01 Jul 2019
Troika Laundromat: inside Europe’s latest money laundering scandal
Reports of a new money laundering scheme, the Troika Laundromat, highlight the brazen use of illegitimate funds within the world of the ultra-wealthy
Like a vast, corruptive beast, money laundering has loomed large over Europe in recent months. Scandal after scandal has ricocheted through the continent’s financial system, embroiling both commercial and private banks, and drawing numerous CEOs into a monstrous series of allegations that will no doubt take years to fully conquer. From Danske Bank to Swedbank, Deutsche Bank to ING, it appears no institution is safe from the clutches of an overarching network of financial criminals that shifts funds of questionable origin from place to place to avoid the prying eyes of regulatory authorities.
In March 2019, the Organised Crime and Corruption Reporting Project (OCCRP) claimed to have had unearthed yet another scam: the Troika Laundromat. Orchestrated by a web of oligarchs, politicians and those with links to organised crime, the Troika Laundromat is a money laundering scheme of epic proportions. What’s more, its impact has seemingly extended beyond the financial sphere and into high society.
“Across Europe, there is a whole class of defamation lawyers, public relations experts and social groups through which [these people] can purchase entry into high society, and gain valuable access and influence that then shields them from scrutiny,” explained Casey Kelso, Advocacy Director at Transparency International. The scheme has reportedly created a new cohort of exceedingly wealthy and well-connected individuals, whose very existence is proof that there are very few circles one cannot buy one’s way into – provided the price is right.
A charmed life
The Troika Laundromat was unveiled when the OCCRP, together with Lithuanian news website 15min.lt, obtained a treasure trove of more than 1.3 million financial documents relating to the activities of Russian private bank Troika Dialog and the now-defunct Lithuanian lender Ūkio Bankas.
The documents revealed a clandestine banking network that had been used to funnel approximately $8.8bn (€7.9bn) through more than 70 offshore shell organisations. “The system enabled many of the Russian elite to sidestep restrictions that were in place at the time, or to hide their identities or their assets abroad, or to launder money,” Kelso told European CEO.
The two banks reportedly worked in partnership to operate the scheme, with Troika initially ‘spinning’ money between different accounts before sending it on to Ūkio, which set up and organised transfers between accounts for at least 35 of the shell companies implicated in the scheme. According to paperwork drawn up by Ūkio, the majority of transfers were represented as a contract for the sale of physical goods.
The OCCRP, however, has alleged the contracts were entirely falsified, with no goods ever changing hands. Rather, the cash deposited into these shell companies was used to finance the decadent lifestyles of participants in the Troika Laundromat. “Once the illicit wealth had been cleaned, [it could] be used to buy anything from residency visas to expensive cars, yachts, jewellery, art, sports clubs [and] high-end property,” Kelso said.
You can claim CPD minutes for this content, by signing up to our CPD WalletFREE CPD Wallet