Three Russian state budgets, or $750 billion: that’s how much Russians have moved offshore in 25 years. According to Central Bank forecasts, another $53 billion will trickle abroad this year. How do billions get laundered around the world?
Imagine you’re an official receiving multi-million-dollar kickbacks. You want to spend your stolen money on something nice. But if you buy a villa, for example, the notary, your bank, and the tax authorities will enquire where the money came from.
So, the money has to be laundered to hide its origin. You set up Company A in the name of a “straw man”. Next, a bribe is transferred into that company’s account, ostensibly as payment for non-existent consulting services to Company B.
Company A agrees to buy shares for Company C, registered offshore, but allegedly the transaction falls through, so it pays a fine to Company C. Next, Company C issues a loan to your 70-year-old mother-in-law, then promptly closes down, while your relative builds a luxury villa on the Spanish coast.
Similarly, a mansion in the resort of S’Agaró in Spain was built by relatives of Vladimir Artyakov, the deputy director-general of state corporation Rostec, and former governor of the Samara region.
According to IMF estimates, the value of property abroad owned by Russians is equal to almost half the country’s GDP. Only citizens of Saudi Arabia, Venezuela, and the United Arab Emirates move more funds offshore.
Every year, an amount equal to Russia’s GDP – about one-and-a-half trillion dollars – is illegally transferred to offshore accounts worldwide.
According to the Tax Justice Network, most money is laundered in the British Cayman Islands, the USA, Switzerland, Hong Kong, Singapore, and Luxembourg.
Money from Russia mostly travels via Cyprus. Over the past decade, Russians have invested 153 billion dollars on an island with a population like the city of Chelyabinsk. The British Virgin Islands, Switzerland, and the Netherlands are the next most-popular offshore destinations. Cyprus also receives the most investments from Ukraine.
There are laundromats from which wealthy people withdraw their money all over the world. Putin’s friends Arkady and Boris Rotenberg, and the Kremlin’s arch-enemy, Igor Kolomoisky, used firms recently exposed by the Moscow Mirror Network. Those laundromats also boasted more-exotic clients: Hezbollah agents, and the Mexican and Colombian mafia.
Hundreds of millions of dollars have been shifted abroad by figures close to Vladimir Putin, Ukrainian leaders Viktor Yanukovych and Petro Poroshenko, the family of Azerbaijani president Ilham Aliyev (as discussed in one of our previous reports), and even the entourage of the “popular” leader of Belarus, Alyaksandr Lukashenka.
Yes, they do. Since 2014, over one hundred states have been automatically sharing information on possible financial fraud. A “grey list” of countries that refuse to share banking data is published by the FATF – Financial Action Task Force (on Money Laundering).
In 2016, Luxembourg and Switzerland began disclosing data on foreigners’ accounts in their banks. The European Union also published a suspicious countries register, similar to the FATF list.
But Russia and the Middle East (the source of the dirty money) or Cyprus, the UK, and the US (where the money is laundered) aren’t on that list. The cash flow from those countries is so huge that checking every transaction would stall the world economy.
Politicians, oligarchs and bureaucrats transfer stolen billions abroad through a string of companies that exist purely on paper.
Thousands of financiers worldwide help criminals locate international “laundromats”, or even set up their own companies, via which they can transfer money. The laundries of choice for post-Soviet oligarchs and dictators are in Cyprus.
Why do even the biggest banks engage in such shady trading? It’s to their advantage. If you’re a private entrepreneur, the bank might well freeze your transfer from Cyprus until you provide additional documents. But if millions of dollars pass through your account daily, you’re a valued, cherished customer…
Alyaksandr Papko, Belsat TV