Dirty money in banks. USA launches probe against Russian ‘laundromats’ 

Dirty money in banks. USA launches probe against Russian ‘laundromats’
The probe was launched after the exposure of Russian money laundering schemes involving European banks Photo: The CrimeRussia

Shortly after the high-profile report of the Organized Crime and Corruption Reporting Project (OCCRP) dedicated to money laundering operations pulled off by Troika Dialog, once Russia’s largest private investment bank, and involving big European banks, the US authorities decided to audit their domestic financial organizations as well. The Congressmen suspect Bank of America, Morgan Stanley, and Citigroup of participation in the ‘Russian laundromat’. No official results are available so far – but Citigroup was also mentioned in the OCCRP report, and its CEO declined to comment on the suspicions expressed by the Congressmen.

Three big American banks – Bank of America, Morgan Stanley, and Citigroup – are suspected on laundering shady financial flows from Russia. The alleged interference of the Kremlin into the everyday life of America has been staying in the headlines for several years already. The Congress continuously introduces new sanctions against Russia for intervention in the US internal affairs. Even after the publication of results of the official inquest into the possible interference of Moscow into the American Presidential elections stating that the Kremlin has nothing to do with the victory of Donald Trump, American people still believe that the Russians are somewhere nearby. 

Maxine Waters, the Democratic Chairwoman of the House Committee on Financial Services, made an inquiry about suspicious operations of the above banks. She is known for a telephone interview given to Russian pranksters Vovan and Lexus – Waters expressed concerns about the ‘invasions’ of Russia in the fictitious country of Limpopo where Russian programmers had allegedly hacked the election systems and brought to power a ‘Kremlin puppet’ – Aiboilit. The Congresswoman seemingly did not suspect a foul play and promised “to do the right things” for Ukraine, which naturally involved imposing new sanctions against Russia.

Waters made her inquiry amid the ongoing inquest against Deutsche Bank carried out by lawmakers in Washington over allegations it had laundered money for Russian clients. 

"Much has been reported about how Deutsche Bank has been a pathway for criminals, kleptocrats and allies of Mr. Putin, to move illicit funds out of Russia. Recent information shows that some of your institutions have also been providing funds of services for individuals or entities that may be engaging in questionable transactions," – Maxine Waters said. According to her, clients of the seven largest American banks whose top managers were present at the hearings could also be involved in shady operations.

Брайан Мойнихен

Brian Moynihan, Chief Executive of Bank of America

New York State Department of Financial Services has fined Deutsche Bank almost $630 million for participation in so-called ‘matching deals’ – i.e. two simultaneous deals made at once – involving Russian shares. In the framework of the first deal amounting to some $10 million, the brokers were purchasing shares of Russian blue-chip companies (e.g. Lukoil) for Russian rubles. In the second deal, they had acted on behalf of a different company – normally, incorporated in offshore territories, including the British Virgin Islands, – and sold the same amount of the same Russian shares in London for dollars, pounds, or euros. Both the Russian and offshore companies belonged to the same owners. This is how the clients had purchased shares from themselves via Deutsche Bank and siphoned off the funds from Russia abroad.

Тим Уисвелл

Tim Wiswell, ex-top manager of Deutsche Bank

Generally speaking, matching deals are not prohibited by the law. At the Moscow stock market, such operations are called "conversion"; in the English-language press, this scheme is known as "mirror trading". There may be perfectly legal reasons for matching deals. Banks have special departments checking such operations and verifying their purposes. Deutsche Bank top manager Tim Wiswell agreed to assist in turning a blind eye to the true reasons behind the ‘mirror deals' for a monthly reward of $100 thousand. According to Boris Fomin, ex-Chairman of the Board of Promsberbank, convicted in August 2018, he had personally delivered the money to Wiswell several times. 

Fomin claims that Russian Land Bank, Russian Credit, Sammit Bank, and Deutsche Bank were involved in the channeling of funds from the Russian Federation. Promsberbank co-owner Oleg Belousov and its primary shady shareholder Ivan Myazin created companies accumulating cashed-out funds for subsequent bribery of Bank of Russia officers. In exchange for such ‘rewards’, the controllers had ignored illegal transfers of vast amounts of money abroad. The General Administration of Criminal Investigation of the Ministry of Internal Affairs (MIA) of the Russian Federation has recently completed its inquest against Ivan Myazin. The final charges are to be laid against him soon, and then the suspect will start reviewing the case file. 

In March 2019, new facts popped up in relation to the laundering of Russian money via above-mentioned Deutsche Bank, Raiffeisen Bank, Citigroup, and Lithuania-based Ūkio Bankas. According to the OCCRP report, Troika Dialog private investment bank has established a network of some 75 offshore companies used to siphon off funds from Russia. This sophisticated financial chain had operated in 2006–2013; $4.6 billion were injected into the offshore network in this period and $4.8 billion withdrawn from it. The total volume of transactions made between the dozens of offshore companies in that period reaches $8.8 billion; this makes it impossible to track the origin of the money. 

Some other big international banks, including Credit Suisse, ING Groep NV, and Standard Bank Group, had also run large-scale joint business projects with Troika Dialog.

Владимир Романов

Vladimir Romanov, former owner of Ūkio Bankas

The OCCRP reviewed transactions of companies having accounts in Ūkio Bankas – one of the largest Lithuanian banks belonging, up until the revocation of its license in 2013, to businessman Vladimir Romanov suspected of misappropriation of some €15 million by the Lithuanian authorities. Romanov fled the country in May 2013; he received asylum in Russia and currently resides there. At least 30 companies affiliated with Troika Dialog had accounts in Ūkio Bankas. In that period, Troika belonged to Ruben Vardanyan; he sold it to Sberbank in 2011. 

According to Ruben Vardanyan, the OCCRP report is full of inventions, interpretations, and statements torn from the context. In March 2011, Sberbank purchased Troika Dialog and established Sberbank CIB on its basis. Sberbank CEO German Gref claims that the companies mentioned in the OCCRP report dedicated to the operations of Troika Dialog have nothing to do with Sberbank.


Ruben Vardanyan, former Head of Troika Dialog

Still, the OCCRP report refers to a number of large-scale deals whose sole purpose was to siphon off funds from Russia and other suspicious operations. 

The Troika Dialogue’s offshore system received over $27 billion from companies involved in the channeling of funds from Sheremetyevo International Airport and tax frauds. In 2006–2007, the scammers have earned at least $200 million on surcharges, while the budget did not receive some $40 million in taxes. Flight ticket prices raised as well. The funds were transferred to the offshore companies via bank accounts of a Vienna lawyer who later admitted that he had rendered financial services to Russian criminal groups. In 2012, he was abducted and killed. 

At least $17 million were channeled to the offshore network by companies charged with tax evasion. According to the investigation, Russian citizen Sergei Tikhomirov was the mastermind behind this fraud. Based on the court materials, he had controlled a chain of dummy firms signing fictitious contracts with insurance companies. The insurance companies had paid Tikhomirov remuneration for his ‘services’. After a series of transactions, the funds ended up on accounts of offshore structures controlled by Troika Dialogue.


Cellist Sergei Roldugin

Cellist Sergei Roldugin, a close friend of Vladimir Putin, ascended to notoriety after the Panama Papers leak exposing secret financial operations of his offshore companies. Roldugin is believed to be the nominal owner of Russian President’s assets. The ‘key’ companies controlled by Troika Dialogue have transferred at least $69 million to the musician – this amount is 7 times higher than the sum mentioned in the Panama Papers. Some of these transactions had raised suspicions of the Ūkio Bankas Legal Department – but the OCCRP found no evidence that the bank had notified the watchdog authorities about the questionable payments. For instance, two companies affiliated with Roldugin have signed in two weeks 16 contracts involving Rosneft shares with firms controlled by Troika Dialogue. These contracts were immediately terminated, thus, bringing the musician $11.6 million in compensations. 

At least six companies mentioned in ‘the Magnitsky case' have transferred over $130 million to offshore structures of Troika Dialog. 

Владимир Артяков

Vladimir Artyakov, ex-Governor of the Samara Region

Offshore companies controlled by Troika Dialog have lent €14.7 million to an 80-year-old female Russian citizen without any securities or guarantees. The lady purchased a villa in Costa Brava, Spain. The female retiree had a residential registration at the very same address where Vladimir Artyakov, Governor of the Samara Region since August 2007 and until May 10, 2012, was registered. In 2014, Vladimir Artyakov’s son Dmitry and wife Yulia became the owners of the property in Spain. Currently, Artyakov senior is the first deputy of Rostec CEO Sergei Chemezov. 

A few months before the military conflict between Russia and Georgia in August 2008, offshore structures of Troika Dialog have transferred $85 million to Multiplex Energy Limited incorporated in the British Virgin Islands. Multiplex Energy Limited has shipped water supply systems for several towns and villages in Georgia. The privatization deal was nontransparent; as a result, residents of Tbilisi, Mtskheta, and Rustavi were not aware who had supplied water to them. The funds were transferred by the three ‘key’ Troika Dialog companies and Russian investment bank Renaissance Capital.

Джеймс Горман

Morgan Stanley CEO James Gorman

Interestingly, the European regulatory bodies have shown virtually no reaction to the OCCRP report. It turned out that the European Union is lacking a single authority responsible for the monitoring of financial flows in the globalized world. 

“It’s a big paradox that you have one single market with free movement for capital and services and so on, but you have 28 different anti-money laundering systems. The financial sector is so interconnected and so transnational, it doesn’t make sense to have this kind of fragmented system,” – said Jeppe Kofod, a Danish lawmaker in the European Parliament, in an interview to Bloomberg. 

In early 2019, the UK launched a special group for combating fraud, corruption, and money laundering. The primary targets of this group are financial flows from Russia, former Soviet republics, Asia, and Nigeria. The government is going to allocate £3.5 million (€3.9 million) to the special group in two years for improvement of the system used for identification of suspicious transactions.

Майкл Корбат

Citigroup CEO Michael Corbat

No official results of the probe into the possible involvement of American banks in Russian money laundering schemes are available so far. According to Financial Times, Brian Moynihan, Chief Executive of Bank of America, James Gorman, Head of Morgan Stanley, and Michael Corbat, Chief Executive of Citigroup, all told the Congressional hearing they had reviewed their account holders for suspicious activity. While Mr. Moynihan and Mr. Gorman said they had not found any such activity, Mr. Corbat said he “could not comment on ongoing investigations”.



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