INVESTIGATIONS

Europol highlights Russian money as biggest laundering threat

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THE HAGUE (Reuters) — Europe’s Baltic states are at risk from fur­ther Russian mon­ey laun­der­ing, a top European police offi­cial said after sev­er­al big banks were hit by scan­dals cen­tered on the region.

Undated hand­out archive pho­to shows Europol’s flag out­side the head­quar­ters in The Hague, Netherlands, released June 13, 2019. Europol/Handout via REUTERS

Pedro Felicio, who is respon­si­ble for fight­ing mon­ey laun­der­ing at European police agency Europol, told Reuters that “huge inflows of crim­i­nal mon­ey” are main­ly com­ing into Europe from Russia and China.

Russian mon­ey is alleged to be at the heart of mul­ti-bil­lion dol­lar laun­der­ing rack­ets that engulfed Danske Bank, Denmark’s largest lender and Sweden’s Swedbank.

There are bil­lions of crim­i­nal mon­ey that are being tak­en out of the Russian econ­o­my,” Felicio said as he warned of the dan­gers of a repeat of scan­dals involv­ing taint­ed Russian mon­ey in the Baltics, a bloc of three coun­tries, Latvia, Lithuania and Estonia, which used to be ruled by Soviet Russia.

The high bur­den of proof in Europe cou­pled with “zero coop­er­a­tion from Russia in pro­vid­ing … evi­dence” were exac­er­bat­ing the prob­lem, Felicio added.

Russia’s cen­tral bank, which has a hard line on mon­ey laun­der­ing in the past few years and shut dozens of banks it said were involved, did not respond to a request for com­ment.

A recent report by the Financial Action Task Force, a glob­al stan­dard-set­ter in fight­ing mon­ey laun­der­ing, said a “large amount of illic­it pro­ceeds flows out of China annu­al­ly”.

China’s cen­tral bank, which has also been tak­ing action in recent years, bol­ster­ing super­vi­sion to com­bat mon­ey laun­der­ing as it opens up its finan­cial sec­tor, did not imme­di­ate­ly respond to a request for com­ment.

The recent scan­dals have helped prompt Europol, which coor­di­nates cross-bor­der inves­ti­ga­tions and was involved in a 2016 oper­a­tion that broke up an inter­na­tion­al drugs and mon­ey laun­der­ing car­tel, to invest more in fight­ing finan­cial crime.

But while things have got bet­ter, there are still gaps par­tic­u­lar­ly in the Baltic states, which are now part of the European Union, Felicio said.

Some of the banks in the Baltic area are very vul­ner­a­ble to mon­ey laun­der­ing activ­i­ties espe­cial­ly com­ing in from Russia. It has improved but it is far from being solved.”

It is just a mat­ter of time until we see anoth­er scan­dal com­ing in from the area and it will prob­a­bly be very sim­i­lar to the scan­dals we have seen in the past,” he added.

BALTIC FRONT LINE

Bill Browder, for­mer­ly an investor in Russia, has also high­light­ed move­ments of Russian mon­ey linked to a fraud uncov­ered by his lawyer Sergei Magnitsky, who was lat­er arrest­ed and died in a Moscow prison after com­plain­ing of mis­treat­ment.

Danske Bank’s shares plum­met­ed after say­ing that 200 bil­lion euros ($226 bil­lion) of sus­pi­cious mon­ey, includ­ing from Russia and for­mer Soviet states, flowed through its Estonian branch.

The Danish bank has since been eject­ed from Estonia and with­drawn from Russia and the oth­er Baltic states.

Swedbank is also being inves­ti­gat­ed after Swedish broad­cast­er SVT said that it had processed bil­lions in pay­ments from high-risk cus­tomers, most­ly Russian, through Estonia.

While the Baltic nations are in the “front line” for receiv­ing dirty mon­ey, it ulti­mate­ly gets invest­ed else­where.

Investments in real estate would be one of the main final solu­tions,” Felicio said, sin­gling out London and Rome.Undated hand­out archive pho­to shows Europol’s head­quar­ters in The Hague, Netherlands, released June 13, 2019. Europol/Handout via REUTERS

The scan­dals have prompt­ed action in the Baltics, where Latvia’s new prime min­is­ter, Krisjanis Karins, is accel­er­at­ing an over­haul of the bank­ing sec­tor and its super­vi­sor.

One of Latvia’s largest banks, ABLV, which had numer­ous Russian clients, closed last year after U.S. author­i­ties accused it of mon­ey laun­der­ing.

However, reforms in Estonia have been on hold while a new gov­ern­ment was being formed. Lithuania has not played a sig­nif­i­cant role in the scan­dals.

Additional report­ing by Andrey Ostroukh in Moscow; Editing by Alexander Smith

Author: John O’Donnell

Original arti­cle : REUTERS

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