Bottle laundromat
how $820 million were siphoned off from Russia with use of plastic bottles
Transparency International Russia discovered a scheme of laundering money through bogus trading operations. In just a couple of years, $820 million were siphoned off from Russia. This is the amount of money that one Russian region spends, on average, on the entire social sphere in a year. This scheme was used by individuals connected with the ruling Russian elite. They were not held accountable in any way. We're publishing this investigation jointly with Novaya Gazeta. Europe, Meduza, Eesti Päevaleht, Transparency International – UK and Transparency International – Czech Republic.
In March 2018, we received a letter from a person whose name we cannot disclose: the information we managed to discover thanks to just one document that he gave us was immense, whereas the protection for corruption whistleblowers in Russia is immensely small.

We obtained a customs declaration which said that in 2015 a company based in Moscow Oblast imported into Russia an injection molding machine bought from a Latvian company. This type of machine is used to blow mold plastic bottles. The price of this machine stated in the income declaration was eleven and a half million euros, which is almost 800 times more than its market price (around 14 thousand euros).
Battenfeld BA 600 injection molding machine
The Russian company was willing to overpay because its goal was not to buy the injection molding machine, it was to siphon off money abroad. The money that left Russia during this transaction was previously stolen from one of the banks. The machine itself never even crossed the border; our correspondence with Latvian customs confirmed this.

We studied customs' databases and public registers and found out that it was not the only case of this kind. Deal after deal was used to siphon about $820 million from Russia in three years. This is seven times more than the money involved in the scheme uncovered by the auditor Sergei Magnitsky.

All the prices and their conversions in different currencies are according to the customs data.

The scheme uncovered by Transparency International Russia involved about 130 companies from Russia and other countries. These companies had accounts in 28 Russian banks and 11 foreign banks. 11 of these Russian banks had their licenses revoked soon afterwards, mainly due to violations of anti-money laundering legislation; some of the foreign banks taking part in the schemes were also involved in scandals with dirty money from post-Soviet countries. The scheme was extensive enough to include law enforcement officials, bankers, public officials and downright criminals.
This scheme is an example of trade-based money laundering (TBML) - an approach to laundering money that involves money earned with criminal activity (drug trade, piracy, smuggling, corruption or fraud) being siphoned off abroad, making it look like payments made as part of bogus trade deals. In doing so, money launderers overstate or understate the cost of goods and the volume of shipments, charge multiple times for the same goods, or merely forge customs declarations. One thing never changes: the money that is laundered is always obtained illegally.

Money laundering is the bridge that allows criminals to move "dirty" money away from the shadow economy and then spend it legally. Let's say it again: just the one scheme that we discovered involved about $820 million crossing that "bridge" in three years. We can guess that way more money than that was siphoned off from Russia through similar transactions involving other types of goods that are exempted from VAT and customs duties.
The scheme
From 2014 to 2016, Russian shell companies, with multiple companies having the same owners and addresses, purchased equipment worth tens of millions of euros from foreign companies. Most of these companies were from Saint Petersburg, Moscow and Kaliningrad. The seller companies were registered in 18 different countries, mostly in Cyprus, the UK and the Baltic states. Soon enough, they were also closed. Many of them belonged to citizens of Russia, Ukraine and Belarus.
The real value of the commodity (an injection molding machine) was no more than a couple dozen thousand euros. During the years when the scheme was going on, such machines were not being produced in Russia. This is why they could be imported with a zero tax rate and without paying any customs duties.

However, it appears that the injection molding machines only crossed the road on paper. In reality, the goods were not delivered anywhere; or, instead of the goods stated in declarations, versions that were hundreds of times cheaper were imported.

The duties of customs include checking the prices of goods as stated in the declarations. Also, import of injection molding machines warranted closer attention as a high-risk operation — after all, they were imported into Russia with a zero tax rate. However, the deals faced no resistance from the customs in the Far Eastern, Central, Southern and Northwestern Federal Districts. This suggests that even if the customs authorities were not fully participating in money laundering, they were, at the very least, turning a blind eye on the exorbitant sums stated in the declarations.
Roughly 80% of all the deals that constituted the scheme we uncovered passed through the North-Western Customs Administration. This was the department whose employees "didn't notice" any TBML on a regular basis; hence we can say that it was an established "channel" for siphoning off money from Russia:
  • In November 2015, the Accounts Chamber discovered a scheme which involved "refined ultradispersed copper powder" being imported into Russia through Kaliningrad customs. This commodity, which actually cost just $3.4 thousand, was imported for the price of $168 million. The difference was supposed to end up in Swiss banks, but the scheme was uncovered, so only $9.4 million were siphoned off abroad.

  • In November 2016, officers of the Main Directorate of economic security and combating corruption (which is a subdivison of the Ministry of Internal Affairs of the Russian Federation) uncovered a scheme involving around $15.5 million. The suspects entered into contracts that involved delivery of overpriced computers and computer parts from abroad, and then transferred the money to a foreign company's account through companies registered in Kaliningrad Oblast.

  • In November 2017, the Central District Court of Kaliningrad sentenced V. Zhukov to a suspended three-year sentence under article of the criminal code on siphoning off money with the use of forged documents. 70 million rubles were siphoned off into four banks under sham equipment delivery contracts. Three of those banks were involved in money laundering.

  • In early 2019, the Moscow District Court of Saint Petersburg sentenced Kurlenko A. A. under the same article of the criminal code. From 2013 to 2015, around 392 million rubles were transferred from the accounts of Russian companies in Guta-Bank to the accounts of foreign companies in Baltikums Bank AS and Tallinn Business Bank Ltd for sham deliveries of gas turbine units.

  • In 2018, several other citizens of Kaliningrad were sentenced under the same articles. They provided "services" of siphoning off money abroad under sham copper powder and technical fluid purchase contracts. The scheme involved several companies they controlled. They were registered to straw men and siphoned money off to accounts in banks in Baltic countries. In return, they received a percentage of this money.
The final argument which proves that we're not mistaken and the "Kaliningrad channel" actually existed is the 2019 sentence against Alexander Vladimirovich Skirdov, a former director of Peterburgskaya Stroitelnaya Investitsionnaya Kompaniya (Saint Petersburg Construction and Investment Company).

The court found this 69 year old retired man guilty of siphoning off money by using sham injection molding machine purchasing contracts. He received a 5 years 6 months suspended sentence. However, he was not charged with creating a scheme and organization of a criminal community. Public prosecutors couldn't find any evidence to back up such claims. Besides, where would a regular retired man acquire skills needed to devise schemes, as well as millions for sham deals? Most likely, Alexander Vladimirovich was merely a nominee director.

For the real beneficiaries of the "Kaliningrad channel", everything turned out great. Their straw man was punished, and almost 6 million euros were siphoned off abroad. This is only a small part of the money that was siphoned off from Russia through bogus injection molding machine purchasing deals.

Transparency International Russia found out that a similar scheme for siphoning off assets had already been used by people connected with entrepreneur Yevgeny Prigozhin, banker Sergey Kononov, sports manager Andrey Safronov, major general of justice Igor Komissarov, former State Duma member Natalya Burykina, a disgraced banker Roman Stroykov, and others.
Universalniye Finansy (UniFin)
Three Russian companies siphoned off about $4,074,214 through this bank to the Czech Republic, Estonia and Cyprus within a few months. One of the companies, the Estonian Greengate Trading OU, also participated in suspicious transactions with thermoforming machines totaling about twenty million dollars. Shareholders of the Universalniye Finansy (UniFin) bank included, at various times, Alexander UdodovMishustin, the brother-in-law of the Prime Minister of Russia Mikhail Mishustin; the son of Alexander Zhukov, the first vice-speaker of the State Duma; and the family of the former head of the State Duma Committee on Financial Market Natalya Burykina. Vera Smirnova, a housemaid of Burykina's family, withdrew 377 million rubles in cash from her account at UniFin just four days before the bank's license was revoked. Now she has a logistics business in Slovakia together with the Burykin family, and there's a criminal case against her under charges of embezzling funds from a Russian bank. Currently, Smirnova is on the federal wanted list.
Universalniye Finansy (UniFin)
Three Russian companies siphoned off about $4,074,214 through this bank to the Czech Republic, Estonia and Cyprus within a few months. One of the companies, the Estonian Greengate Trading OU, also participated in suspicious transactions with thermoforming machines totaling about twenty million dollars. Shareholders of the Universalniye Finansy (UniFin) bank included, at various times, Alexander UdodovMishustin, the brother-in-law of the Prime Minister of Russia Mikhail Mishustin; the son of Alexander Zhukov, the first vice-speaker of the State Duma; and the family of the former head of the State Duma Committee on Financial Market Natalya Burykina. Vera Smirnova, a housemaid of Burykina's family, withdrew 377 million rubles in cash from her account at UniFin just four days before the bank's license was revoked. Now she has a logistics business in Slovakia together with the Burykin family, and there's a criminal case against her under charges of embezzling funds from a Russian bank. Currently, Smirnova is on the federal wanted list.
Promsvyazbank
Just before Dmitry Ananyev was assigned to the position of the chairman of the board of Promsvyazbank which he had controlled, about $30,231,305 were transferred from accounts of three shell companies into Estonia and the UK. Most of this money ended up on the accounts of an Estonian company belonging to Vitaly Murentsov, a Saint Petersburg resident. According to Novaya Gazeta, Mr. Murentsov is a straw man for "Putin’s chef" Yevgeny Prigozhin. Elena Mazokina was listed as the company's second director. Mazokina told Postimees, an Estonian newspaper, that she'd never visited Estonia or started any companies. After this, she closed her account on the VK social network.
Oranzhevy Bank
Dobrogost, a company owned by entrepreneur Andrey Gertsen, used Oranzhevy, a small Saint Petersburg-based bank, to siphon off $8,527,751.00 via a bogus injection molding machine purchasing deal. After the equipment was shipped to Russia, it was dumped at a temporary storage warehouse. This is evidenced by the administrative protocol issued by the Baltic customs to EuroBusiness Group LTD, a supply company from the British Virgin Islands. Thanks to the Panama Papers offshore service provider leaks, we found out that the offshore company belongs to a man named Gennady Chervyakov. Most likely, he is Gertsen's father-in-law. It's likely that Andrey, a brother of Igor Komissarov (major general of justice, former Senior Assistant to the Chairman of the Investigative Committee of Russia) and Gertsen's business partner, helped him siphon off $8,527,751.00 from Russia. In 2020, criminal proceedings were initiated into the charges of organization of a criminal association and cash-out. Gertsen is a witness in this case. He currently lives in Latvia, he has real estate and permanent residency there.
Bank Saint Petersburg
$9,862,468.11 went through Bank Saint Petersburg. Most of this money ($8,074,801 according to the customs documents) ended up on the Swedbank AS and Versobank AS banking accounts of the Estonian company called Grizpol OU – supposedly as payment for the purchase of Italian injection molding machines by OOO Peterburgskaya Stroitelnaya Investitsionnaya Kompaniya (PSIK). In reality, the criminals moved two Chinese machines across the border several times. In 2019, a 69 year old man named Alexander Skirdov, owner of PSIK, received a 5 years 6 months suspended sentence for money laundering. OIMA, an Italian manufacturer, stated to law enforcement officials that they never produced the equipment that was supposedly purchased by Mr. Skirdov's company. Journalists of Eesti Päevaleht found out that both Skirdov and Grizpol OU are connected with Russian entrepreneur Alexander Arhipov, a member of Estonian Centre Party since 1996. Arhipov has been mayor of Maardu, an Estonian city, since 2016. Arhipov’s business partner Pavel Fokin insisted in his conversation with the journalists that Grizpol OU never received money from Russia and that the criminal case against Alexander Skirdov was fabricated.
Transnational Bank
Three shell companies siphoned off $51,259,621 from the country in the guise of purchasing used injection molding machines just a few days before Transnational Bank's license was revoked. A criminal case was started against its management, but its shareholders and top managers still haven't answered for the money they stole from investors. We discovered that one of the bank's shareholders, Sergey Kononov (a business partner of Leonid Dyachenko), owns a luxury apartment in the center of London and a villa in France. Currently, Mr. Kononov is in a detention center; he is suspected of embezzling 213 million rubles from the bank.
Rosenergobank

Artyom Henkin, the former president of the Rost banking group, has been hiding in Israel since 2018. He is charged with embezzlement of Rosebergobank funds on a large scale. In 2015, four shell companies siphoned off around 6 billion rubles from Russia via bogus purchase of injection molding machines; two years later, they pawned non-existing equipment to Rosenergobank with a large loan - just a few months before the bank's license was revoked. One of the companies was headed by Ilya Belkadi, a brother of disgraced banker Denis Belkadi. Both of them are currently under arrest on the charges of embezzlement from the Miraf bank. Another defendant in this case is Monje Simons Mario Ignacio, also a shareholder of Rosenergobank.
Expert Bank
In December 2019, the Tushino District Court of Moscow sentenced three female employees of AKB Investitsionno-Torgovy Bank to five years of medium security prison for embezzling the bank's money by issuing loans to shell companies. One of such companies later transferred about $164 thousand to the account of OOO Indra, who later "bought" an injection molding machine for $3,785,741. All in all, $7,765,741 was laundered via Expert Bank using bogus equipment deals. Until Expert Bank's license was revoked, it belonged to the Russian-Estonian millionaire Roman Stroykov, a beneficiary and an "ideologue" of another money laundering scheme — the "Russian Laundromat". Currently, Mr. Stroykov is under house arrest under suspicion of participating in laundering money through Estonian branches of Danske Bank and Swedbank.
Bank “Bereit”
Two Russian companies withdrew about $19,091,160 through the bank. The sole shareholder of Bereit is Sotrans LLC. The final beneficiaries are US citizens Grigory Solovey and Lyudmila Bronovskaya. Bereit is also a corporate bank of the Sotrans Group, one of the largest international cargo carriers in St. Petersburg. Mark Bronovsky, the owner of Sovtrans, was sentenced to 6.5 years in prison in 2020 for embezzling 578 million rubles of VAT during the construction of the administrative center of Sotrans Group in Krasniy Bor. Initially, it was about the illegal refund of VAT for 4 billion rubles. Bronovsky was released in the courtroom, as he had actually already served his sentence in the pre-trial detention center; the process had lasted since 2014. However, in 2020, he was still imprisoned for 10 years. One of the companies that acted as a seller of injection molding machines was the Estonian Malindor Invest OU, whose director is Yuri Butok. Butok is a former lieutenant colonel of the Soviet army and ex-director of the branch of the Central Bank of Russia in Estonia. In 1996, he was detained and accused of taking bribes of about $ 1.5 million and embezzling 500 million rubles with the help of forged documents. After serving the sentence, he went to work at Akademkhimbank, whose shareholder was Vladimir Antonov, former owner of the Lithuanian bank Snoras and the English football club Portsmouth. In mid-June of this year, Estonian journalists found out that Mr. Butok's companies had withdrawn 947 million euros through the Estonian branch of Nordea Bank, despite the fact that they had neither an office nor employees, besides they did not pay taxes. Butok's bank transactions have been repeatedly flagged as suspicious by Nordea auditors, correspondent banks and authorities.
Bank “Bereit”
Two Russian companies withdrew about $19,091,160 through the bank. The sole shareholder of Bereit is Sotrans LLC. The final beneficiaries are US citizens Grigory Solovey and Lyudmila Bronovskaya. Bereit is also a corporate bank of the Sotrans Group, one of the largest international cargo carriers in St. Petersburg. Mark Bronovsky, the owner of Sovtrans, was sentenced to 6.5 years in prison in 2020 for embezzling 578 million rubles of VAT during the construction of the administrative center of Sotrans Group in Krasniy Bor. Initially, it was about the illegal refund of VAT for 4 billion rubles. Bronovsky was released in the courtroom, as he had actually already served his sentence in the pre-trial detention center; the process had lasted since 2014. However, in 2020, he was still imprisoned for 10 years. One of the companies that acted as a seller of injection molding machines was the Estonian Malindor Invest OU, whose director is Yuri Butok. Butok is a former lieutenant colonel of the Soviet army and ex-director of the branch of the Central Bank of Russia in Estonia. In 1996, he was detained and accused of taking bribes of about $ 1.5 million and embezzling 500 million rubles with the help of forged documents. After serving the sentence, he went to work at Akademkhimbank, whose shareholder was Vladimir Antonov, former owner of the Lithuanian bank Snoras and the English football club Portsmouth. In mid-June of this year, Estonian journalists found out that Mr. Butok's companies had withdrawn 947 million euros through the Estonian branch of Nordea Bank, despite the fact that they had neither an office nor employees, besides they did not pay taxes. Butok's bank transactions have been repeatedly flagged as suspicious by Nordea auditors, correspondent banks and authorities.
How a scheme like this could exist
Another participant of the scheme, arranging siphoning off of the money, though was supposed to prevent it, were Russian and foreign banks. They have to check transactions for international business activity, transaction certificates and equipment purchasing companies.

Eleven Russian banks entered this money laundering schemes just before their licenses were revoked. Later checks discovered sophisticated schemes of money laundering and, therefore, huge ‘holes’ in their capitals. The better part of the amounts siphoned off through injection molding machines is, apparently, directly related to this embezzlement. Management of the banks could have known of oncoming revocation of license and, quite possibly, participated personally in siphoning off of the money and its embezzlement through simulated foreign trade transactions.
For example, a check of the Transnational Bank performed by the Central Bank discovered a “hole” in the bank's capital of 2.6 billion rubles. We found out that $51,259,621 had passed through the bank in the last month before revocation of its license, while the last transaction took place just two days before the revocation. All four deals conducted by the bank through three shell companies in Russia and two companies in Latvia involved the same customs declarant. Three out of four deals were conducted through the Bagrationovsk customs post in Kaliningrad Oblast.

A similar situation happened with Metrobank. After its license was revoked on June 1, 2015, a 4.5 billion rubles hole was discovered in the bank's capital. Two months before the bank's license was revoked, two tranches were used to siphon off $17,000,000 from the bank through the same shell company. The foreign partner functioning as a cushion was the same company from Cyprus in both cases, and both deals went through the Yamburg customs post in Leningrad Oblast.

Siphoning off of the money from the banks' capitals harmed not only their clients. The money to pay insurance payments to depositors was compensated from the state budget through the Deposit Insurance Agency of Russia. Basically, every citizen of Russia paid out of their own pocket for the money stolen from the banks and siphoned off from the country.

Seller companies also had accounts in eleven foreign banks: Lithuanian Latvijas pasta banka (now called LPB bank) and A/S Norvik banka, Austrian Meinl Bank (now called Anglo Austrian AAB Bank AG), Danish Nordea Bank AS, Polish mBank, Latvian AS Privatbank, SEB Banka, JSC Citadele Banka and AS ABLV (liquidated), Estonian Versobank AS (liquidated) and a branch of Swedbank. These banks were involved in scandals concerning negligence in the performance of anti-money laundering procedures and laundering money from ex-USSR countries.

  • Journalists from SVT, a Swedish television channel, reported that $4.3 billion was laundered through Swedbank, or, to be precise, through its branches in Lithuania, Latvia and Estonia; part of this money, about $26 million, was connected with the case of Sergei Magnitsky, an auditor of Hermitage Capital.

  • In late March 2018, the European Central Bank cancelled the license of the Estonian Versobank due to systematic violation of the money laundering legislation. It was owned by Ukrainian nationals: Vadim Ermolaev and Stanislav Vilensky.

  • In 2017, A/S Norvik banka was fined by the Financial and Capital Market Commission for non-compliance with legal requirements for preventing the financing of terrorism and use of illicit funds, including working with clients who tried to bypass sanctions against North Korea.

Management's interest in money embezzlement is not the only reason for a financial organization to fail to answer the foreign trade transaction verification requirements. The discovered scheme involves small captive banks (belonging to financial industrial groups and providing for their interests). The ability of the top managers of such banks to pursue policies that are independent from the shareholders (owners) is minimal, and compliance with the KYC (Know Your Customer) policy and the regulator's requirement to identify dubious deals are treated as a pure formality by such banks, which opens a wide window of opportunity for abuses. Moreover, it's often difficult to bring the shareholders (the ultimate owners) of such banks to justice, as the banks are formally controlled by the board of directors.

We identified financial and industrial groups who, on one hand, owned the banks involved in money laundering and, on the other hand, were vendors for customs authorities supervising the customs posts that the suspicious transactions went through. Some bankers involved in the scheme were connected with representatives of customs authorities: they were both in the same legal entities' governing bodies.
Too many regulators spoil the broth
In late January 2019, Sergey Shklyaev, the head of the Department of Trade Barriers, Currency and Export Control of the Federal Customs Service (FCS), told Rossiyskaya Gazeta in an interview that the times when money flows worth billions were leaving the country through the customs are now gone.

Mr. Shklyaev claimed that the situation changed partly thanks to the tight cooperation between the FCS of Russia, the Central Bank of Russia and the Federal Financial Monitoring Service of the Russian Federation (Rosfinmonitoring). It is true that in 2012 the Central Bank of Russia and the authorized banks started receiving declarations directly from the FCS, and in 2014 compulsory electronic declaration was introduced. All of this was supposed to significantly lower the risks of violations of foreign exchange controls.
But in the next few years, when those policies were already employed, the customs service, especially the Northwestern Customs Administration, was involved in several big scandals related to corruption, smuggling, illegal VAT refunds and siphoning off of billions of rubles abroad. This led to staff rotation in the FCS itself and even in the department of the FSB that oversees the work of the FCS. However, beneficiaries of the schemes discovered in these scandals took no responsibility, and the money stolen from Russia and transferred abroad never returned to the country.
The same way, regulators never managed to interfere in the scheme we investigated - with injection molding machines. Moreover, they seemed to fail to notice it. And finally, beneficiaries of the schemes kept staying "some unidentified persons” - until our investigation.
Rosfinmonitoring
Being the key institution authorized to control how legal entities and private persons obey the Russian law on counteracting the legalization of proceeds of crime, Rosfinmonitoring was supposed to build a comprehensive system for identification of suspicious deals showing signs of money laundering.

The money laundering scheme we discovered was functioning from 2014 to 2016. It was specifically a scheme - actions of the launderers were recurrent and predictable. The fact that 40 billion rubles were siphoned off unnoticed says that Rosfinmonitoring's system for identifying and investigating money laundering schemes, especially transborder ones, is inefficient. This is confirmed by the latest report by the Financial Action Task Force on Money Laundering (FATF) on our country, where Russia is recommended to improve its approach to oversight and to make investigation and prosecution
The Central Bank of Russia
Starting with 2007, every banking establishment has its own supervisor from the Central Bank of Russia who has access to pretty much all of the bank's information. The main task of such a supervisor is to discover violations (insufficiencies) in the bank's work early on. However, if we look at what accountability the bank supervisor has, we'll see that the maximum punishment a supervisor can face for failure to prevent any abuses (provided that there’s no proof he is complicit with the ill-intentioned administration of the bank) is being fired from the Central Bank.

Russia was criticized for inefficiency of its anti-money laundering control over banks by FATF experts, who checked Russia for compliance with anti-money laundering recommendations in 2019. International experts criticized the Central Bank's infrequent on-site inspections to identify money laundering schemes through banks, and they called penalties for breaking anti-money laundering rules too small.

Considering the fact that the scheme we're describing was used repeatedly and functioned in Russian banks for several years, it's hard to imagine that the Central Bank's management couldn't identify the systemic problem concerning sham foreign trade operations with the same goods code every time, used to launder embezzled money.
The FSB
In the Economic Security Service of the FSB of Russia, there is a special department to fight crime in the sphere of credit and finance; it's called the Special Directorate K. The Directorate's staff works closely with Rosfinmonitoring and the Central Bank. One of the Directorate K's most privileged departments is the 2nd ("banking") department.

The Head of this department Kirill Cherkalin himself was accused in a cause celebre of corruption offences and found guilty in April 2021. Trial of his colleague Dmitry Frolov, the ex-deputy head of the Directorate K, is still underway.

In the Russian banking sphere, there is also such thing as seconded staff of the FSB. These people formally occupy positions of heads of security services, advisors and vice presidents of banking establishments, but in reality they are in the FSB's reserve, and they maintain working relationships with people from the intelligence agency. While receiving a large emolument in the bank, a member of the seconded staff can become the person who will make sure that the bank's illegal activities are protected from any inspection bodies.

During our investigation, we faced the situation when one of the owners of a bank used for money laundering turned out to be among the management of a non-profit organization whose board of trustees included seven high-ranking generals of the Russian intelligence agency. Despite the uncovered facts of money being embezzled from the bank, the bank's owner wasn't arrested. In the global money laundering system, officers of intelligence agencies can hardly be called key beneficiaries of such schemes. However, the lack of even formal control over the FSB of Russia, both from other authorities and from the civil society, allows the use of shadow banking as a possible source of illicit enrichment for the FSB staff.
The Federal Tax Service of Russia
In order to siphon off the money abroad through shell business transactions, violators of law employ an extensive network of shadow companies registered in the name of their nominal directors and owners. Through this, real beneficiaries of money laundering schemes avoid responsibility.

Officially, Russia has no institute of nominal directors and nominal company owners. However, if we study ads carefully, we can not only find hundreds of various offers, but even companies that have been working on the market for a long time, offering services of nominals at bargain prices. During the investigations we managed to discover at least 30 “professional directors” and owners of shell companies who work as nominals sometimes for seven or more years.

Companies that participated in the scheme we uncovered were usually opened a short time before the crucial deal, they were registered to nominals and had the same addresses as many other companies. Basically, these companies already had all the traits of shell companies when they were opened. However, it didn't stop the tax service employees from registering a huge bunch of such companies.

After receiving money from other companies as loans, shell companies conducted sham foreign trade operations to cover up money laundering, and then they got safely dissolved. We haven't discovered even a single situation when the Tax Service had any problem with nominal directors and owners of shell companies, or with sham deals worth millions that they carried out.
Translated by Ulyana Pavlovskaya, Nikolai Gorelov
Infographics by Artyom Schennikov
Illustrations by Anna Goremyka
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