An investigation by the Sarajevo-based Organized Crime and Corruption Reporting Project (OCCRP) has revealed that Lithuania’s Ukio Bankas was used to help move billions of euros of suspicious money out of Russia, in a global money-laundering scheme allegedly set up and run by Russia’s largest private investment bank said to have close ties to the country’s ruling elite.
According to leaked documents and the OCCRP report, Ukio Bankas, which was a subsidiary of Russian private investment bank Troika Dialog, owned by Armenian-Russian banker Ruben Vardanyan, before being shut down in 2013, operated accounts for at least 35 shell firms in a scheme which has been dubbed the Troika Laundromat. According to the OCCRP investigation, the Troika Laundromat was more than just a money-laundering scheme, being used also as “a hidden investment vehicle, a slush fund, a tax-evasion scheme, and much more.”
“The scheme was discovered in a large set of banking transactions and other documents obtained by OCCRP and the Lithuanian news site 15min.lt. The data, which was compiled from multiple sources, represents one of the largest releases of banking information ever, involving more than 470 billion US dollars sent in 1.3 million leaked transactions from 233,000 companies,” writes OCCPR.
“The money was broken up and transferred among the laundromat companies before being sent onward to various recipients, known and unknown. The transactions were mostly bogus, supported by fake paperwork describing the trade of non-existent goods. On its way out of the system, the money passed through correspondent bank accounts in the West, typically through Austrian and German banks,” they add.
Paul Radu, OCCRP co-founder and project coordinator, told RFE/RL that the scheme was just the “tip of the iceberg. The reality is that there are many laundromats out there, and these are not just laundromats that help the elite in Azerbaijan and in Russia, and in these former Soviet countries. There are laundromats that serve criminal groups — large criminal groups, like drug groups – from Mexico.”
While not all the transactions to come out of Ukio Bankas were suspicious, there are links tying almost almost 200 million US dollars to well-known crimes in Russia, including a fuel price scam at Moscow’s Sheremetyevo airport in 2012 and a tax rebate scam which ended with the death of a Russian whistle-blower, Sergei Magnitsky, in 2009.
In addition, some of the ill-gotten money was subsequently spent on a variety of goods and services in Europe, which include a donation to the British royal family, purchase of real estate in the UK and Spain, luxury yachts, art, payments for medical services and private school fees, and purchases of jets and luxury cars.
According to the leaked reports, money from the network was sent to the Prince’s Charities Foundation. Between 2009 and 2011, Prince Charles’ Prince’s Charities Foundation received three payments, adding up to 202,000 US dollars via Ukio Bankas. The leaked bank data show the last of the payments went to an account held by the Prince’s Charities Foundation. In addition Mr Vardanyan has enjoyed an ongoing charitable and business relationship with the Prince of Wales over the years and in 2010 attended an event celebrating Armenia and its culture at Windsor Castle where the Prince spoke about Dumfries House and his plans to restore it.
The OCCRP investigation reveals the glaring shortcomings in anti-money laundering systems in Europe, and make the case for an EU-wide anti-money laundering supervisory authority, Transparency International announced in a statement.
“The European banking system should be a firewall that stops corrupt money from Russia and elsewhere being siphoned out of these countries’ economies. Instead, we see time and again how easy it is to launder and hide the proceeds of corruption, tax evasion or other criminal activities in Europe. All that is needed is an anonymous offshore company and one or more unscrupulous banks willing to turn a blind eye. Without more effective supervision of banks, we will see more scandals like this undermining the entire EU banking system,” said Patricia Moreira, managing director of Transparency International.