The word ‘Laundromat’ has been known since 2014 thanks to the Russian daily Novaya Gazeta and the global network of investigative journalists consortium OCCRP (Organized Crime and Corruption Reporting Project) when their investigation revealed corruption schemes designated for laundering money of Russian business oligarchs. For instance, Moldavian and Latvian banks Moldindconbank and Trasta Komercbanka laundered around 20 billion US dollars to the Western countries in four-year time.
After 20 September of the current year ‘ordinary’ portions of information about money laundering appeared on the international public domain thanks to (or on the initiative of) another, however very similar International Consortium of Investigative Journalists (ICIJ that unites 108 media organizations around the world) when on 21 September the web portal Buzzfeed started publishing documents of the Financial Crimes enforcement Network of the United States Department of the Treasury (FinCEN), which indicated that during the period of 1999 – 2017 the banks could make suspicious transactions ‘only’ for over 2 trillion US dollars. European banks and business people were mentioned among other documents of FinCEN.
According to the information of the portal Re:Baltica that participated in ICIJ project, some Latvian banks helped the business leaders of Russia and Ukraine and politicians to wire billions of US dollars abroad by using unlawful schemes. For instance, a company Mako Trading relating to the son of Viktor Janukovych who fled to Russia, was wiring money to the Latvian bank Aizkraukles Banka and Baltikums Bank, although in 2015 the US Treasury Department imposed sanctions on Mako Holding, which included also Mako Trading.
According to the data of FinCEN, Ukrainian billionaire Dmitry Firtash that has been sued in the United States could launder millions of US dollars through the Latvian bank Trasta Komercbanka. The former Prime Minister of Ukraine Yulia Tymoshenko in 2014 from March to December could wire to Canada almost 16.5 million US dollars through the Latvian bank Privat Bank. Of course, the politician called this information as ‘fake news’.
According to Re:Baltica FinCEN found suspicious that bank wires have been made through Latvia year by year and also when it was considered as high-risk jurisdiction. FinCEN used to get information on a regular basis on suspicious transactions through Latvian banks, the main business of which was provision of services to accounts of non-residents. Among others we should mention Blue Orange Bank (previously called Baltikums Bank), Expobank, Regional Investment Bank, Rietumu Bank, already not operating ABLV, PNB Bank (previously called Norvik Banka) and Trasta Komercbanka. the US Treasury Department in the middle of February 2018 even announced about sanctions on ABLV and banned the access to US dollars and accused of money laundering.
Just according to testimony of the international investment banking services holding company The Bank of New York Mellon, Expobank in 2006 – 2016 made suspicious transactions for 29 billion US dollars. This exceeds the budget of Latvia of 2020 almost three times. According to the data of the Finance Latvia Association, last year Expobank was the smallest bank among 15 banks operating in the country.
Documents of FinCEN demonstrate that one of the wealthiest Russians, the magnate of the Russian aluminium (the holding RUSAL) Oleg Deripaska from 2002 to 2016 wired over 3 billion US dollars of suspicious origin through this bank. The oligarch Oleg Deripaska is extremely loyal to the President of Russia Vladimir Putin (there is no other case with Russian oligarchs), for instance, he invested a million US dollars to infrastructure of the Winter Olympic Games held in Sochi in 2014 that were particularly taken care by Vladimir Putin.
He has been included into the list of sanctions of the United States for suspicious money laundering. Besides, the business oligarch, included into the list of sanctions since 2018, is also the officer of the Russian government (an economic advisor). Oleg Deripaska denies the accusations and has pending legal proceedings with the United States for removal of him from the list of sanctions.
Money from Expobank accounts has been wired for various purposes. For instance, to hire lobbyists in Washington, who had to look for business partners in the United States and help Oleg Deripaska to get a USA visa. A group of lobbyists Endeavor Law Firm represented Oleg Deripaska not only as a private person, but also as an economic advisor of the President of Russia.
Expobank was mentioned around 10 years ago in legal proceedings between business oligarchs Boris Berezovsky and Roman Abramovich held in London. In documents of FinCEN we can also find details showing that another Russian oligarch Suleiman Kerimov was also among clients of Expobank, who has been also included in the list of sanctions of the USA. France accused Suleiman Kerimov of tax fraud he after he intended to buy several villas, and brought hundreds of millions euro packed in suitcases to France.
By the way, for he last five years Expobank is trying to get rid of the tail of the corrupt financial institution – from provision of services to non-residents to provision of services to local business entities.
The provided scenarios add to the image that started forming previously. Despite the unblemished reputation until 2016, later the Swedish bank Swedbank (which has over 3 million clients in the Baltic States) was imposed a financial penalty of almost 1.4 billion euros for inadequate customer control and in 2019; it got into a huge scandal over dubious customers in the branches located in the Baltic States. By the way, former chief executive officers of Swedbank Latvia Ingrida Blūma and Māris Avotiņš held senior positions in Expobank, too (Māris Avotiņš was Chief Executive officer of Expobank in Latvia and Czech Republic).
In March 2019, the internal report that was sent to top managers of Swedbank was leaked to the press and got public. It revealed that suspicious clients of Swedbank and Danske Bank in 2007 – 2017 wired 95 billion Swedish crones (9.04 billion Euros). The national Swedish broadcaster SVT announced about that on 20 February and informed that 40 million Swedish crones (3.8 billion Euros) have been laundered through the branches of Swedbank and Danske Bank in the Baltic States. According to SVT Swedbank was providing services to Russian business oligarchs and Viktor Yanukovych.
According to the journalist of SVT program ‘Uppdrag granskning’ Joachim Dyfvermark, banks such as Swedbank, Danske Bank and Nordea traditionally have not been associated with increased risk and now trust in them has been ruined. The banks of the Baltic States have been operating over a decade as a channel of dirty money from the former USSR states to Europe and nobody can be sure that this algorithm is not operating any longer.
A British investor Bill Browder, a restless enemy of the Kremlin and fighter against corruption in return produced information to the law enforcement authorities on permission issued by Swedbank to make 176 billion US dollar payment from the Lithuanian Ūkio bankas that was announced bankrupt in 2013 and the Estonian branch of Danske Bank that was closed as a result of money laundering.
The business news agency Bloomberg paid attention to these stories in March 2019 and indicated that the expanding money laundering scandal revealed shortcomings of the European financial system (actually, lack of it), that has been used by Russian criminals year by year. Although officers of the European Union started creating a banking union after the financial crisis in 2007-2008, a competent money laundering control authority of all EU has never been even discussed. Local authorities have done this. As a Danish politician, a member of the European Parliament (EP) Jeppe Kofod told the agency, we see a big paradox: the EU has a common market with free movement of capital, services, etc., however at the same time 28 different anti-money laundering systems exits.
According to Bloomberg, financial institutions starting with Stockholm to Amsterdam get unpleasant questions about regulation of dirty money; investigations of money laundering are taking place in the Baltic States, the United Kingdom and Northern Europe. Almost every day brings new facts about crimes of similar nature, which enables us think that we can expect more surprises in the future.
The impression is that banks of the Northern Europe – most often through their branches in the Baltic States, become a crossroad for Russian criminals, who transfer money to the Western countries. For instance, the agency mentioned about a supposition that around 700 million euros has been laundered through the bank Nordea Bank Abp, part of which was associated with the death of Russian lawyer Sergei Magnitsky. We have written about his tragedy in the text “A list of Magnitsky – contribution of the Baltic nations to transparency in the current geopolitical havoc”. It singled out contribution of the Baltic States in fighting against corruption that is coming from the East. This time the vector of value is strictly opposite and this is a paradox.
According to assessment of the International Monetary Fund (IMF), 2-5 percent of the global gross domestic product (GDP) or up to 2 trillion of US dollars (that is equal to the economy of Italy) is laundered around the world in one-year time. The Baltic States are also involved in this ‘process”, there is no other way.