for decades, Russian oligarch It has funneled billions of dollars in illicit money abroad, putting it into shell companies to make it extremely difficult to track down.
Now countries around the world They take action To find this money.
How much Russian “dirty money” is there around the world?
According to the American think tank the Atlantic Council, Russians have about $1 trillion of what they classify as “dirty money” stashed abroad.
In its 2020 report, the group estimated that a quarter of this amount is controlled by Russian President Vladimir Putin and his close associates – wealthy Russians known as “the oligarchy”.
“This money can be exploited and used by the Kremlin for espionage, terrorism, industrial espionage, bribery, political manipulation, disinformation and many other nefarious purposes,” the report says.
Where does this money come from?
Another US think-tank, the National Endowment for Democracy, claims that Putin encourages his close allies to “steal the state budget, extort money from private companies, and even organize a complete takeover of profitable companies.”
According to the foundation, this is how they built a personal fortune in the tens of billions of dollars.
Russian opposition leaders Boris Nemtsov and Vladimir Milov claimed that between 2004 and 2007, $60 billion of money from the oil giant Gazprom was transferred to Putin’s friends.
You pandora leavesFinancial documents released in 2021 by the International Consortium of Investigative Journalists that reveal the secretive and business legacy of world leaders, politicians and billionaires note that people close to Putin have become very wealthy – and may be helping the Russian president transfer his own fortune.
Where is the money kept?
Historically, much of this money went to Cyprus – after it was attracted by favorable taxes. For some, the island became known as “Moscow in the Mediterranean”.
According to the Atlantic Council, $36 billion in Russian money was sent into the country in 2013 alone, much of it coming through shell companies used to hide the real owners.
In 2013, the International Monetary Fund persuaded Cyprus to close tens of thousands of bank accounts held by shell companies.
Some British Overseas Territories, such as the British Virgin Islands and the Cayman Islands, are also among the preferred destinations for Russians to get this money.
According to a report by the human rights organization Global Witness, in 2018 the Russian oligarchs had about 45.5 billion US dollars in these tax havens.
A portion of this money arrives in financial capitals such as New York and London, where it can be invested and generate returns.
Anti-corruption watchdog Transparency International says at least $2 billion of UK property is in the hands of Russians accused of financial crimes or links to the Kremlin.
The scope of Russian money laundering was further revealed in a 2014 report by the Organized Crime and Corruption Reporting Project (OCCRP) on the scheme dubbed “Russian Laundering.”
According to the document, between 2011 and 2014, 19 Russian banks laundered $20.8 billion into 5,140 companies in 96 countries.
How is the money hidden?
The most common method used by the Russian oligarchs to hide their “dirty money” abroad is through shell companies.
“These oligarchs employ the best lawyers, auditors, bankers and lobbyists in the world to develop legal means to hide and launder their money,” says the Atlantic Council.
“A serious oligarchy has layers of anonymous shell companies in many offshore jurisdictions, and their money moves at lightning speed between them.”
In 2016, the International Consortium of Investigative Journalists published the Panama Papers, which showed that only one company created 2,071 shell companies for wealthy Russians.
What steps are being taken to keep track of the oligarch’s money?
After the invasion of Ukraine, several countries announced a series of measures to track Russian money.
The United States is forming a new task force called “KleptoCapture” to clamp down on the finances of Russia’s oligarchs.
It will be administered by the Ministry of Justice and is intended to seize property obtained through unlawful conduct.
The UK government has taken steps to increase the use of so-called ‘unexplained wealth orders’ (UWOs), which are a type of court order that requires people to provide details about where they obtained money used to purchase assets in the UK.
So-called account freeze orders (AFOs), another type of court order used in such cases, allow British courts to freeze funds in banks or partnerships if they suspect the funds are linked to criminal activities.
The government even passed the Economic Crimes Act, with a register of beneficial owners of real estate owned by foreign entities.
The UK has also abandoned the “golden visa” scheme, which gave residency rights to wealthy foreigners who have invested large amounts of money in the country.
Malta, a favorite tax haven for Russian rulers, has also scrapped its “golden passport” program, which allowed billionaires to buy citizenship.
Cyprus and Bulgaria abolished their golden passport schemes in 2020.
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