Our discussion on Thursday, 2 October, had been initiated by this article from EuroWeekly: ” Spain’s tax agency targets digital banks and cards: Over a million cards under the microscope ” https://euroweeklynews.com/2025/09/24/spains-tax-agency-targets-digital-banks-and-cards-over-a-million-cards-under-the-microscope/ (Chris noted that this was a translation of an article which appeared in the Spanish press). Here are the main points:
“Spain’s new tax rules for neobanks and prepaid cards
The new rules mean fintech firms and neobanks must now report whenever their users’ spending crosses certain thresholds. That’s €50,000 a year for ordinary cards, and just €15,000 for prepaid ones. And it’s not just the totals: they also need to hand over the number of transactions, the full details of account holders and even information on those authorised to use the cards.
On top of that, Hacienda has launched 42 individual inspections into taxpayers flagged as ‘high risk’ – people whose use of these platforms appears far more intense than average. Inspectors are particularly interested in those who are funnelling money into cryptocurrencies and new financial products that are harder to trace.
It’s all part of the 2025 Annual Plan for Tax and Customs Control, which has singled out digital banking as one of the main battlefronts in the fight against fraud.”
…neobanks and fintechs are also being used by non-residents to move money into and out of Spain without paying the taxes due. With many of these firms based elsewhere in Europe, Spain is now calling for stronger EU-wide rules and deeper cooperation between tax offices.
So, the actions taken by Hacienda are part of a wider campaign to combat fraud and money laundering.
We took a look at this summary https://www.rankia.com/blog/cuentas-corrientes/5428070-mejores-neobancos-mercado-cual-vale-pena Mejores neobancos de España octubre 2025: con IBAN español y en el extranjero (The best NeoBanks in Spain, with Spanish and foreign IBANs ). Several members had accounts with Wise (Their UK Barclays account having been closed because of Brexit). The other popular fintech bank was Revolut. All banks listed are governed by the rules of National banking authorities. e.g. Revolut: UK ; Wise: Belgium.
Other members used Wise for currency transfers, but didn’t have a bank account with them. We noted that just to make transfers with Wise you had to register and prove your identity by uploading documents or an image of you and your ID in the same frame.
We discussed the importance of having a Spanish IBAN (International Banking Number) number. The above article notes that –
..without a Spanish IBAN ” However, there are also implications. You will not be able to direct debit some receipts or use them with Spanish public organisations. Additionally, if you exceed 50,000 € in accounts with a foreign IBAN, you will have to present Treasury form 720. It does not involve paying taxes, but it does involve reporting your assets outside of Spain.“
We looked at how the perks and services offered by Fintech banks can be exploited by criminals: https://www.ivix.ai/post/tackling-fintech-enabled-tax-evasion-key-takeaways-from-the-j5-report Tackling Fintech-Enabled Tax Evasion: Key Takeaways from the J5 Report Stephen Ryan, CRO
June 30, 2025
Here’s a summary of the key take-aways from the article:
The J5 report identifies several systemic vulnerabilities exploited by criminals. These include:
The sheer volume and speed of transactions – Fintech platforms enable rapid and large-scale financial transactions, which can outpace the monitoring and regulatory capabilities of tax authorities.
The borderless nature of the financial system – The global nature of fintech allows for cross-border transactions that can obscure the origin and destination of funds, complicating jurisdictional oversight.
Pseudo-anonymity – Certain fintech services offer users a degree of anonymity, making it challenging to trace transactions back to individuals or entities.
Weak AML (Anti Money Laundering) controls – Some fintech platforms lack robust AML measures, providing opportunities for illicit financial activities to go undetected.
Regulatory gaps – The rapid evolution of fintech has outpaced the development of comprehensive regulatory frameworks, leaving exploitable gaps.
Nested services – The use of layered or nested financial services within fintech platforms can conceal the true nature of transactions and the identities of those involved.
The following article highlights the use of cryptocurrency and other techniques enabling money launderers to escape detection: https://www.twobirds.com/en/insights/2025/uk/money-laundering-in-the-age-of-fintech-emerging-risks-and-regulatory-responses Money Laundering in the age of Fintech: Emerging risks and regulatory responses
The increasing adoption and use of cryptocurrencies has introduced new risk factors in the realm of financial crime. Unlike traditional money laundering processes, which involve placement, layering, and integration, cryptocurrency simplifies this by eliminating the placement stage due to its anonymity. This reduces detection risk during the most vulnerable stage of money laundering. Additionally, cryptocurrencies enable large-scale laundering schemes through automated transfers, making them an attractive option for criminals seeking to exploit digital currencies. A key aspect of cryptoassets is the anonymity inherent in the development, decision-making and validation processes, which holds significant attraction to criminals looking to disguise the proceeds of crime. This is not to say that tracing cryptoassets transactions is impossible, it is just a further complication for law enforcement officials.
NFTs (Non fungible Tokens) present novel money laundering opportunities, often through inflated sales. By overpaying for an NFT, launderers can transfer funds under the guise of legitimate transactions, making illicit income appear as proceeds from digital asset sales. Alternatively, creating and selling NFTs to oneself or accomplices at inflated prices can create a complex web of transactions, further obscuring the illicit origins of funds.
Circular ownership structures pose significant risks for money laundering due to their ability to obscure the true beneficial ownership of companies. In such arrangements, Company A might own a substantial stake in Company B, which in turn holds a stake in Company A. This structure often extends beyond two entities, creating a complex network that facilitates the concealment of beneficial ownership and fund movements. This structure of money laundering is common in India, China, and Russia, with recent reports identifying over 15,000 Indian companies flagged for suspicious circular ownership patterns in November 2023.
Money mules are recruited to move criminal proceeds, traditionally through personal bank accounts or crypto self-custodial wallets. Recruiting mules has become easier, often through online advertisements and social media. Cifas (a UK fraud prevention service) estimates that in 2023, 37,000 bank accounts exhibited behaviours indicative of money muling. The FCA also collects data in relation to money muling, and in January 2025 reported that, according to its data, 25 financial services firms had closed the accounts of 194,084 money mules between January 2022 and September 2023.
Professional enablers in the legal, accounting, and financial services sectors may unwittingly, or sometimes deliberately, facilitate money laundering schemes. Sham litigation, involving fabricated legal disputes to disguise the movement of funds, has become more sophisticated with digital case management and online dispute resolution platforms.
Smurfing, or structuring, involves breaking down large sums of illicit money into smaller, less conspicuous amounts for separate deposits, evading detection. While structuring typically involves a single individual, smurfing employs a network tasked with depositing smaller sums. This method has been increasingly exploited through the rise in digital ‘challenger banks’. These banks, known for rapid onboarding and automated verification, have become prime targets for money launderers due to weaker AML controls. The FCA’s £28.9 million fine against Starling Bank in 2024 highlighted failures in transaction monitoring, customer due diligence, and enhanced due diligence for high-risk accounts. This case underscores growing regulatory concerns over challenger banks’ vulnerabilities.
In the context of “Smurfing” we noted the tighter cash withdrawal rules implemented in Spain last May: https://fintechnews.ch/fintechspain/spain-strict-cash-withdrawal-rules-fines/76051/ Spain Enforces Stricter Cash Withdrawal Rules Over €3,000 with Fines Up to €150,000
“According to EuroWeekly, any person intending to withdraw €3,000 or more from a Spanish bank must now file a prior notification with the Agencia Tributaria, Spain’s tax agency. For withdrawals of €100,000 or more, a minimum of 72 hours’ advance notice is required, while amounts exceeding €3,000 but below €100,000 must be declared at least 24 hours before the transaction.“
We also looked at the rules governing other digital platforms, such as online sales of second hand goods, renting out property or vehicles: https://www.msn.com/es-pe/dinero/noticias/wallapop-aclara-que-solo-190-000-usuarios-pagar%C3%A1n-a-hacienda-por-las-ventas-hechas-en-la-plataforma/ar-AA1AMhwf Wallapop aclara que solo 190.000 usuarios pagarán a Hacienda por las ventas hechas en la plataforma
(Translated paragraph: It is worth remembering that, for the first time in this Renta, the Treasury will control taxpayers’ sales made through digital platforms such as Wallapop, Amazon or Vinted, as well as the income obtained from renting an apartment in pages such as Airbnb or renting vehicles to individuals online. However, in the case of the sale of items on digital platforms, the tax authorities will only control those users who make more than 30 transactions per year or earn more than 2,000 euros per year. Regarding the rental of real estate or vehicles, there is no (lower) limit whatsoever.
Chris noted that Hacienda is sending out notices to people who, from their transactions, look like they will be affected by these regulations, so that the recipients are aware of the law and that there’s no excuse for infringements: https://elpais.com/economia/2025-04-02/renta-2024-hacienda-lanzara-tres-millones-de-avisos-por-ventas-por-internet-alquileres-criptos-y-rentas-en-el-extranjero.html Hacienda lanzará tres millones de avisos por ventas por internet, alquileres, criptos y rentas en el extranjero (The Treasury will launch three million ads for online sales, rentals, cryptos and rentals abroad)
Hacienda is also introducing improved data mining tools, so that suspicious movements of money are flagged up quickly.
Let this be a warning to anyone trying to hide money transfers below the radar !
Christine Betterton-Jones – Knowledge Junkie