A group of anti-corruption reporters who in 2014 exposed a criminal scheme to move large sums of money out of Russia say they’ve uncovered details about how the system worked, including the transfer of $21 billion through major banks.
Members of the group say in a report published late Monday that they now know where the funds ended up and that banks allegedly refused to shut it down, despite warnings.
The Organized Crime and Corruption Reporting Project said that reporters from the group and the Novaya Gazeta newspaper in Moscow obtained bank records showing that funds were transferred worldwide via 112 bank accounts in Eastern Europe. They shared the details of the scheme, dubbed Laundromat, with investigative reporters in 32 countries.
“Law enforcement agencies in Moldova, Latvia, Britain and Russia continue to investigate Laundromat, but attempts to bring those responsible to justice and to recover the money have been hampered in part by the reluctance of Russian officials to cooperate,” the group said on its website.
Organizers of the scheme created a core of 21 companies based in Britain, Cyprus and New Zealand, run by hidden owners and used by several Russian companies to move their money abroad. All of the core companies appeared to be owned by proxies standing in for hidden owners, with fake directors and shareholders, though the reporters provided no evidence to back the claims.
Between 2011 and 2014, the 21 shell companies sent 26,746 payments from various accounts to 96 countries, including to some of the world’s biggest banks, such as HSBC, Deutsche Bank, Bank of China, Bank of America and Emirates NBD.
Laundered money ended up at several big name companies, including South Korea’s Samsung, Swedish telecom company Ericsson, toolmaker Black & Decker and Total Golf Construction Inc., which says it has renovated a Donald Trump golf course in the Grenadines.
Companies contacted over the report denied wrongdoing, saying such business methods were common with Russian clients and added that they had stopped dealing with them. They declined to identify the clients.
Using company records, the investigative reporters said they tracked some clients, many rich and powerful Russians who made fortunes from dealing with the Russian state, including a businessman in the inner circle of Russian President Vladimir Putin and IT distributors in Russia, including for Apple, Samsung and Asus.
Some $1.2 billion was allegedly funneled through the Estonian branch of Denmark’s largest bank, Danske Bank, which acknowledged a “case of possible international money laundering” with illegitimate transactions at its Estonian branch in 2011-2014.
Danske Bank spokesman Flemming Pristed said security procedures had been “insufficient” but now had been improved. Other banks, including Deutsche Bank, have since been fined for lax controls on money laundering schemes.
Reacting to the news, Danish Prime Minister Lars Loekke Rasmussen on Tuesday called the money laundering a disgrace. “It makes me sad and angry,” he told Denmark’s TV2.