#RussianLaundromat – The EU’s dirty money

| January 14, 2019

While news of the Russian Laundromat has died down since the story first gained global attention in 2017, investigations have continued in earnest into how more than $21 billion (some estimates suggest the real figure is more likely to be $80bn) was laundered out of Russia, into some of the world’s largest financial centres, writes Colin Stevens.

A recent article reports that Ruslan Rostovtsev, a leading Russian businessman and former Deputy Mayor of Sochi and Moscow City official, was allegedly one of the individuals involved in the global money laundering scheme.

Rostovtsev, a Russian mining magnate, who has been at the centre of legal cases in Russia, Greece and Cyprus in recent months, has found himself embroiled in one of the world’s largest money laundering scandal, after his company, Grandwood Systems, was reportedly found to have allegedly moved more than $400 million through the ring, with $50m moving through one account at Trasta Komercebanka, a Latvian bank which has since ceased operations after news of its ties to the laundromat became known.

According to The Campaign for Maladministration and European Corruption, Grandwood Systems Ltd., a company for which Rostovtsev claims ownership in official Cypriot court filings, appears to be just one of a series of companies he owns that allegedly moved hundreds of millions out of Russia, on behalf of numerous individuals, including managers from Russian Railways and representatives from the People’s Democratic Republic of Donetsk, in the annexed Crimea. His ties to the Donetsk region are not new, with Forbes reporting last year that such was the scale of his ties to the separatist region, he received a recognition award from it’s Ministry of Foreign Affairs. He is suspected of re-exporting coal from the region, reportedly sending it back to Russia before it was shipped internationally under the guise of being Russian coal.

The news comes as no surprise following the publication of the ‘black cash register’ with names of individuals he had reportedly bribed, businesses and government departments he allegedly ‘deposited’ money and the sums involved. The Cypriot courts have implemented a worldwide freeze on Rostovtsev’s assets, while his case is heard. Documents filed with the court suggest that he used his Cypriot registered businesses to channel more than £13.3m in and out of various Grandwood Systems Ltd.

The Russian Laundromat moved dirty money from Russia into several EU countries, including the UK, Germany and France, passing through banks in Moldova, Estonia and Latvia. In the face of growing tensions between Russia and the West, in light of the Skripal poisoning, this only serves to antagonise issues further.

The BBC’s hit show McMafia, based on the book authored by the network’s former foreign correspondent, Misha Glenny, highlighted the increasing popularity of London as a home for Russia’s dirty money. The size and global influence of London’s financial markets, and its seeming attractiveness to Russians, places the UK at a significant advantage that allows it to exercise substantial leverage over the Kremlin. As such, the British government has imposed tighter know your customer (KYC) requirements and implemented Unexplained Wealth Orders (UWO’s) to force individuals to reveal the source of their wealth.

Several other European countries have followed suit, and these steps are slowly beginning to have an impact, yet much more needs to be done to ensure that the almost state-like policy of channelling dirty money through Europe becomes more of an inconvenient occurrence rather than a matter of national security.

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Category: A Frontpage, EU, Russia

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