One of the extraordinary resources that has been made available by the OCCRP is a list of entities used by both the Azeri and Russian laundromats.
Whilst much research has been done on individual accounts within those lists, I wanted to do some analysis of the overall data to see if there were additional learning points to be gleaned. This has become especially relevant in recent weeks as the role of the clearing, or correspondent, banks has been brought into focus following the Danish and EU Parliamentary hearings on the Danske Bank scandal.
Much of the analysis that follows would have been capable of being achieved by the correspondent banks from the information contained on the payment files that accompany the transfers through the financial system and therefore, at least theoretically, they could have produced the same analysis as I have (providing the motivation was there to do it, in the first place).
For the purposes of this analysis I have focused on UK Limited Liability Partnerships for two reasons:
- The UK corporate registry is free to access; and
- As highlighted by the Bruun and Hjejle report into the Danske Bank scandal, they were the primary vehicle through which the bulk of the laundromat money was laundered.
The Report highlighted 177 UK Limited Partnerships (LPs) or Limited Liability Partnerships (LLPs) used as part of the Russian Laundromat and 75 as part of the Azeri but, of course, the authors of the report were only focused on those entities that processed payments through Danske Bank Estonia.
In total, I have identified 128 LLPs in the Azeri Laundromat and a further 221 in the Russian Laundromat. I have ignored Limited Partnerships as there is far less information about them readily available. Where an entity appeared in both the Russian and Azeri Laundromats, I have only counted it once.
What quickly becomes apparent from inspecting the account signatories of each of these LLPs (which, to be fair, is currently a manual process, as the information is not available in digital format) is that there were two names which account for a huge majority of all of the LLPs used in the laundromats.
Starting with the Russian Laundromat entities, the name of Ali Moulaye (in a whole variety of spellings) appears on the accounts of 83 of the 221 LLPs (37.5%) and Sabine Boze appears on a further (41) 18.5% which means that a majority (57.5%) of all the LLPs identified have one of these two signatures on their accounts. In the case of Sabine Boze, every one of the accounts she signed was for a LLP registered to:
- Cornwall Buildings, 45 Newhall St, Birmingham B3 3QR
Whereas the Ali Moulaye accounts were signed on behalf of LLPs registered to a total of seven different addresses:
- 175 Darkes Ln, Potters Bar EN6 1BW (41)
- 20 Primrose Street London EC2A 2EW (3)
- 11 Churchill Court, 58 Station Road, North Harrow, Middlesex, HA2 7SA (13)
- 82 Whitchurch Rd, Cardiff CF14 3LX (5)
- Unit 5, Olympia Industrial Estate, Coburg Road, London, England, N22 6TZ (6)
- Suite 1, The Studio, St Nicholas Close, Elstree, Hertfordshire WD6 3EW (14)
- 48 Queen Anne Street, London, W1G 9JJ (1)
In addition there were nine other entities registered to one of the above addresses who weren’t around long enough to file accounts but for which it would be entirely reasonable to assume, had they done so, they would have been signed by one or other of them, making a total of 131 out of 221 LLPs definitively related.
Even here though, the differences are not clear cut. Take for example Knysort Corporation LLP (although, just to be clear, this is not an LLP that appears in either of the Laundromats). Its original registered address was Cornwall Buildings and the accounts were signed by Sabine Boze. Then, in 2017, it changed registered address to Unit 5, Olympia Industrial Estate and the accounts were then signed by Ali Moulaye (latterly Kang Dong-Hee). And there are numerous other examples of these LLPs moving between these and other well known signatories and registered addresses. So the ties that bind are even closer than on first inspection.
If we turn to the Azeri Laundromat we find a similar, but not completely identical, picture.
Of the 128 LLPs identified by me featuring in the Azeri Laundromat, no fewer than 85 have filed accounts signed by Ali Moulaye! That’s an astonishing 66.5%. Add in a further 18 signed by Sabine Boze and a full 80% of all the Azeri Laundromat LLPs were associated to just two account signatories.
Turning to the accounts which these entities filed with Companies House and, for the time being just focussing on those who filed accounts for 2014 as this was the height of both laundromats, the figures also reveal some interesting data.
Once again, I’m going to concentrate on the Ali Moulaye accounts.
In respect of the Azeri Laundromat, 48 LLPs filed accounts for 2014, the average income declared across that population was £16,570.58 (in rather stark contrast to the amount that was laundered).
In respect of the Russian Laundromat, 60 LLPs filed accounts for 2014, the average income declared across that population was £13,355.55.
To take but one example, Dartwall Systems LLP (registered at 82 Whitchurch Road). Between mid 2011 and early 2013, it received 111 payments totalling a little under $US60,000,000 from Ronida Invest LLP (registered at Cornwall Buildings) whilst, during the same time period, filed one set of accounts showing commission income of £3,730.
And even here, despite a change of signatory, address and designated members since the previous accounts in early 2011, they still managed to forget to change the accounting period, witness the following two screen grabs.
So the question we should ask (albeit with the benefit of hindsight) is whether correspondent banks should monitor the underlying entity information contained in their payment files for more than just sanctioned individuals or firms?
Of course, the remitting bank should always be primarily responsible for checking these payments but given that criminals and the corrupt specifically target the weakest links, it is imperative that the big global clearing banks reinforce these defences with intelligent monitoring of their respondent’s clients.
It isn’t difficult to build a list of known “problem” addresses which act as corporate entity factories and neither is it difficult, at least for UK entities, to perform a quick check of volumes and values of payments processed against those declared through Companies House.
If you find yourself processing a payment for an LLP registered at a problem address, which has overseas Designated Members, a red flag alert and a quick check against the last set of accounts is not time consuming and could rapidly alert the banks to a problem.
With the advent of AI, RegTech and machine learning, none of these things should be insuperable, particularly with the further opening up of Corporate Registries following the 4th EU Anti Money Laundering Directive and the decision by UK government to require the British Overseas Territories to do likewise.
The time for action is now.
Hiding in plain sight - my search for money launderers 