Some 19 British firms are at the center of an investigation into in a mammoth global money-laundering operation. The scheme was allegedly contrived to make $20bn (£12.5bn) worth of ill-gotten gains appear legitimate.
The illicit funds are thought to have originated from criminal gangs and corrupt officials across the globe, attempting to make their dirty money appear ‘clean’ so it can be spent free of suspicion.
An investigation carried out by The Independent and UK NGO the Organised Crime and Corruption Reporting Project (OCCRP) uncovered a complex international web of companies, which are implicated in the scheme. As part of the probe, a minimum of 19 UK firms are currently under investigation, it emerged on Thursday.
The criminal operation highlights how Because directors of British firms are afforded a high degree of financial secrecy under UK law, the identities of the scam’s primary architects are extremely difficult to determine.
The cross-border money laundering scheme was in operation for four years before it was uncovered in May by criminal investigators in Moldova. In tandem with Britain, the former Soviet republic was one of the scam’s core focal points.
Vasile Sarco, an officer at the center of the Moldovan investigation, told The Independent the tainted money was originally channeled from Russia, but that UK firms were vital to its re-routing and ‘cleaning’. Sarco sought assistance from UK police to help decipher the operation’s British dimension.
Vital to the process of money laundering, is the creation of an impression the funds have been earned legitimately. As a result, criminals often work to cultivate documentation that indicates their tainted funds stem from honourable origins.
In past cases, criminals have often taken over legitimate firms for the purpose of laundering dirty money. But when illicit funds generated from criminal activity amount to billions, such straightforward schemes become impractical, and more complex laundering operations are required.
In the scam, uncovered by the Independent and OCCRP, front companies were created in Britain which conducted fake and fraudulent business deals amongst one another. These ‘shell companies’ subsequently sued one another in Moldovan courts, demanding they be repaid loans amounting to hundreds of millions of pounds.
As part of the scam, a Moldovan judge would issue a ruling in favor of the claimant firm, which subsequently received a large payment from the opposing company. Related judgments resulted in the creation of court documents that legitimised such transactions.
But rather than flow from one UK firm to another, the funds were channeled from Russia – an international money laundering hot spot, which attracts gangs and corrupt officials from across the globe looking to ‘clean’ ill-gotten gains. Generally such dirty money stems from political corruption, white collar crime, human trafficking, drug dealing and prostitution.
Once the illicit funds arrived in the accounts of UK front companies in Moldova, the money was funneled into a bank in Latvia. Latvia’s banking system is integrated with the EU, and considerably well regulated. As a result, this final phase of the operation bolstered the tainted funds’ apparent legitimacy.
Because of its lax financial regulation, Britain has become a focal point for money laundering schemes. Front companies can be set up on British soil with little oversight.
Multiple money laundering operations, involving swathes of UK companies, are thought to be used by criminal gangs and corrupt officials from places as far-flung as Syria, Japan, and South America.
The launderers behind this latest scam were able to shift the jurisdiction of their lawsuits to Moldova by employing Moldovan citizens as guarantors in their fraudulent business deals. The false debts central to the operation were also guaranteed by Russian firms.
The UK firms under investigation were registered at regular office buildings in London, Belfast, Edinburgh, Glasgow and Birmingham, according to the Independent.
However, their true ownership is obscured by a web of shell companies and nominee directors in offshore tax havens, such as the Seychelles, the Bahamas and the Marshall Islands.
Nominee directors are third party individuals officially registered as administrators of offshore companies. This allows true benefactors or managers to remain entirely anonymous. They are often central to aggressive, yet legal, tax avoidance schemes.
they are shelf companies and the trails to the owners will be hidden in a myriad of webs..but the point here is this which i highlighted:
“Because of its lax financial regulation, Britain has become a focal point for money laundering schemes. Front companies can be set up on British soil with little oversight.”
“Britain’s lax regulatory architecture has made the UK a particularly alluring destination for global organized crime syndicates looking to launder ill-gotten gains.”
“directors of British firms are afforded a high degree of financial secrecy under UK law”