Monday, 1 May 2017

Bank documents released by the Reporters for the Organized Crime and Corruption Reporting Project (OCCRP) showed a complex money laundering scheme which involved enormous sums moved from Russia, through Moldovan and Latvian banks, to 732 banks across 96 countries. The laundered funds were then used to buy luxurious goods across the world.

How did it work?

For example, a UK company called Seabon Limited filed financial statements in 2013 showing income of £1. However according to an analysis of the OCCRP records, Seabon was a shell company, involved in transactions worth USD $9 billon.

The Banks

There will no doubt be questions asked as to the adequacy of the Money Laundering provisions at the affected banks. Trasta Komercbanka has already been shut down for not following money laundering guidelines.

A number of British banks were approached for comment1, and most had the typical response of

We are committed to combatting financial crime and money laundering in line with our regulations and have controls and safeguards in place to identify, assess, monitor and mitigate these risks’

Not a particularly enlightening comment. However, HSBC (which apparently had USD $545.3m laundered through it) had this more intriguing response:

…This case highlights the need for greater information sharing between the public and private sectors, each of whom holds important information the other does not… Since HSBC was not at the center of this alleged scheme, the bank was in the position of monitoring individual transactions in isolation from one another, without the benefit of information about their interconnectedness or the existence of a larger scheme.

An interesting response – it’s not clear if HSBC was suggesting that the government was better placed to spot this than the bank itself, by collating information from each of the British banks. It’s worth noting that HSBC processed $545 million of the $730 million allegedly processed by London banks – surely this should have provided enough information for it to notice some ‘interconnectedness’.


1. By the Guardian newspaper