‘Billions’ moved out of Russia in ‘Global Laundromat’: report

Some of the UK’s top banks are being accused today by the Guardian newspaper of having been involved in a Russian money-laundering scam that is said to have handled billions of dollars.

In a major report, the London-based paper such high street banks as HSBC, the Royal Bank of Scotland, Barclays, Lloyds and Coutts  among those involved in processing nearly US$740m as part of a scam it calls the “Global Laundromat”.

It claims that at least US$20bn, and possibly as much as US$80bn, was moved out of Russia between 2010 and 2014, citing “detectives” and documents its journalists had seen.

Altogether, it says, some 17 banks either based in the UK or with branches there are “facing questions over what they knew about the international scheme, and why they did not turn away suspicious money transfers”.

“Investigators are still trying to identify some of the wealthy and politically influential Russians behind the operation,” the article says.

It goes on to note that a group of about 500 people were thought to be involved in the scam, including “oligarchs, Moscow bankers, and figures working for or connected to the FSB, the successor spy agency to the KGB”.

“Igor Putin, the cousin of Russia’s president, Vladimir, sat on the board of a Moscow bank which held accounts involved in the fraud,” it continues.

“British-registered companies played a prominent role in this extensive money-laundering network…

“The Global Laundromat banking records were obtained by the Organized Crime and Corruption Reporting Project (OCCRP) and Novaya Gazeta, from sources who wish to remain anonymous. OCCRP shared the data with the Guardian and media partners in 32 countries.

“The documents include details of about 70,000 banking transactions, including 1,920 that went through UK banks and 373 via US banks.

The data is understood to be part of the evidence gathered in a three-year money-laundering investigation led by police in Latvia and Moldova.”

Other publications in other markets published similar stories today, including the Bangkok-based   Asia Times, which is reporting that “several of China’s state-controlled banks, as well as HSBC’s Hong Kong branch, have allegedly processed hundreds of millions of US dollars from a vast money-laundering operation run by Russian criminals with links to the Russian government and the spy agency FSB”.

 

Banks deny failing their AML duties

All of the banks named above, as well as several others, deny that they were failing in their obligations to report suspicious money transfers and other irregularities. In a separate article also carried on the Guardian’s website, 10 of the institutions respond to the newspaper’s claims.

HSBC states that it is “strongly committed to fighting financial crime,” and that it “has systems and processes in place to identify suspicious activity and report it to the appropriate government authorities”.

It adds that the case unearthed by the Guardian’s investigation “highlights the need for greater information sharing between the public and private sectors, each of whom holds important information the other does not”.

The Royal Bank of Scotland, the parent of Coutts and NatWest, says it is “committed to combatting financial crime and money laundering, in line with our regulations, and have controls and safeguards in place to identify, assess, monitor and mitigate these risks”, while Citibank stresses that it “continually take[s] steps to strengthen and enhance our AML [anti-money laundering] programme, in order to anticipate and respond to the changing patterns of criminal and terrorist behaviour”.

To read the Guardian’s report on its website, click here. 

ABOUT THE AUTHOR
Helen Burggraf
Helen Burggraf is the editor of International Investment. A US-trained journalist, she has worked in Rome, New York City and London, covering everything from the fashion and retailing industries to the global drinking water and water-treatment sector, private equity, and most recently, the international cross-border financial services/advice industry.

Read more from Helen Burggraf

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