A group of investigative journalists have uncovered what they describe as a $9 billion money-laundering operation enabled by Russia’s largest private investment bank, Troika Dialog.
The operation, in which billions were said to be funneled from shell companies into the global banking system, was uncovered by the Organized Crime and Corruption Reporting Project and the Lithuanian news site 15min.lt using leaked data shared with others including The Guardian.
The journalists said the data used in their reporting represented one of the largest leaks of banking information ever, “involving more than $470 billion sent in 1.3 million leaked transactions from 233,000 companies.”
The OCCRP said the Russian operation, which it called “the Troika Laundromat,” was active in syphoning an estimated $4.8 billion into Europe and the US from 2006 to early 2013 and was formed by at least 75 interconnected offshore companies.
Those companies generated $8.8 billion worth of internal transactions to help hide the cash’s origins, the report said.
“The Laundromat allowed Russian oligarchs and politicians to secretly acquire shares in state-owned companies, to buy real estate both in Russia and abroad, to purchase luxury yachts, to hire music superstars for private parties, to pay medical bills, and much more,” the OCCRP said in a release on its website.
“To protect themselves, the wealthy people behind this system used the identities of poor people as unwitting signatories in the secretive offshore companies that ran the system.”
The OCCRP said Ruben Vardanyan, then Troika Dialog’s president, chief executive, and principal partner, denied wrongdoing by the bank. It also said reporters found no evidence that Vardanyan specifically had been accused of wrongdoing.
Raiffeisen stock tanks
The OCCRP said that funds were eventually distributed through a series of major Western banks, including the US-based Citigroup, the Austria-based Raiffeisen, and the Germany-based Deutsche Bank. The explosive report sent shares of Raiffeisen tumbling 14% in Tuesday trading.
Raiffeisen, in a comment to Business Insider, said it was conducting an internal investigation:
“Raiffeisen Bank International (RBI) is not familiar with the concrete allegations and does not have any further information on the content of the complaint. RBI complies with all anti-money laundering requirements. Its compliance systems and processes have been, and continue to be, regularly reviewed by external parties and are confirmed to be in compliance with the legal requirements.”
In an emailed statement to Business Insider, Deutsche Bank said:
“Deutsche Bank’s clients are so-called respondent banks. It is first and foremost the task of the respondent bank to check its customers in accordance with the applicable know-your-customer regulations.”
Citigroup declined to comment.
The investigation goes right to the top of Russian politics, with links to Russian President Vladimir Putin’s friends and business associates.
Prince Charles link
Among the reporting from The Guardian is that in 2009, 2010, and 2011, three transfers totaling $200,000 from one of the shell companies linked to the scandal went to a fundraising vehicle for Prince Charles.
The money was reportedly used to help Prince Charles rescue a stately home in Scotland called Dumfries House from being auctioned off.
There is no suggestion that recipients such as Prince Charles were aware of the original source of such money, and The Guardian noted that in some cases legitimate money might have entered the system.
The Prince of Wales’ Charitable Foundation and The Dumfries House Trust “apply robust due diligence processes in accordance with Charity Commission and Scottish Charity Regulator guidelines as well as legislation relating to money laundering, the Bribery Act, terrorism and political activity,” a spokesman for Prince Charles’ charities told Business Insider in an emailed statement. “In the case of the examples highlighted, no red flags arose during those processes.”