Money laundering: from Russia to UK trough Big Banks

HSBC, the Royal Bank of Scotland, Lloyds, Barclays and Coutts are among 17 banks based in the UK, or with branches here, believed to have processed almost $740 million on behalf of Russian money launderers with ties to gangsters and intelligence services, according a major investigation carried out by the Organized Crime and Corruption Reporting Project (OCCRP) and Novaya Gazeta, and reported by the Guardian.

The figure was gathered by documents covering the years 2010-2014 showing at least $80 billion was moved out of Russia by an organisation called the Global Laundromat. Investigators are still trying to identify who is behind the nickname, but the task is difficult as the owners of offshore entities that moved money through the banks often kept their identities secret, the report noted, adding the documents include details of about 70,000 banking transactions, including 1,920 that went through UK banks and 373 via US banks.

To move money out of Russia, two entities typically pretended to lend money to each other, underwritten by Russian businesses, according to the Guardian. One company would then “default,” allowing the Russian businesses to send cash to an account in Moldova. The money then went to Latvia, inside the European Union.

The investigation follows a $6.5 million fine Coutts was ordered to pay by Swiss authorities last month, over separate case in which it was accused of handling $2.4 billion in illicit funds.

The bank is in the process of winding up its Swiss subsidiary or would have been forced to pay a much larger sum, the local regulator said, and employees could still face criminal charges.

The news marks a blow for HSBC, which was engulfed in a scandal in 2015 over its Swiss private banking unit which allegedly helped thousands of clients evade taxes. The FTSE 100 lender was also named in last year’s ‘Panama Papers’ which suggested that Europe’s biggest bank was among the most active in registering shell companies which move money around the world on behalf of rich and politically-connected clients.

In a statement provided to the paper, RBS said: "We are committed to combatting financial crime and money laundering in line with our regulations and have controls and safeguards in place to identify, assess, monitor and mitigate these risks."