On 19 January 2014 in Moscow, a company called Streamtrade Industries signed a contract to sell “construction materials.” The size of the deal was impressive: “Forty-one million fourteen thousand seven hundred dollars of the USA.”
The terms were straightforward – “100% of the payment in advance” within 10 days – but the money arrived late and short. Over the following five weeks, Streamtrade only received $9.5m in its account at ABLV, a Latvian bank.
It’s unclear whether Streamtrade received the remaining $31.5m, but its ABLV account – number 0001 1400 88060 – was usually full. It used to receive an average of $40,000 a day.
It was a lot of money for a company based in an office suite in a three-storey brick building near a small police station in Harrow, northwest London. It was also a lot of money for a company that described itself as a “trade agent for furniture” on its filings at Companies House, the business registry.
The filings are false. It’s a criminal offence, but a minor one compared to what Streamtrade really did. It was part of a scheme Russian officials and organised crime groups used to launder billions of dollars out of the country where it was made through fraud, contraband, and drugs and arms smuggling.
Journalists exposed what became known as “the Russian Laundromat” six years ago. But new documents seen by Tortoise suggest its true scale was larger than anyone knew at the time. There was more dirty money, wreaking more havoc, moving through more shell companies.
Streamtrade is one of them. It was a limited liability partnership, a corporate structure described as the vehicle of choice for money launderers. It can be formed in a few hours for under £50, and its main benefit is providing a British wrapper on anonymous shell companies.
Ireland & Overseas Acquisitions Ltd, with a correspondence address in the secretive British Virgin Islands but registered in the more secretive jurisdiction of Belize, was a Streamtrade partner. It had to sign off on Streamtrade’s accounts, which showed annual profits of a few thousand pounds.
The signature that appears on those filings belongs to one Ali Moulaye. He is a fifty-something-year old Latvian dentist in Brussels whose signature appears on thousands of other company filings after he leant his passport to “friends.”
Many of Moulaye’s companies are registered to the same suite in the same Harrow office block as Streamtrade. One of them, Lantana Trade LLP, was owned by Vladimir Putin’s family, although the Kremlin denies this.
Another two of Streamtrade’s partners were shell companies in the Marshall Islands, “one of the few jurisdictions where bearer shares were common practice,” Floris Alexander, a financial crime lawyer, says. “This creates an issue for the identification of beneficial owners because the physical holder of the shares” – the bearer of the share certificates – “is the owner of the company.”
Anonymous shell companies can’t open bank accounts in most jurisdictions. Latvia was an exception.
Most of ABLV’s accounts were held by anonymous shell companies, but the Riga bank had other money laundering controls.
It was required by law to conduct due diligence on the source of companies’ funds. The contract Streamtrade signed in Moscow in January 2014 was given to the bank for this purpose.
But there’s no indication in trade statistics that Streamtrade supplied the “construction materials,” including thousands of the ZLP500 cleaning gondolas at $5,000 each. Nor is there any indication that the buyer, a shell company in Edinburgh, received them.
“The lazy man’s way of trade-based money laundering assumes physical products to be shipped but this rarely happens,” Alexander, who represents small ABLV depositors, says. “The underlying transaction often does not exist.”
But the money does. Streamtrade’s income normally arrived in a repeated series of transfers a dollar or two shy of $500,000. “It’s almost certain that ABLV had a monitoring figure of $500,000,” Graham Barrow, an anti-money laundering expert, says. “Repeated transactions at that precise level is just not how a business works.”
Other transfers were equally precise, and far above the suspected monitoring figure. Part of Streamtrade’s payment came in three separate transfers of precisely $2m each. No one at the bank raised an alarm.
A person who worked in the Riga branch compliance team for over a decade and before that was a Latvian police officer in economic crime, replied to Tortoise’s request for information with: “It very interesting. But why should I tell you something? What is your offer?” Another, four years in the same compliance team, said: “Thanks for the offer. Any royalties involved?” Both men now work at other Latvian banks.
ABLV no longer exists. It collapsed after the US Treasury said its “executives, shareholders, and employees have institutionalized money laundering as a pillar of the bank’s business practices” in a February 2018 notice.
The main problem was that it solicited “high risk shell company activity” mostly from Russia where its slogan was “We’re closer than Switzerland!” In the bank’s defence, chief operating officer Vadim Reinfeld said, “We know when Russians are lying.”
Latvia’s parliament was more sceptical. Soon after ABLV’s collapse, it passed a law that banned banks from dealing with shell companies that can’t prove they’re legitimate businesses. The vote was 57 in favour and 17 against. All the “no” votes were cast by members of the pro-Russia party.
The corrupt in Russia know more than anyone not to keep their money there: they’re vulnerable to the same failings in the rule of law which they exploit for their profit. They rely on enablers from Riga to London to get the proceeds of their corruption out and to launder it.
But it’s not just the company formation agents, the lawyers, the bankers, who they rely on. Ineffective and underfunded institutions play their role.
“If the UK is serious about getting rid of its dirty money problem,” Ava Lee, senior anti-corruption campaigner at Global Witness says, “the government must give Companies House the mandate and proper resources to verify company information and sanction those that don’t play by the rules.”
The government consulted on Companies House reform in May 2019. It gave the registry new rules, but no means of enforcing them. Another consultation closed in February, but its results are unknown.
Companies House, meanwhile, remains open to more dirty Russian money and other Streamtrades. The registry says it “has, and will continue to take action” against companies suspected of criminal activity, but only one person has been prosecuted for filing false information: a transparency campaigner who’d set out to show how easy it is.
Paul Caruana Galizia is an editor and reporter at Tortoise.
Photographs Getty Images, Google Streetview