HSBCs building in Canary Wharf, London. Photograph: Anthony Devlin/ PA Archive/ Press Association Ima
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.
Detectives have unravelled a conspiracy that involved billions of dollars being sent from suspected offenders in Russia via accounts in Latvia and Moldova held at banks notorious for their exposure to money-laundering scams.
The trail resulted investigators to 96 country level to a network of anonymously owned firms, most of them registered at
Companies House in London. Most of the 21 core companies under scrutiny have been dissolved.
The scale of the operation has staggered law enforcement officials. The records indicate British banks and foreign banks with offices in London processed $738.1 m in transactions apparently involving criminal money from Moscow.
Banks say they have sophisticated units dedicated to rooting out financial crime. But they say the volume of payments billions a year makes such work difficult.
If you are on the back end you are kind of playing whack-a-mole, trying to pick this up, one source said.
HSBC processed $545.3 m in Laundromat cash, largely routed through its Hong Kong branch. The troubled Royal Bank of Scotland which is 71% owned by the UK government handled $113.1 m. Coutts used by the Queen and owned by RBS accepted $32.8 m worth of pays via its office in Zurich, Switzerland. Coutts is winding down its Swiss operation and
was last month penalty by regulators for fund laundering in a different suit.
Other high street banks that appear in the Laundromat data include Barclays, NatWest and Lloyds. NatWest also owned by RBS allowed through $1.1 m.
In the US, big banks processed more than $63.7 m. They include Citibank ($ 37 m) and Bank of America ($ 14 m ).
The Guardian contacted all these banks. None of them challenged the authenticity of the data, but they all insisted they had strict anti-money-laundering policies.
The response from RBS was typical. The bank told: We are committed to combatting fiscal crime and money laundering in line with our regulations and have controls and safeguards in place to identify, assess, monitor and mitigate these risks. The statement covered Coutts and NatWest.
HSBC said: This instance highlights the need for greater information sharing between the private and public sectors, each of whom holds important information the other does not.
However, the Guardians disclosures create awkward questions for UK banks. The
Financial Conduct Authority demands that banks consider the money-laundering hazard presented by customers, taking into consideration country risk; the customers reputation and the source of their wealth and funds.
In many of the cases looked at by the Guardian, money vanished into offshore shell firms, whose beneficial owneds remain anonymous, and whose source of wealth is a mystery. The
OCCRP detectedthat the official owneds of many of the firms were fake or nominee directors based in Ukraine.
The Guardian presented details of the transfers to L Burke Files, an international financial researcher. He said compliance checks at many western banks were desultory, and often little more than box ticking.
Typically the compliance and investigations department is treated like an unwanted step-child. The directors of a bank assure conformity as an expense without any return. The compliance professionals are underpaid, underskilled and receive little or no effective training in spotting criminal patterns.
Files added: Most of the transactions Im seeing here would have involved substantial enhanced due diligence. It isnt just individual transactions. Its the recurred pattern.
Police in eastern
Europe have focused on a number of British shell companies, including Seabon Limited, which was run by a company management firm in Tooley Street, London, only around the corner from the mayor of Londons office and City Hall.
Seabon filed accounts to Companies House saying its income was just 1. The firm was wound up in February 2016. According to its examination of the records, Seabon was involved in transactions worth$ 9bn. Another firm Ronida Invest LLP, registered in Newhall Street, Birmingham processed $6.4 bn.
Prosecutors in eastern Europe claim both firms were put up from the operation of fraud.
The records also give an insight into Russian shopping habits, although the customers in many cases are unknown. They bought diamonds from a jewellers in Bond Street, furs from brokers in north London, and chandeliers from a Chelsea boutique.
The scheme was also used for a wealthy Russian to pay for his sons boarding fees at
Millfield, a prestigious school in Somerset.
Often, the information in the notes segment of wire transfers was misleading. One bank payment of $500,000 was marked down in records as notebooks. Actually, it was spent on fur.
The scheme that allowed the transfer of money from east to west was unravelled by police following the launch of the inquiry in 2014. The OCCRP which first reported the story originally
called it the Russian Laundromat.
Typically, two firms would pretend to give money to each other, with the sums underwritten by Russian business. One company would then default on the loan. Judges would certify the debt as authentic, permitting the Russian businesses to send cash to an account in Moldova. From there it went to Latvia, inside the EU.
Accounts held at 19 Russian banks were involved in the scheme. In 2014, it was reported that one financial institution was the Russian Land Bank( RZB ). A bank board member at the time was Igor Putin.
Detectives tell accounts at RZB transferred about $9.7 bn to accounts at Moldovas Moldindconbank. The cash was then endeavoured to Trasta Komercbanka in Riga.
A opinion of Riga. Photograph: Alamy
RZBs director Alexander Grigoriev
was arrested in Moscow in 2015, a year after his bank was shut down for money-laundering offences.
Sources told the
OCCRP that Grigoriev had links to the FSB, Russias main snoop agency.
He has denied wrongdoing and says he is a respectable citizen. He remains in custody, accused of stealing assets in a different case.
Igor Putin declined to comment. In a letter written in 2014, he told: My its own experience, gained in recent years, demonstrates the truth of the thesis that the Russian banking system should be radically rehabilitated and cleaned of troubled banks headed by people with doubtful reputations.
Trasta, the Latvian bank at the centre of the scandal, was closed in 2016. Maija Treija, deputy director of Latvias finance ministry, said it lost its licence due to fund laundering. Of the billions sent from Russia, she told: Obviously it was money either stolen or with criminal origin. The fight against fund laundering was a never-ending story, she told the Finnish broadcaster
The involvement of Moldovas banks in the scandal led to a political crisis that has ensure five prime ministers come and go in the last two years.
Former and current officials working at Moldovas central bank were detained by attorneys last August suspected of turning a blind eye to information on fund laundering carried out through Moldindconbank.
The fraud has also triggered a row with Moscow. This month, Moldovas parliament told Russias FSB
had abusively treated Moldovan officials arriving in the Russian Federation. It connected their harassment to Moldovas Laundromat investigation and told some of the money had been used to try to bribe Moldovan MPs.
The FSB run by Vladimir Putin before he became “ministers ” and chairwoman had
used part of the Laundromat money to further Russian nation interests, Moldovan officials said.
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