Most money laundering is done through a bank. The more lax the institution, the easier the process.

Troika Dialog was the Russian investment bank that set up and ran the Troika Laundromat, a massive offshore network used by oligarchs, business tycoons, and criminals in part to evade taxes and move money out of Russia, as well as to launder illicit funds.

But the bank and its clients operated in a country that is heavily scrutinized by both regulators and Western banking partners. For the Laundromat to succeed, its operators needed a foreign bank that would allow proxies to sign up for accounts and wouldn’t ask a lot of questions. They needed a bank whose compliance department would allow tens of thousands of highly suspicious transactions that made no business sense.

Enter Ukio Bankas

Starting in 2006, Troika set up at least 75 companies in the British Virgin Islands, Panama, and other offshore jurisdictions through an Irish offshore registration agent. Of these, at least 35 (and likely more) are known to have opened bank accounts at Ukio, which was based in Kaunas, Lithuania’s second-largest city.

These accounts were then used to conduct the Laundromat’s financial activities. Typically, money would be wired into the offshore account of a shell company, split into smaller amounts and transferred to other shell companies under the guise of non-existent trade deals.

Bogus paperwork supported it all. For example, transaction documents from Quantus Division Ltd., one of the core Laundromat companies, variously describes the firm as trading “food goods,” “furniture,” “vent grilles,” “polished goods,” “lighting goods,” “metal goods,” and just plain “goods.”

After being changed into euros, the money could then enter the European banking system through Ukio’s correspondent accounts at Raiffeissen Bank International in Austria, Commerzbank in Germany, and other Western lenders.

The Lithuanian bank served as a key cog in the Laundromat from the scheme’s start until the Bank of Lithuania shut it in 2013 for what regulators said were risky lending practices, poor quality assets, and noncompliance with regulations. They would later accuse its owner, Vladimir Romanov, of looting his own bank’s accounts.

Credit: Erikas Ovcarenko /15min.lt People queueing outside Ukio Bankas the day it was shut down in 2013.

In a written response to OCCRP and 15min.lt, Romanov said that the money laundering allegations are nothing but “a myth” and accused journalists of taking part of a foreign plot against Lithuania. He accused the Lithuanian state of stealing his bank and using money laundering allegations to justify it.

“They simply robbed the only bank that was capable of earning money and investing it in Lithuania’s economy, culture and sports,” Romanov said in a written statement.

🔗A Bank With Friends? Vitalijus Gailius, the former head of Lithuania’s Financial Crime Investigation Service, said that Ukio was one of two major banks in the country investigated for money laundering during his 2010-2012 tenure at the agency. He has since been elected to the Lithuanian parliament. Several years after leaving FCIS, he said he had reason to believe that, prior to his term there, Ukio was being protected by people within the service. He said he had fired some staff over the issue. “There were really a lot of officers that were asked to bid farewell to the authority during reorganization. There wasn't five or ten of them, there were more,” he said, declining to name names.

From Russia to Lithuania

Romanov, 71, is a charismatic Russian businessman who — in addition to leading Ukio — owned several sports teams and ran a political party in his adopted homeland before running afoul of regulators. After being accused of stealing money from Ukio, he fled Lithuania and has been hiding in Russia since 2014, claiming to have lost his fortune.

Romanov opened Ukio in Kaunas in 1989, making it one of the country’s oldest commercial banks. His move into banking proved successful, and by the time it was shut down, Ukio had become the country’s fifth largest lender.

Romanov combined his assets into a global conglomerate called Ukio Banko Investicine Grupe (UBIG), which started in Lithuania but soon branched out to several other countries in the region.

In 2011, less than two years before Ukio’s collapse, Romanov was reportedly Lithuania’s 21st richest person. His net worth was estimated at 165 million lita ($67.6 million).