Credit: Ion Preașcă/RISE Moldova The Russian Laundromat Exposed

DONATE Three years after the “Laundromat” was exposed as a criminal financial vehicle to move vast sums of money out of Russia, journalists now know how the complex scheme worked – including who ended up with the $20.8 billion and how, despite warnings, banks failed for years to shut it down. The Organized Crime and Corruption Reporting Project (OCCRP) broke the story of the Laundromat in 2014, but recently the reporters from OCCRP and Novaya Gazeta in Moscow obtained a wealth of bank records which they then opened to investigative reporters in 32 countries. Their combined research for the first time paints a fuller picture of how billions moved from Russia, into and through the 112 bank accounts that comprised the system in eastern Europe, then into banks around the world. Reporters can now say that much of the money ultimately found its way to Russian businessmen who own groups of companies involved in construction, engineering, information technology, and banking. All held hundreds of millions of US dollars in state contracts either with the government directly, or with state-owned entities. They are named in this project and their spending sprees on fancy autos, prep school fees, furs, and electronics are revealed. Law enforcement in Moldova, Latvia, the United Kingdom, and Russia continue to investigate the Laundromat, but attempts to bring those responsible to justice and to recover the money have been hampered in part by the reluctance of Russian officials to cooperate.

Money to Play With Money entered the Laundromat via a set of shell companies in Russia that exist only on paper and whose ownership cannot be traced. Some of the funds may have been diverted from the Russian treasury through fraud, rigging of state contracts, or customs and tax evasion. Money that might have helped repair the country’s deteriorating roads and ports, modernize the health care system, or ease the poverty of senior citizens – was instead deposited in a Moldovan bank. At the other end of the Laundromat, money flowed out for luxuries, for rock bands touring Russia, and on a small Polish non-governmental organization that pushed Russia’s agenda in the European Union. (It is run by Mateusz Piskorski, a Polish pro-Kremlin party leader arrested for spying for Russia). Mihaly Csikszentmihalyi got paid too. The Hungarian-born, California-based psychology professor is noted for naming the psychological concept of flow – a highly focused mental state. Well-known companies unwittingly took part when beneficiaries used their Laundromat money to buy goods and services. South Korea’s Samsung received laundered money, as did the Swedish telecom company Ericsson, and the toolmaker Black & Decker. In the United States, $500,000 went to Total Golf Construction Inc., the company that boasts of renovating a Donald Trump golf course on Canouan Island in the Grenadines. A large Japanese electronics manufacturer got €576,000 from the Laundromat in its Austrian branch on behalf of a British company run by a Russian criminal, Sergey Magin. A Worldwide Maze of Payments

The Laundromat was ingenious. Organizers created a core of 21 companies based in the United Kingdom (UK), Cyprus and New Zealand and run by hidden owners. A number of Russian companies then used these companies to move their money out of Russia. To get the money out, the scheme’s organizers devised a clever misdirection. They created a fake debt among some of these core shell companies and then got a Moldovan judge to order the Russian company seeking to launder funds to pay that debt to a court-controlled account. Moldindconbank in Moldova held those accounts. The companies involved in the fake debt also had accounts at the same bank. Soon, Moldindconbank was deluged with cash sent in from the Russian companies. About $8 billion was then withdrawn directly from these accounts in Moldova and spent around the world. Meanwhile, nearly $13 billion more was transferred to Trasta Komercbanka in Latvia. Some of the money disappeared into the maze of these same shell company accounts. Trasta Komercbanka’s location in the European Union made the transactions less likely to be questioned by other banks. The money was now considered “clean” European money that could be spent on anything the Russians wanted. The system worked well enough to launder some $20.8 billion – which can be seen in a database ​showing who received the money:​ Distributing the Money Between 2011 and 2014, the 21 shell companies fired out 26,746 payments from their various Trasta Komercbanka and Moldindconbank accounts. The payments went to 96 countries, passing almost without obstacle into some of the world’s biggest banks. All of the core-group companies appeared to be owned by proxies standing in for hidden owners. Even directors and shareholders of the companies were fake. Some payments did go to genuine companies for real goods – but the transactions were made not by their clients, but by the 21 core companies using bogus copy-pasted paperwork which specified goods the company didn’t sell. Some payments went to another layer of shell companies, similar to the core group making the payments from Trasta Komercbanka.