Council of Europe Urges Swift Action on Money Laundering, Citing Baltics and UK
15 Apr 2019

European lawmakers are urging financial institutions and governments to address dozens of legal and supervisory shortcomings they say contributed to the proliferation of massive money laundering schemes in recent years.

In a resolution adopted Thursday, the Council of Europe’s Parliamentary Assembly said that recent money laundering schemes linked to Russia, the Baltic states and the United Kingdom were of such scale that they posed a “serious threat to democratic stability, human rights and the rule of law.”

The intergovernmental group, which advises on international law but is not part of the European Union, singled out three alleged money laundering operations—the so-called “Global Laundromat,” “Azerbaijani Laundromat,” and “Troika Laundromat”—believed to have been used to transfer at least $28.5 billion in suspicious funds through a massive network of shell companies and banks.

“The three laundromats have two important features in common: the use of banks in the Baltic states and the use of shell companies based in the UK and its overseas territories,” said Assembly Member Mart van de Ven in speech presenting the resolution Thursday.

Geographic proximity and historic relations to Russia, as well as inadequate implementation and enforcement of anti-money laundering (AML) recommendations, have made financial institutions in the Baltic states particularly vulnerable to Russian money laundering, according to van de Ven, who has served as a Dutch senator since 2015.

At times, corporate formation laws in the United Kingdom and its overseas territories have facilitated the schemes, the resolution concluded.

“Shell companies with nontransparent ownership in places like the British Virgin Islands concealed the origin of laundered money,” said van de Ven. “Limited partnerships in the UK gave a veneer of respectability to the ownership of assets, allowing bank accounts to be opened without arousing suspicions.”

The resolution calls on authorities in Russia, Moldova, Azerbaijan, the United Kingdom, Denmark, Sweden and the Baltic States to step up their efforts to curb financial crime by closing legal loopholes, bolstering their enforcement efforts and pursuing criminal prosecutions.

The intergovernmental group cited fiscal amnesty and golden visa programs in Moldova and purportedly lax beneficial ownership rules in the United Kingdom and its overseas territories as contributing to international money laundering.

Photo: Council of Europe

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