Private Eye | Money laundering : Electronic Avenue

WHILE official indifference to money laundering and economic crime persists, the opportunities provided by the UK government to the bad guys come thick and fast.

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The latest offering from the British launderette is the innocuous-sounding “electronic money institution” (EMI), a type of company that processes payments without being a proper bank and with correspondingly less regulation and internal control.

A study by Transparency International found that 37 of the 260 EMIs set up in the UK had owners or directors from the former Soviet Union. Some of these connections indicate that EMIs are the latest manifestation of the money-laundering networks that grew in the Baltic states in the 1990s as the route into western financial markets and property (with the help of British lawyers, accountants and company service providers, as set out in the Eye’s 2018 special report, Looting with Putin). The researchers found 45 EMIs had senior figures who had already been linked to money laundering.

Suspicious transactions

A Plus Payment Solutions, for example, is run from a trading estate in Bletchley by Latvian Dmitrijs Krasko, who began his career at Latvian bank ABLV, which was shut down after the US Treasury banned it for “institutionalised money laundering”. Krasko went on to run a company formation agency and sign many of the dodgy company filings for UK “limited liability partnerships” of the sort the Eye identified as the money-laundering vehicle of choice back in 2013. An impressive 112 companies from the Krasko stable cropped up in the International Consortium of Investigative Journalists’ FinCEN Files leak of suspicious transactions.

Krasko’s payment company was authorised by the Financial Conduct Authority at the end of 2020, long after it would have been simple to spot the obviously suspicious hallmarks of money laundering.

So lax is the regulation of EMIs that these “institutions” are freely bought and sold. Active in this business is another veteran of the Latvian banking game, Julia Raubishke. Once of Baltikums Bank (fined by Latvian regulators and forced to close 90 percent of non-Latvian accounts, but with no suggestion of Raubishke being involved in wrongdoing), and also a veteran of the company formation game, Raubishke now heads an operation called Round Finance. It can be found advertising “A[authorized]EMI license (FCA UK)” companies for sale. Regulators are supposed to look at any new buyer, but Britain’s financial Clouseaus are not the fleetest of foot.

Financial services growth

Away from the Baltic, a string of other small banks also became important cogs in the laundering machine, none more so than Cyprus’s FBME, which closed in 2015 after the US called it a “foreign financial institution of primary money laundering concern”. The man in charge of its card services division from 2006 to 2012 (a hotbed of laundering using fake transactions), Guy El Khoury, now runs another EMI, AF Payments Ltd, authorised by the FCA in 2018.

It’s a good time for questionable payment companies. Chancellor Rishi Sunak has recently instructed the FCA to target growth of financial services as well as regulate them, while the payments companies shrewdly style themselves “fintech” and thus at that cutting edge Sunak is so keen on. With less than 1 percent of financial service companies coming under FCA examination in any year, and half-hearted attempts at reining in the UK’s shell company industry already failing, the money launderer’s British toolbox remains full of all the best gadgets.