High-street banks 'exploited by Russian Federation to launder $740m'

by Frankie Norman March 22, 2017, 0:18
High-street banks 'exploited by Russian Federation to launder $740m'

Europe's biggest bank has allegedly processed more than $500 million in Russian "dirty money" over four years.

According to documents seen by The Guardian that were passed on by the Organised Crime and Corruption Reporting Project (OCCRP), a USA government-backed programme, the lenders handled transactions for individuals and companies linked with a scheme known as the Global Laundromat.

While companies that shield owners' identities can be used legally, they can also be tools for laundering money, hiding assets or evading taxes. The companies conducted fake business deals between themselves then sued each other in courts in Moldova, demanding the repayment of hundreds of millions of pounds of loans. Now we know the date for when Article 50 is to be triggered, we need clarity from the government that this scandal is not a glimpse into the future of what a Tory Banker's Brexit will resemble.

It detailed 70,000 banking transactions including 1,920 going through United Kingdom banks.

According to a report in The Guardian, it processed $545.3m (£437.3m) out of Russian Federation between 2010 and 2014, mostly through its Hong Kong branch.

HSBC handled $545 million of Laundromat cash, mostly routed through its Hong Kong branch, the Guardian said, without elaborating on the dealings.

HSBC, the Royal Bank of Scotland, Barclays, Lloyds and Coutts are among those involved. Standard Chartered, UBS Group, Citigroup, Bank of America, Barclays and ING Groep handled amounts ranging from $2 million to $37 million, it said. OCCRP shared the data with the Guardian and media partners in 32 countries.

A spokesperson for HSBC issued a similar response: "The bank has systems and processes in place to identify suspicious activity and report it to the appropriate government authorities".

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 loanee company would then "default" on that debt, at which point the borrowings would be certified by a judge and the Russian guarantor would step in to pay up.

Transparency International executive director Robert Barrington, who was first alerted to the United Kingdom end of the so-called Laundromat when it was exposed by the Evening Standard and Independent newspapers in 2014, said: "There have been some small improvements in controlling money laundering, but fundamentally nothing has changed since".

Coutts has previously been fined in the United Kingdom for violating money laundering rules.

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