Britain’s high street banks processed nearly $740m from a vast money-laundering operation run by Russian criminals with links to the Russian government and the KGB, the Guardian has revealed.
HSBC, the Royal Bank of Scotland, Lloyds, Barclays and Coutts are among 17 banks based in the UK, or with branches here, that are facing questions over what they knew about the international scheme and why they did not turn away suspicious money transfers.
Documents seen by the Guardian show that at least $20bn appears to have been moved out of Russia during a four-year period between 2010 and 2014. The true figure could be $80bn, detectives believe.
One senior figure involved in the inquiry said the money from Russia was “obviously either stolen or with criminal origin”.
Investigators are still trying to identify some of the wealthy and politically influential Russians behind the operation, known as the Global Laundromat.
They estimate a group of about 500 people were involved. These include oligarchs, Moscow bankers, and figures working for or connected to the FSB, the successor spy agency to the KGB.
Igor Putin, the cousin of Russia’s president, Vladimir, sat on the board of a Moscow bank which held accounts involved in the fraud.
British-registered companies played a prominent role in this extensive money-laundering network. The real owners of most of the firms used in the scheme remain secret, however, because of the anonymity provided by controversial offshore laws.
The Global Laundromat banking records were obtained by the Organized Crime and Corruption Reporting Project (OCCRP) and Novaya Gazeta from sources who wish to remain anonymous. OCCRP shared the data with the Guardian and media partners in 32 countries.
The documents include details of about 70,000 banking transactions, including 1,920 that went through UK banks and 373 via US banks.
The data is understood to be part of the evidence gathered in a three-year money-laundering investigation led by police in Latvia and Moldova.
Detectives have unravelled a conspiracy that involved billions of dollars being sent from suspected criminals in Russia via accounts in Latvia and Moldova held at banks notorious for their exposure to money-laundering scams.
The trail led investigators to 96 countries and to a network of anonymously owned firms, most of them registered at Companies House in London . Most of the 21 core companies under scrutiny have been dissolved.
The scale of the operation has staggered law enforcement officials. The records show British banks and foreign banks with offices in London processed $738.1m in transactions apparently involving criminal money from Moscow.
Banks say they have sophisticated units dedicated to rooting out financial crime. But they say the volume of payments – billions a year – makes such work difficult.
“If you are on the back end you are kind of playing whack-a-mole, trying to pick this up,” one source said.
HSBC processed $545.3m in Laundromat cash, mostly routed through its Hong Kong branch. The troubled Royal Bank of Scotland – which is 71% owned by the UK government – handled $113.1m. Coutts – used by the Queen and owned by RBS – accepted $32.8m worth of payments via its office in Zurich, Switzerland. Coutts is winding down its Swiss operation and was last month fined by regulators for money laundering in a different case .
Other high street banks that appear in the Laundromat data include Barclays, NatWest and Lloyds. NatWest – also owned by RBS – allowed through $1.1m.
In the US, big banks processed more than $63.7m. They include Citibank ($37m) and Bank of America ($14m).
The Guardian contacted all these banks. None of them challenged the authenticity of the data, but they all insisted they had strict anti-money-laundering policies.
The response from RBS was typical. The bank said: “We are committed to combatting financial crime and money laundering in line with our regulations and have controls and safeguards in place to identify, assess, monitor and mitigate these risks.” The statement covered Coutts and NatWest.
HSBC said: “This case highlights the need for greater information sharing between the public and private sectors, each of whom holds important information the other does not.”
However, the Guardian’s disclosures raise awkward questions for UK banks. The Financial Conduct Authority demands that banks “consider the money-laundering risk presented by customers, taking into account country risk; the customer’s reputation and the source of their wealth and funds”.
In many of the cases looked at by the Guardian, money vanished into offshore shell firms, whose “beneficial owners” remain anonymous, and whose source of wealth is a mystery. The OCCRP discovered that the official owners of many of the firms were fake or “nominee” directors based in Ukraine.