Mafias and Firms

Organized crime groups (OCGs) are often thought to infiltrate firms to benefit from or support criminal activities, such as corruption, false invoicing, and the provision of illicit goods. We show that much of infiltration-especially among large firms-serves a different purpose: firms are infiltrated not to engage directly in criminal activities, but to access valuable connections in the legal economy and politics. We develop a conceptual framework that distinguishes between the classic contaminated motives and the novel pure motive of infiltration and delivers testable predictions to infer these motives from firms' behavior. We test these predictions using the "Mappatura," a new and highly confidential dataset assembled by the Financial Intelligence Unit of the Bank of Italy. Consistent with the model, we uncover a systematic pattern across firm size: smaller infiltrated firms display the hallmarks of being set up to be used for criminal activities, medium-sized firms benefit from criminal support, and large firms are predominantly consistent with the pure motive. In these firms, infiltration leaves operations largely unchanged but reduces reliance on bank financing and increases liquidity. At the same time, infiltrated firms and infiltrating individuals are significantly more connected to other firms and to politicians. These findings shift the perspective on infiltration, align with recent high-profile investigations, and provide a rare glimpse into the integration stage of money laundering, linking it to the acquisition of economic and political connections.