Banks caused to violate sanctions to launder millions of dollars for Russian oligarchs and proscribed entities

US banks were caused to process tens of millions of dollars in schemes to evade sanctions and export controls applicable to Russia according to an indictment charging five Russian nationals and two oil traders with global sanctions evasion and money laundering.

The defendants allegedly obtained military technology from US companies, smuggled millions of barrels of oil and laundered tens of millions of dollars for Russian oligarchs, sanctioned entities and the world’s largest energy conglomerate the indictment says in a thinly veiled reference to China’s Sinopec.

To facilitate transactions through the financial system the defendants are accused of using fictitious companies, falsified know-your-customer documentation and bank accounts in high-risk jurisdictions.

Bank involvement

No charges have been brought against any of the banks involved in the alleged criminality. But one unnamed Egyptian bank operating in the UAE is commented on in a reported conversation between two of the defendants: Yury Orekhov, a Russian operating out of Germany and Dubai and Juan Carlos Soto, who brokered illicit oil deals for Petroleos de Venezuela SA (PDVSA), the Venezuelan state-owned oil company, as part of the scheme.

Orekhov allegedly bragged that “there were no worries…this is the shittiest bank in the Emirates…they pay to everything.”

As part of the scheme, which also used bulk cash drops and cryptocurrency transfers, several US-denominated transactions were processed through correspondent accounts at banks in New York, one for more than US$13.5 million, according to the indictment which does not name the banks involved.

Complex shell companies

Deals worth millions of dollars were arranged between PDVSA and one of the principle companies operated by the defendants, Nord-Deutsche Industrieanlagenbau GmbH (NDA GmbH), a privately held industrial equipment and commodity trading company located in Hamburg, Germany.

Funds were routed through a complex group of shell companies and bank accounts to disguise the transactions.

Sanctions admission

In one communication with another defendant, Orekhov openly admitted that he was acting on behalf of a sanctioned Russian oligarch, saying “He [the oligarch] is under sanctions as well.  That’s why we [are] acting from this company [NDA GmbH].  As fronting.”

The scheme also allegedly involved falsified shipping documents and supertankers that deactivated their GPS navigation systems to obscure the Venezuelan origin of their oil.

The indictment published by the US department of justice can be downloaded from here.

Categories: Trade Based Financial crimes News

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