Sanctions imposed by western countries, Australia and Japan on Russian banks, oligarchs and other wealthy individuals in response to Moscow ordering troops into separatist regions of eastern Ukraine may prompt sanctioned individuals and entities to contemplate using trade-based money laundering (TBML) operations to channel funds.
A 2015 report outlines in detail that platforms of international shell companies operated through Baltic banks are already in place and play a key role in TBML for the post-Soviet countries. Meanwhile Russian oligarchs already stand accused of turning to TBML to avoid freshly imposed sanctions.
Established TBML network
“There is little doubt that TBML has played a key role in illicit flows of funds from and to the countries in the former Soviet Union” concludes investigative journalist and researcher covering Eastern Europe, Graham Stack.
His report, Baltic shells: on the mechanics of trade-based money-laundering in the former Soviet space, is underpinned by other research evidence that revealed discrepancies between US and Russian trade data due to misinvoicing resulted in as much as US$9 billion illicitly flowing out of Russia in just five years.
Platforms of shell companies
Stack’s case study – the first study of a TBML platform operating in the post-Soviet space –draws extensively on the results of journalist investigations and court cases to describe one example of a money-laundering platform.
The report found that platforms of international shell companies operated through Baltic banks are created for systematic laundering of revenues from tax evasion, tax fraud, corruption and criminality across the post-Soviet space, and also globally.
Oligarchs turn to TBML
Yesterday, the UK announced sanctions against Russian billionaires Boris Rotenberg and Igor Rotenberg. They have already been accused of using TBML to evade sanctions when they were freshly imposed on them by Washington eight years ago.
According to a US Senate investigation they used artworks and shell companies in a multi-million dollar TBML operation involving high-value art to evade sanctions imposed on them by the US in March 2014 in response to Russia’s invasion of Ukraine and annexation of Crimea (Trade-based Financial Crime,16 September 2020).
Graham Stack’s report, Baltic shells: on the mechanics of trade-based money-laundering in the former Soviet space, can be requested from here.
The US Senate’s Permanent Subcommittee on Investigations report, The Art Industry and US Policies that Undermine Sanctions, can be found here.
Categories: Trade Based Financial crimes News