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How Britain let Russia hide its dirty money

Rogue Valley

Rogue Valley

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How Britain let Russia hide its dirty money

Very expansive article by financial journalist Oliver Bullough explaining how Britain came to be Moscow's dirty banker and money launderer.

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Journalist Oliver Bullough speaks to Parliament
 
I thought these were some noteworthy excerpts from the article:

In his speech, Cameron boasted that Russian companies accounted for a quarter of share offerings on the London Stock Exchange. “Governments need to remember that businesses don’t have to invest in our country – they choose to. And we need to help them make that choice,” Cameron said. “It means minimising the burden of regulation so that business and entrepreneurship can flourish.”

Their salvation came from an unlikely quarter: the Soviet Union, which didn’t want to keep its dollar reserves in US banks. Instead, it kept them in London, where British banks began lending them to each other in an entirely unregulated market – they became known as “Eurodollars” – thus giving birth to offshore finance, and providing the City with the startup capital it needed to get back in business. By the end of the communist period, Soviet institutions routinely sent their money through Britain’s offshore territories, and the City was booming. The Central Bank in Moscow even had a shell company in Jersey, which it used to hide money from the government that it was supposedly a part of.

This is one of the problems with trying to ascertain the volume of dirty Russian money in London: how far back do we go? Do the fees Midland Bank received for banking Soviet money in the 1950s still count as Russian cash, and if so, are they dirty? Does the commission the estate agent earned by selling those flats in Kensington in the early 1990s count as dirty money? And what about the £800m that Russians paid for government bonds in return for golden visas? Or the $41,000 of Magnitsky money that was spent on a wedding dress in London? How many times does money have to circulate in the economy before we decide it’s not dirty any more?

This money is so deeply embedded in the UK that extracting it, or even identifying it, would be an unrivalled feat of investigation. “It would be impossible,” says Prem Sikka, professor of accounting at Sheffield University. “They have the big accountancy firms advising them where best to stash the money, to conceal it, to disguise it, all kind of things. The brains of this pinstriped mafia are available to everyone. They’re for hire.”

This made me think of another article that is strongly related...

British banks handled vast sums of laundered Russian money

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.

Igor Putin, the cousin of Russia’s president, Vladimir, sat on the board of a Moscow bank which held accounts involved in the fraud. Igor Putin declined to comment. In a letter written in 2014, he said: “My personal experience, gained in recent years, proves the truth of the thesis that the Russian banking system should be radically rehabilitated and cleaned of troubled banks headed by people with doubtful reputations.”

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. 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 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.

Looks like conspiracy theory and conspiracy reality are beginning to converge. What crazy times we live in.
 
I ran out of room in the previous post but that bit about the Queen reminded me of this brilliant rant by Jonathan Pie about how useless and creepy the British Monarchy is:

 
We have a new Russian-sponsored Prime Minister in the shape of Bozo Johnson. Pie isn't holding back!

DEFINITELY NSFW!

 
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