight months' imprisonment. Both had already been convicted in March 2025 in the same investigation for other tax evasion offences, and are serving sentences of more than five years in Germany.

The first was convicted as a member of a criminal organisation and as the perpetrator of VAT fraud in 26 cases, in the role of de facto manager, and for complicity in VAT fraud in relation to 10 shell companies used as «missing traders» and «buffers». The second was found guilty of supporting a criminal organisation and of complicity in VAT fraud in five cases. Two other defendants committed for trial have not yet been tried because they are in custody in Denmark. Proceedings against a third defendant, a director of one of the main companies who was not involved in the fraud, were discontinued under § 153 of the German Code of Criminal Procedure (StPO). According to the EPPO, these are the first convictions in an EPPO case in Germany in which a court recognises membership of a criminal organisation. The judgment is at first instance and can be appealed.

How did the scheme work, according to the court?

Element	What the court established (as reported by the EPPO)
Structure	The defendants had joined an international organisation active in selling electronic products and, to increase their proceeds, planned their own network, controlled by them
Companies	A large number of shell companies in Germany and abroad; trade in goods (including AirPods and other electronics) was managed by an office in Istanbul
Concealment	Encrypted chats and pseudonyms; collaboration with a former notary who authenticated deeds in place of the nominee directors
Money laundering	Hawala network, an unregulated financial channel based on trusted intermediaries, used to transfer the proceeds

Why does it matter for due diligence and for buyers?

The press release does not refer to anti-money-laundering obligations or to Italian professionals, and we draw no conclusions about them. It does, however, describe a mechanism that the beneficial owner check is designed to bring to light: companies whose formal directors do not match who actually decides, chains of interposed suppliers, and payments made outside the banking channels. These are signals to be assessed together, never proof on their own:

• suppliers or customers in electronics trading with recently incorporated companies, registered at nominal addresses and with directors who have no history in the sector;
• a chain of intermediaries with prices or margins inconsistent with the market, where each link is a different company;
• requests to pay parties or countries other than those in the order, or outside the banking channel;
• deeds signed by attorneys while the real partner does not appear.

What to do if you have customers or suppliers with this profile

• Reconstruct who owns and manages the counterparty, not only who appears in the company extract (visura): offices, shareholdings and chain of control, with source and date.
• Compare profile and activity: does the company have a structure, history and capital consistent with the volumes it handles?
• Check the payment flows: is the IBAN in the name of the supplier and in the expected country? Be wary of payments directed to third parties.
• Document the risk assessment if interposed companies or anomalous payment channels emerge.

The first step is knowing who is on the other side. The beneficial owner report (€9.90) reconstructs from the Business Register (Registro Imprese) the persons holding an office or a significant shareholding. With the beneficial owner plus protests and insolvency proceedings (€14.90) you also see negative records. If the company is your client, the customer due diligence file (€49) brings together checklist, beneficial owner and report in a single PDF.

Sources

• European Public Prosecutor's Office (EPPO), «Investigation Goliath: First convictions as members of criminal organisation in €200 million VAT fraud scheme using Hawala network», press release of 23 October 2026, accessed 25/10/2026