The Organized Crime and Corruption Reporting Project (OCCRP) in 2017 brought to the surface the Russian Laundromat which moved billions from Russia to Eastern Europe and then to banks around the world.
Organizers created a core of 21 companies in the UK, Cyprus and New Zealand. These companies were run by owners who could not be traced.
How the scheme worked (see infographic):
🔎 Two shell companies are formed overseas and run by Russian money launderers.
🔎 “Company A” lends money to “Company B” by signing a contract. No actual money ever changed hands.
🔎 The debt was guaranteed by a Russian company.
🔎 The agreement always involved a Moldovan citizen.
🔎 “Company B” defaulted on the fictitious loan.
🔎 “Company A” called the Russian company (who acted as a guarantor) to repay the loan.
🔎 Since the debt involved a Moldovan citizen, the matter should be resolved in a Moldovan court.
🔎 The Moldovan judges were corrupted and part of the scheme. An official court order was issued instructing the Russian company to honour the guarantee and repay the loan of “Company A”.
🔎 The Moldovan court appointed a judicial executor – who was also part of the scheme – to arrange the transfer.
🔎 The executor opened a court-controlled account in Moldindconbank where the Russian company deposited the money to “settle” the fake loan.
🔎 The money was now deposited in a bank, laundered and certified by a Moldovan court.
🔎 Money was now ready to buy luxury goods or be transferred to other banks all over the world.
It is interesting though that although this dirty money passed through multiple banks around the world, not a single red flag was raised.
Once funds are illegally obtained, they do not become legal either because another bank has accepted them or laundered them, or because the court issued an order. Once the money is illegal, it is always illegal.
Banks accepting these funds were apparently not performing their due diligence and did not check the source of funds they accepted.
