The European Commission (EC), in order to combat organized crime, intends to propose amendments to legislation that will facilitate the confiscation of property acquired by criminal means. The new measures are also planned to be extended to Russian and Belarusian oligarchs and politicians associated with Russia’s war in Ukrainesaid European Commission Vice President Margaritis Schinas in an interview with the Welt am Sonntag weekly published on Saturday, May 14.
“The European Commission will shortly put forward a proposal to improve the current EU legal framework relating to confiscation of propertyto strengthen the powers of national law enforcement agencies to detect, freeze, confiscate and manage criminal property,” Schinas said, noting that existing laws are not enough to deprive organized crime of high profits.
Measures against Russian oligarchs and politicians
According to Margaritis Schinas, the volume of criminal proceeds in the EU is at least 139 billion euros, but only one percent of this amount can be confiscated. The amendments developed by the EC will allow to confiscate criminal means and manage them without a guilty verdict of the court, said the deputy chairman of the EC. He also said that the new rules will help the European Commission more effectively enforce sanctions against oligarchs and politicians close to Putin.
“We see a very concrete example of how important the freezing and confiscation of property is in connection with the EU sanctions against Russians and Belarusians, which contributed to the war in Ukraine,” Schinas said.
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How the money laundering scheme from Russia worked
“Global Laundry”
According to documents obtained by the international organization of investigative journalists OCCRP, at least $20 billion was withdrawn from Russia in three years, but the real amount could be $80 billion. Journalists believe that about 500 people were involved in the corruption scheme, codenamed “Global Laundry”, including oligarchs, bankers and people with connections to the FSB.
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How the money laundering scheme from Russia worked
Shell companies
Money laundering usually proceeded according to the following scheme: the attackers registered abroad, for example, in the UK, two front companies, the real owners of which were hiding behind a chain of offshore companies. Both companies existed only on paper. The authors of the investigation suggest that the same people actually stood behind both enterprises.
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How the money laundering scheme from Russia worked
Fictitious transactions
Then both firms signed a loan agreement, according to which firm “A” borrows a large amount from firm “B”. In reality, the transaction was fictitious, and firm “A” did not receive any money.
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How the money laundering scheme from Russia worked
Russian companies as a guarantor
The contract provided that commercial structures from Russia, which in almost all cases were headed by a citizen of Moldova, would act as a guarantor of the loan repayment. Firm “A” then declared itself insolvent, and obligations to repay the debt automatically passed to Russian companies.
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How the money laundering scheme from Russia worked
Corrupt Judges
Since the head of the Russian firms was a citizen of Moldova, the claims had to be considered in the Moldovan court. Corrupt judges confirmed the existence of debts and issued an order to recover the required amount from the guarantors. According to the investigation, more than 20 Moldovan judges were involved in the scheme in total. Some of them are now under investigation, while the rest have retired.
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How the money laundering scheme from Russia worked
At the center of the scheme is the Moldovan Moldindconbank…
After the court decision was made, the bailiffs, who were also involved in the scheme, opened accounts in the Moldovan bank Moldindconbank. Russian companies were supposed to transfer money to these accounts, thus closing the fictitious debt.
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How the money laundering scheme from Russia worked
..and the Latvian bank Trasta Komercbanka
In the end, the money was transferred to the account of the “creditor company”, which was always opened by the Latvian bank Trasta Komercbanka. Thus, the funds legalized by the Moldovan court ended up on the territory of the EU: fraudsters could now dispose of the money at their discretion and transfer them to accounts in other countries. Trasta Komercbanka’s license has recently been revoked.
Author: Alexandra Elkina
