Russian Laundromat

The Russian Laundromat was a scheme to move $20-80 billion out of Russia from 2010 to 2014 through a network of global banks, many of them in Moldova and Latvia. The Guardian reported that around 500 people were suspected of being involved, many of whom were wealthy Russians. The money laundering scheme was uncovered by Global Laundromat, an investigation.

The Herald in Scotland wrote that the scheme is "thought to be the world's biggest and most elaborate money-laundering scheme."

History of the Scheme

THe Investigation and t he Media Reveal

The scheme allowed Russia's elite to funnel out at least $20 billion from Russia.

The scheme's alleged architect of the scheme is Veaceslav Platon, a Moldovan businessman and former MP. Igor Putin (Vladimir Putin's cousin) has also been named in connection with this scheme.

The term "Russian Laundromat" was coined by the Organized Crime and Corruption Reporting Project.

Internal bank documents detailing around 70,000 transactions between 2011 and 2014 were obtained by the Russian newspaper Novaya Gazeta and the Organized Crime and Corruption Reporting Project (OOCRP), which then shared data from the documents with various media companies.

=Dat by Region

British territories

Afterwards, it was reported that $740 million had been processed by British banks as part of the scheme. On 20 March 2017 the British paper The Guardian reported that hundreds of banks had helped launder KGB-related funds out of Russia, as uncovered by the investigation named Global Laundromat. Among banks facing scrutiny under the investigation included HSBC, the Royal Bank of Scotland, NatWest, Lloyds, Barclays and Coutts. HSBC was listed among the 17 banks in the UK that were “facing questions over what they knew about the international scheme and why they did not turn away suspicious money transfers,” as HSBC “processed $545.3m in Laundromat cash, mostly routed through its Hong Kong branch.” The Royal Bank of Scotland “handled $113.1 million” in Laundromat cash. Coutts, owned by RBS, had accepted “accepted $32.8m worth of payments via its office in Zurich, Switzerland.” NatWest, also owned by RBS, was named for allowing through $1.1 million in related funds. The Guardian reported that around 500 people were suspected of being involved, many of whom were wealthy Russians.

On March 27, 2017, The Herald in Scotland reported that Scottish shell companies were used as part of the scheme, estimated at $5 billion  The newspaper said that one means to circumvent capital export controls was for a Western company to make a fake loan to a Russian company.  The Russian company would intentionally default on the loan, and a corrupt court in Moldova would order the company to pay the "debt".

The Guardian wrote that most of teh comanies involved in laundering the money had UK registration and over half of the money went to shell companies in Scotland, Birmingham, and London. Of those core companies, the data read that Seabon Lt. handled $9 billion through a network of companies.

United States

Citibank was listed among the American banks who were named as having handled the laundered funds, with banks in the US processing around $63.7 million between 2010 and 2014. Citibank was listed as having processed $37 million of that amount, with others including the Bank of America, which processed $14 million. as the bank “handled $113.1 million” in Laundromat cash. Others included JP Morgan and Wells Fargo in the United States.

Global banks and other

Global banks that touched the laundered money included Deutsche Bank, Standard Chartered, and Barclays.

Bank Responses

In response to the reports, HSBC stated that it was against financial crime, and that the case “highlights the need for greater information sharing between the public and private sectors.” Citi and Standard Standard Chartered responded with statements against the activities, while Wells Fargo, Deutsche Bank, Bank of America, and JP Morgan initially declined to comment to the press.