HSBC has been dragged into a new money-laundering scandal amid allegations that Britain’s biggest high street lender handled more than $500 million in Russian “dirty money” over four years.
International money-laundering investigators believe that British banks, including Barclays, HSBC, Royal Bank of Scotland and Coutts, unwittingly helped to move more than $738 million of money linked with an alleged Russian criminal scheme between 2010 and 2014.
According to documents seen by The Guardian that were passed on by the Organised Crime and Corruption Reporting Project (OCCRP), a US government-backed programme, the lenders handled transactions for individuals and companies linked with a scheme known as the Global Laundromat.
It is said to have been one of Russia’s largest money-laundering schemes and involved the illegal transfer of at least $20 billion of assets out of the country and into the western banking system.
The newspaper claimed that UK and overseas branches of HSBC processed $545 million of such cash, more than any other British bank. RBS handled transactions worth $113 million, as well as a further $32.8 million through Coutts, its private banking unit.
Other banks said to be caught up in the scheme were Standard Chartered, whose branches are alleged to have moved $28.6 million of dirty money; Barclays, which allegedly processed transactions worth $2.5 million, and Lloyds Banking Group, for which no figure was provided.
By contrast, two unidentified American banks are said to have questioned the transfers and refused to process them.
The allegations will be embarrassing for HSBC, which only five years ago paid $1.9 billion, a record at that time, to settle a US money-laundering investigation into its North American business. It was also forced to agree to install an independent monitor to oversee efforts to clean up its operations.
HSBC and Coutts were named in last year’s Panama Papers leak, in which it was revealed that they had asked Mossack Fonseca, a controversial law firm, to set up more than 2,000 offshore companies for clients.
The claims will renew fears that the City of London and the UK financial system have become a conduit for billions of dollars of illicit money. Last week the Treasury announced the creation of a new anti-money-laundering unit.
The documents obtained by the OCCRP apparently detail how UK-registered companies were one of the main routes for the Laundromat scheme. According to The Guardian, the money was funnelled at first through 21 companies, most of which were based in Britain, with addresses in London, Birmingham, Edinburgh, Glasgow and North Yorkshire. British retailers were the unwitting final destinations for some of the cash, which was used to buy luxury products.
Banks are not alone under the spotlight. It was claimed that PWC had received a €27,000 fee for providing “consultancy services” to a Russian-owned company in Cyprus. PWC Cyprus said that it “applies all relevant laws and regulations on combating money laundering” and was “passing on the email communicated to us to the relevant authorities in Cyprus”.
HSBC said that it was strongly committed to fighting financial crime. “This case highlights the need for greater information-sharing between the public and private sectors, each of whom holds important information the other does not,” a spokesman said.
A spokesman for Barclays said that the bank “complies with the rules and regulations in all the jurisdictions in which it operates and has systems and controls in place to mitigate the risk of the bank being used to facilitate financial crime”.
Standard Chartered emphasised that it was committed to preventing fraud, money laundering and the financing of terrorism. It said that it would investigate suspicious activity and if necessary report its findings to the authorities.
A spokesman for Lloyds said: “We have effective processes in place to check the identity of customers as well as various tools to help identify suspicious activity. Where we identify any potential money laundering activity we advise the relevant authorities in line with our legal and regulatory obligations.”
