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How illicit Russian money was allegedly siphoned into EU and beyond


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How illicit Russian money was allegedly siphoned into EU and beyond

What are the accusations?

The allegations centre upon claims that Russians were behind a huge money laundering operation, involving at least $20.8 billion (19.3 billion euros).

The Organized Crime and Corruption Reporting Project (OCCRP), which broke the story, says it was a way of siphoning out illicitly-gained money, via Eastern Europe.

How is the scheme said to have worked?

OCCRP says it was an ingenious scheme involving so-called shell companies, which serve as a vehicle for business transactions without having significant operations or assets.

These companies are not illegal but OCCRP said the people behind them often remained anonymous.

It is alleged one shell company set up a fake loan to another. The former then accused the latter of failing to pay back the money, launching a court action in Moldova to ‘recover’ the cash.

Russian companies, OCCRP alleges, then transferred over real money to Moldovan accounts to pay off this fake debt.

Some of the money was then transferred to Latvia and into the EU. From there the cash went onto 96 countries, involving 70,000 banking transactions, according to law enforcement officials in Moldova and Latvia, quoted in the Guardian.

Isn’t this an old story?

Yes, partly, it was uncovered in 2013. But a wide network of journalists linked to OCCRP have now delved deeper into where the money went.

So, what has been uncovered now?

The vast money-laundering scheme, nicknamed the Global Laundromat, saw nearly $740 million (685 million euros) pass through Britain’s high street banks, according to the Guardian.

Investigators, allege the British newspaper, estimate a group of 500 people were involved, including oligarchs, Moscow bankers or connected to the spy agency FSB.

British authorities, including the Financial Conduct Authority (FCA) and the National Crime Agency (NCA), have now promised to investigate.

According to data compiled by the OCCRP and published by the Guardian, HSBC saw $545 million (505 million euros) routed through its UK and foreign branches.

HSBC is still subject to a five-year deferred prosecution agreement made in 2012 with U.S. authorities over lapses in its anti money laundering controls.

HSBC is strongly committed to fighting financial crime,” the bank said in a statement.

“The bank has systems and processes in place to identify suspicious activity and report it to the appropriate government authorities. This case highlights the need for greater information sharing between the public and private sectors, each of whom holds important information the other does not.”

The other banks named by the Guardian were the Royal Bank of Scotland, Lloyds, Barclays and Coutts, all of whom insisted to the newspaper they had strong money-laundering systems in place.

Are there any other investigations?

Moldovan prosecutors have launched criminal cases against 14 judges as well as 10 senior bank managers, senior central bank officials and four bailiffs in the money-laundering investigation.

Moldova says it has also sent repeated requests to Russia over the past six years for help getting to the bottom of a scheme.

The Russian Interior Ministry said in response to inquiries that it could not comment on the money-laundering case itself because of the on-going Russian investigation into it.

Last week Moldova’s Prime Minister and the President of the Moldovan parliament met the Russian ambassador in Chisinau to send a note of complaint to Moscow about the way Moldovan officials were being treated.

The note also said that the Russian authorities had repeatedly ignored Moldovan requests for help to trace the origins of the laundered money and information to piece together how the scheme was carried out and who was involved.

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