Tuesday

26th Sep 2017

Investigation

Europol joins hunt on EU-Russia money laundering

  • Europol chief Rob Wainwright with EU commissioner Cecilia Mamlstrom, whose department runs the FIU (Photo: ec.europa.eu)

The EU's joint police body, Europol, is hunting Russian mafia money laundered in EU banks.

The operation was revealed in a report by an investigator in the Strasbourg-based Council of Europe, Swiss MP Andreas Gross, out on Tuesday (25 June).

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The paper says: "On 25 April 2013, a meeting took place at Europol in The Hague to … co-ordinate the investigation by anti-money-laundering experts of a number of countries concerned by transfers of funds originating in the tax reimbursement fraud denounced by Sergei Magnitsky."

Europol declined to comment, citing confidentiality rules.

But EUobserver understands that Bulgaria, Cyprus, Estonia, Latvia, Lithuania and Switzerland took part in the event.

Gross urged the EU agency "to follow the 'money trail' wherever it leads."

He added: "Russian authorities should be at the forefront of such an action, as it is the money of the Russian people that was stolen."

The case concerns a bogus tax refund, in 2007, of $230 million organised by the "Kluyev group" and the death of the man who exposed it - Magnitsky, a Russian auditor.

An EU contact said Europol took an interest earlier this year.

Europol officials went to a meeting on Magnitsky in the European Commission's Financial Intelligence Unit (FIU) on 7 February, together with officials from Austria, Cyprus, Estonia, Finland, Latvia and Lithuania.

Europol also went to an FIU meeting in June.

The EU source said FIU intelligence-sharing led Latvia, last week, to fine an unnamed bank.

He added that Europol's role is to collect material for criminal prosecutions.

The Gross report corroborates allegations that Magnitsky was murdered by Russian officials in league with the Kluyev gang.

The Swiss MP consulted documents and conducted multiple interviews on trips to Bern, London, Moscow and Nicosia between last November and May.

He said Magnitsky was "healthy" before the suspects had him arrested in 2008.

But in 11 months of pre-trial detention, in freezing cells containing toilets overflowing with excrement, and following the prescription of Diclofenac, an anti-inflammatory drug, he contracted pancreatitis.

Guards also beat him with rubber batons on 16 November 2009, the day he died.

"There is no doubt that some of the causes of Mr Magnitsky's death were created deliberately, by identifiable persons," Gross says.

The Swiss MP saw "complete documentation" on how the stolen money flowed from Russia's treasury into the bank of Dmitry Kluyev, a convicted fraudster, and then into accounts in EU banks under Europol and FIU scrutiny.

He adds: "(Serious) money cannot disappear, it always leaves an indelible digital trail … The global financial system functions like a giant digital balance sheet."

His report is peppered with criticism of Russian officials' replies to questions, some of which he calls "downright cynical."

He highlights one theory why Russia is protecting the suspects.

Citing "off the record" statements by contacts, he says: "Russia has a huge 'parallel budget,' involving massive 'black funds' used for stabilising and expanding the elite's power, in Russia and beyond, especially in the territory of the former Soviet Union."

The black fund is reportedly fed by tax refunds, bribes in public procurement deals and undeclared payments by state-owned firms.

Gross notes that Russia's former central bank chief, Sergei Ignatiev, said in February that $49 billion a year is exiting the country and that "half of this" is "the work of one well-organised group."

Gross also notes "the same suspects, using the same modus operandi" as in the Magnitsky case are linked to tax refunds worth $1 billion.

According to the theory, "Magnitsky merely had the bad luck to stumble on an operation that was part of this 'system'."

With Russian border data showing that Magnitsky suspects often visit EU countries, Russian NGOs told the Swiss MP: "If you really want to interest our corrupt elites in turning Russia into a better place, you must sentence them to 'life in Russia,' by preventing them from taking out of the country what they value most: Their money and their families."

Gross said European countries should impose "intelligent sanctions."

The US in April imposed a visa ban and asset freeze on 18 Magnitsky suspects and published their names.

But Gross noted that this model entails "practical and legal difficulties" because there is no judicial oversight.

He said Europe should "take into account" British practice, in which suspects of serious crime are denied entry but it is not made public.

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