US and UK expose Russia's multi-billion dollar money laundering scheme – Reuters

Oleksii Artemchuk — Thursday, 5 December 2024, 12:11

The United States slapped fresh sanctions targeted at destroying the illegal financial network that allowed the Russian elite to bypass limits through the use of digital assets.

Source: Reuters

Details: The new measures target five people and four businesses that, as the US government says, are tied to an international network known as TGR Group. This organisation contributed significantly to the circumvention of sanctions. The list also includes a Wyoming-based corporation that is partially controlled by someone who has previously been sanctioned.

According to Bradley Smith, Acting Deputy Secretary for Counterterrorism and Financial Intelligence, TGR Group employed digital assets, such as dollar-backed stable coins, to avoid US and international sanctions. This allowed the Russian elite to profit themselves while also supporting the Kremlin's financial interests.

This network conducts the following activities:

Laundering of funds associated with organisations under sanctions;
Exchange of cash for cryptocurrency without registration;
Providing cash to customers in the form of crypto assets;
Issuing prepaid credit cards to bypass controls;
Concealing the source of funds for the acquisition of real estate in the UK by wealthy Russian citizens.

The US and the UK joined efforts to uncover the network. The NCA website does not specify the overall amount of money laundered, but the mention of a 3% charge suggests the scale. It is suggested that to compensate for the £20 million confiscated by UK law enforcement, the networks would have to launder around £700 million "for free." This suggests that the actual amount of money laundering was measured in billions of pounds. The organisers used the proceeds to assist drug trafficking, cybercrime, and espionage. The UK reported that 84 persons were arrested, millions of pounds were seized, and assets were withdrawn via cryptocurrency and traditional banking institutions.

The publication reveals how the scheme worked:

For four months, the network has collected funds at 55 locations across the UK, Scotland, and the Channel Islands. The major mechanism for fund legalisation was the cryptocurrency Tether, a prominent stablecoin that guarantees anonymity and high transaction speed.

Couriers collected money from drug cartels or scammers.

The money was then exchanged into the Tether cryptocurrency. "Laundered" money was sent to consumers in various countries..

One of the organisations, Smart, led by Russian Ekaterina Zhdanova, assisted clients in bypassing KYC (identity verification) requirements. For example, Russian clients used this scheme to purchase £2 million worth of real estate in the UK.

In addition, Smart and TGR crypto-wallets were associated with the Russian platform Garantex, which in 2022 was blocked for financing the supply of weapons for the war against Ukraine.

US sanctions provide for a ban on individuals and legal entities from the United States to conduct any operations with entities that are on the list. All assets of these persons under the jurisdiction of the United States are also frozen.

The new measures are aimed at strengthening control over the use of cryptocurrencies to avoid sanctions, emphasising the US commitment to combat the Kremlin's financial fraud.

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