Leaked documents reveal laundering of millions of dollars

By Stefan J. Bos

Arkady Rotenberg has known Russian president Vladimir Putin since childhood. Together with his brother Boris, Rotenberg became co-owner of the Stroygazmontazh (SGM) group. That's the largest construction company for gas pipelines and electrical power supply lines in Russia.

But financial restrictions, or sanctions, were imposed on Rotenberg by the United States and the European Union in 2014. That meant Western banks could face severe consequences for doing business with him.

The sanctions were in response to Russia's role in the annexation of Ukraine's Crimean Peninsula and Moscow's support for pro-Russian separatists in eastern Ukraine.

However, despite these punitive measures, it seemed business as usual for Rotenberg. Leaked documents suggest Putin's friend used Britain's Barclays Bank in London to launder money and dodge sanctions.

Documents from an arm of the U.S. Treasury Department show that he conducted $60 million in transactions through a company called Advantage Alliance at Barclays.

Barclays involved

The documents reveal that Rotenberg laundered money through Barclays from 2012 through 2016, including after introducing sanctions.

Barclays closed the Advantage Alliance account only in late 2016. But it conveniently allowed another Rotenberg account at the bank, Ayrton Development Limited, to remain open until 2017.

That gave him plenty of time to launder the money. In July, a U.S. Senate investigation alleged that the Rotenberg brothers used luxury art purchases to evade sanctions. Barclays has denied that it knowingly violated sanctions and says it complied with all legal and regulatory obligations.

The Rotenberg accounts' information was only part of a massive trove of 2,100 documents from the Financial Crimes Enforcement Network (FinCEN) of the U.S. Treasury Department.

They were initially leaked to media outlet BuzzFeed. But it shared them with the International Consortium of Investigative Journalists and more than 400 journalists around the world.

MASSIVE PAYMENTS

The trove of documents indicates that over the period from 1999 to 2017, global banks moved more than $2 trillion in payments they believed were suspicious.

They show how significant banks, including HSBC, JPMorgan, and Deutsche Bank, helped criminal networks worldwide move and hide money.

On Monday, HSBC's share price fell to its lowest level since 1995. After revelations, it allowed fraudsters to transfer $80 million around the world.

That happened even after it had learned of their scam, which involved investors having to recruit people to make money. That led to one victim being murdered. His body was found in a vineyard in the United States, recalls sergeant Chris Pacheco of the Napa County Sheriff's Department.

"Most of his body was submerged underwater. He was bound. He had coverings over his face. We knew that he was deceased.  He was a victim in a scheme. He was a victim of a homicide. Just a true, true victim."    

US President involved?

The investigation also alleges that U.S. President Donald Trump may have profited from dirty money. Olicharchs from Kazakhstan allegedly bought apartments at a Trump New York property with laundered money. But Trump's company denies knowing who these customers were, though they did make money from the transactions.     

The revelations are incredibly tricky for Deutsche Bank. Germany's largest bank already faced millions of dollars in fines in 2017 over shady dealings in Russia. The documents suggest the activities we're more widespread than previously thought.

But Deutsche Bank spokesman Jörg Eigendorf denies wrongdoing by the institution's CEO. "He founded a unit that leads these investigations," he said. "There have since been also external investigations. And at no stage could any responsibility be traced back to the head of the business". Eigendorf added.  

However, the documents have underscored concerns that financial institutions and governments are not doing enough to stop illicit money flows.

Since a massive leak in 2017 from two offshore legal and corporate service providers, the FinCEN dump is the latest secretive global financial records breach. Known as the Paradise Papers, they revealed the shady offshore financial dealings of politicians, celebrities, and business leaders.