Keeping the money clean
One of the problems criminals have is ‘cleaning’ the money they get for their nefarious activities. Therefore, they have to come up with increasingly inventive ways to launder it and there is currently a case involving Russia that suggests UK banks were involved in the clean-up activity.
Dubbed the “Laundromat” case, it involves allegations that British banks processed hundreds of millions of pounds for a Russian money-laundering scheme and that almost 2,000 transactions have already been found to have been processed in the UK. According to some reports, at least $20bn was moved out of Russia between 2010 and 2014, although some believe the figure could be as high as $80bn. The criminals did this by convincing a court in Moldova to demand repayment from Russian firms to satisfy fake loans. The money was then allegedly paid by court order into a Moldovan bank account, thereby making it look clean.
The ‘fresh’ cash was then spent on legal things, such as paying for school fees and buying property and diamonds, without the recipients having any idea it had once been dirty. However, it is less clear whether the banks were guilty of not flagging up transactions that involved cash that was “obviously either stolen or with criminal origin”.
Following an exposé in the Guardian newspaper, the Financial Conduct Authority (FCA) and the National Crime Agency (NCA) have announced they will investigate whether this information would allow the progression of an investigation.
As with all financial investigations, either large or small, the investigators will trace the money back to its source, however labyrinthine the route. If it is found to have originated in the dirty pile, then a criminal case can be mounted and the forensic accountants will play an important part in the investigation.
Author: Roger Isaacs, 27 March 2017