Dirty secrets of the LAUNDROMAT
That’s the name of a scam used by Russian gangsters, aided by greedy British banks, to launder billions of illicit roubles through London
school Millfield in Somerset, via a Latvian bank. The school, which has fees of up to £35,000 a year, was made aware of allegations against Valemont three years ago and reported the transaction to the National Crime Agency.
Much of the money spun through the Laundromat has been spent on luxury goods here, as the OCCRP investigation confirms.
SEPARATELY,
two Bentleys alleged to have been purchased through Valemont Properties, ended up with people associated with Moldovan businessman Veaceslav Platon, including his now ex-wife elina Cobaleva.
Platon, 44, a former member of Parliament in Moldova, is alleged to be one of the architects of the Laundromat scheme. He was extradited from Ukraine last summer back to Moldova accused of joining in a plot to defraud banks there of $ 1 billion. He denies involvement in Laundromat.
Several high-end London shops are said to have been drawn unwittingly into the Laundromat scandal. Russian buyers have acquired furs and jewellery while issuing fake invoices to make their acquisitions look like humdrum business expenses, the OCCRP found.
In 2013, at Bond Street jeweller Graff Diamonds, a Russian customer bought two items for £140,000 and £120,000, which were fraudulently invoiced as ‘building equipment’ with Barclays. And a furrier, John Shackman Ltd, was said to have been paid £400,000 by a Russian in 2013, but this was recorded in documents sent to Lloyds as being for ‘notebooks’.
It is, perhaps, too much to expect shops to interrogate customers about where their money has come from — but the same does not hold for banks who are supposed to be alert to money-laundering. The fact criminals are not deterred from using British banks is indicative of how lax their monitoring is.
‘London is the major sink for Russian dirty money,’ says financial crime expert Nick Kochan, author of The Washing Machine: How Money Laundering And Terrorist Financing Soils Us. ‘British banks are supposed to turn down doubtful deposits, but they’re seemingly so consumed with greed, they lap them up,’ he says.
Around £133 billion of ‘ hidden capital’ that cannot be explained has come into the country since the mid-Seventies, according to research compiled by analysts at Deutsche Bank. Since 2010, it has poured in at a rate of £1 billion a month. ‘We don’t know exactly how it is coming in,’ says Roman Borisovich. ‘But it is very large amounts, perhaps enough to endanger the financial stability of the country.’
Ironically, earlier this year Deutsche Bank was fined more than £500 million by U.S. and British regulators for failing to prevent $10 billion (£8 billion) of tainted roubles flowing through its hands.
But all the major High Street players stand accused of being involved in the Laundromat affair, and will face the consequences if the allegations are proven. Some have already been fined for laundering offences.
In 2012, HSBC was fined £1.2 billion for handling money for Mexican criminals, and even the Queen’s bank Coutts, now owned by RBS, has fallen foul of the regulators. It was fined nearly £9 million five years ago for anti-money laundering failures.
The City rightly prides itself on being open for business with individuals and firms from anywhere in the world. But bring together inept bankers, ineffective regulation and Russians with wallets full of dirty money and it’s not surprising that London is a prime port of call for laundry men. Much of the blame dates back to the Blair administration, which presided over the light-touch regulation that led to the financial crisis. Successive Coalition and Tory governments have done too little to clamp down on all that. And as ever it is ordinary bank customers, who have endured contemptuous treatment from High Street lenders for years, who will foot the bill if there is another crash. In the short term if the banks are hit with yet more enormous fines these will be passed on in the form of higher charges. (HSBC, Lloyds, Barclays, RBS and Coutts insist they are committed to combating financial crime and have safeguards to identify the risks.)
Roman Borisovich despairs of the greed of British banks and some businesses which do not seem to mind the opprobrium associated with these vast sums.
‘The corrupt can come here and become a respectable english businessman overnight,’ he says. ‘But I worked there and I have seen that for such people, there’s no such thing as clean money. There are only various degrees of dirty.’