How Portugal's Shell Company Crackdown Protects Your Bank Account

The Portugal Judiciary Police (PJ) has placed a 26-year-old woman in preventive detention for allegedly orchestrating a ghost company money laundering operation that funneled over €640,000 in illicit transfers through a shell corporation based in the Sintra region. The suspect now faces charges of document forgery and capital laundering tied to two counts of aggravated fraud.

Why This Matters

• Shell company crackdown intensifies: This arrest signals Portugal's escalating enforcement against phantom enterprises used to launder foreign fraud proceeds — a tactic that has tripled investigations nationwide since 2019.

• Foreign fraud, local laundering: The funds originated from overseas bank accounts belonging to scam victims, a pattern authorities say exploits Portugal's banking system as a transit hub for criminal cash flows.

• Preventive detention upheld: A judicial hearing on February 24 resulted in the most restrictive coercive measure available, reflecting the severity prosecutors attribute to the alleged scheme.

How the Alleged Scheme Operated

According to the Portugal Public Prosecutor's Office, the suspect established a commercial entity with no physical presence or genuine business activity—what enforcement agencies classify as a "paper company" or empresa fantasma. She then opened a corporate bank account exclusively under her control, which served as the receiving point for two large wire transfers from abroad.

The transfers, which totaled more than €640,000, allegedly came from accounts held by victims of fraudulent schemes operating outside Portugal. Prosecutors contend that the suspect's sole function was to accept, move, and obscure the origin of these funds, effectively acting as a financial conduit for international fraud networks.

The Department of Investigation and Criminal Action (DIAP) at the Sintra nucleus is handling the inquiry, which remains under judicial secrecy—a standard procedural measure in complex financial crime cases that limits public disclosure while investigators pursue additional leads.

What This Means for Residents and Businesses

This case exemplifies a broader trend that has placed Portugal on the front line of European money laundering enforcement. Investigations for capital laundering have surged from 522 cases in 2019 to 1,844 in 2024, according to the Internal Security Annual Report (RASI). The number of defendants quintupled over the same period, climbing to 507 in 2024, while formal accusations jumped from 18 to 101.

Why Portugal? Financial crime analysts point to several factors: the country's integration into the EU banking system, relatively straightforward corporate registration processes, and its position as a transit point for funds moving between high-fraud jurisdictions and ultimate destinations in Eastern Europe or offshore havens. The Banco de Portugal has intensified supervision of entities handling virtual assets and cross-border transactions, and a new EU-wide anti-money laundering authority—AMLA—is set to begin direct oversight of high-risk financial institutions this year.

For business owners and compliance officers, the message is clear: due diligence on corporate clients and beneficial ownership verification are no longer optional. Entities that fail to implement robust Know Your Customer (KYC) protocols risk both regulatory penalties and reputational damage. Banks, real estate agencies, and even accountants are now mandated to report suspicious transactions under Law 83/2017, as amended in 2020.

For individuals, the proliferation of shell company schemes underscores the risks of allowing third parties to use personal bank accounts for "business opportunities" or "processing payments"—a tactic that has ensnared dozens of unwitting Portuguese citizens as money mules in recent operations.

A National Crackdown on Phantom Enterprises

The Sintra arrest is one of several high-profile enforcement actions in early 2026. In February alone, the PJ dismantled:

• Operation "Guita Fácil": Nine individuals aged 21 to 26 were detained for recruiting account holders to receive fraudulent transfers exceeding €250,000 via compromised corporate email schemes.

• Crypto investment fraud: Two women in Valongo and Avintes were arrested for a cryptocurrency scam that defrauded dozens of victims of over €2 million, using dozens of bank accounts to obscure the money trail.

• Operation "Terra Queimada": Seven defendants face charges related to fraudulently obtaining €3.6 million in EU reforestation subsidies for Madeira projects that prosecutors allege never materialized, with laundering as a key element of the scheme.

A December 2025 mega-operation dubbed "Cash-a-lot" in the Greater Porto area uncovered €140 million in cash deposits and flagged over €200 million in vehicle accounts linked to trade-based money laundering (TBML)—a sophisticated method that disguises illicit funds as legitimate commercial transactions. That case resulted in seven arrests and 45 individuals and companies charged with criminal association, tax fraud, and document forgery.

The Mechanics of Shell Company Fraud

Financial crime experts describe a three-stage process that the Sintra suspect allegedly executed:

Placement: Illicit funds enter the financial system via deposits, investments, or transfers—often from foreign sources to obscure the trail.

Layering: Multiple transactions—wire transfers, currency exchanges, corporate account shifts—distance the money from its criminal origin. Shell companies and offshore accounts are frequently deployed in this phase.

Integration: The "cleaned" funds re-enter the legal economy through asset purchases, business investments, or consumer spending.

Portuguese law, specifically Article 368-A of the Penal Code, punishes capital laundering with 2 to 12 years in prison. Convictions hinge on proving the defendant knew or should have known the funds derived from illegal activity and took steps to conceal their origin.

Telegram and Digital Fraud: A Growing Nexus

While the Sintra case involved traditional banking channels, authorities are increasingly concerned about the convergence of encrypted messaging platforms and financial crime. A 2025 industry report identified Telegram as the fastest-growing fraud source in Portugal, accounting for 25% of all reported scams—a 233% increase over the prior year.

The platform's encrypted, private nature makes it an ideal recruitment tool for fraud networks seeking money mules or "front" account holders. Globally, 58% of job scams now originate on Telegram, luring victims with promises of easy income in exchange for allowing their bank details to be used for "processing transactions."

Portugal ranked 13th worldwide and 5th in the EU for phishing attempts in 2024, with attacks rising more than 26% year-over-year. The most common scam types affecting residents include:

• Online shopping fraud: 53% of fraud cases reported to fintech platforms in 2025, with the fashion and jewelry sectors leading complaints.

• Rental scams: Over 1,500 reports in 2024 and more than 4,200 cases recorded by the Portugal Public Security Police (PSP) over three years, exploiting the housing crisis with fake listings and advance payment demands.

• Fake job offers: Promising high returns for simple tasks, then requiring upfront payments for access to "premium" opportunities.

What Authorities Are Watching

The Council of Ministers designated capital laundering as a priority crime for the 2025-2027 enforcement cycle, reflecting its share of 40% of all economic and financial crime in Portugal. The government has also frozen approximately €25 million across 26 investigations into sanctions violations and suspected laundering tied to Russian capital, particularly in the luxury real estate sector. Prosecutors believe Portuguese and Ukrainian nationals are being used as straw buyers to circumvent EU sanctions.

The PJ continues to collaborate with Europol, Interpol, and national police forces across Spain, Germany, and Brazil on cross-border cases. A February 2026 joint operation with Spanish authorities—Operation "Tocada 2"—resulted in the arrest of 12 suspects for cocaine trafficking and laundering, following an investigation launched in mid-2025.

Practical Safeguards

Residents should exercise caution when:

• Opening corporate bank accounts: Ensure the entity has genuine economic substance—active management, a physical address, and a legitimate business purpose.

• Accepting "business partnership" offers: Allowing others to use your bank account, even temporarily, can result in criminal liability as a money mule.

• Verifying online transactions: Cross-check seller identities, avoid advance payments for rentals or purchases, and report suspicious requests to the PJ's cybercrime unit or the Banco de Portugal.

The Portuguese Financial Intelligence Unit encourages anyone who suspects involvement—knowingly or unknowingly—in a fraudulent transaction to report it immediately. Early disclosure can mitigate legal consequences and assist investigators in tracing funds to their ultimate beneficiaries.

As enforcement agencies continue to dismantle ghost company networks, the case of the 26-year-old in Sintra serves as a stark reminder: Portugal's banking system is under intense scrutiny, and those who facilitate the movement of illicit funds—whether as architects or intermediaries—face increasingly aggressive prosecution.