Europe's Largest Laundrette

Europe's largest laundrette has been revealed and it's in Britain. But this outfit wasn't set-up with the intentions of keeping Mr Jones looking fresh and clean for work, but rather laundering Mr Bigs' loot. It was about laundering ill-gotten gains from prostitution, people trafficking, drug trafficking, illicit arms deals and corruption, and to make it all look respectable by making illegitimate money legitimate, then funneling it through the economy. Some may argue that if the loot gets recycled and put to good use, creates businesses and provides work for people in these desperate times then maybe just look the other way? I guess that depends on the size of the operation, if the illicit activities amounts to millions of dollars, then it's a good fish for the establishment to fry and the predictable happens. The criminals are marched off in handcuffs, the media is invited to take living color photos of the villains with their bundle of illegal substance in clear view on a table with a burly policeman standing proudly by. It is a victory for law and order and the government of the day is given a pat on the back by the electorate.

But this money laundrette didn't involve millions of dollars, it was massive in scale and at least 19 UK household name firms are under investigation. It was truly international in nature and high level corrupt officials around the globe have been caught up in the scandal. 

The scale of this money laundrette would have made the notorious American gangster, Al Capone, look like a small time villain. The aim of this massive global underworld operation was to make 20 billion US dollars of dirty money look legitimate.

When it’s a white collar crime of that magnitude it is just too big to jail. An article in The Independent, entitled “The great British money launderette”, dated October 15, reports that “An investigation by Organised Crime and Corruption Reporting Project, an NGO, has identified dozens of firms in a global web spreading from Birmingham to Belize”. At the heart of the investigation are front companies in the UK into one of Europe’s biggest money-laundering operations, allegations that criminal gangs and corrupt officials conspiring to make $20bn (£12.5bn) of illegitimate money look legitimate. The funds are believed to have come from major criminals and corrupt officials around the world wanting to make their ill-gotten cash appear “clean”, so they can move the funds in the legitimate economy without creating suspicion.

There are at least 19 UK-based front companies under investigation. Those calling for tighter corporate laws in the UK are using the scandal to highlight how lax corporate rules have made the UK a hotbed destination for global organised crime. Apparently, according to the article, the secrecy that company directors are entitled to under UK law is also making it extremely complex to identify who the big player, the kingpin behind Europe's largest money laundering operation, actually is.

Money laundering involves creating the impression that dirty money has been earned through legal means. This major scam involving billions of dollars has been going on four years without alerting the attention of the regulators and the authorities. But it was finally shut down in May by the authorities in another of its main centers, the former Soviet republic of Moldova.

Vasile Sarco, an investigating officer in Moldova, told The Independent: “This money was routed from Russia, but the companies incorporated in Britain were instrumental to transit the funds.”

But due to the sheer volume of money involved the deception, the scam, had to be more complex, so that it gave the illusion of credibility to the authorities. It is difficult to launder billions of dollars through say a retail pizza operation. Billions of dollars laundered through a restaurant, or night club, a “window type business operation,” would look suspicious and raise the alarm bells. It just wouldn't look credible. Moreover, documentation is required for moving such large scale amounts of cash.

So the kingpins masterminded another more complex web of deception involving front companies, corrupt officials and bankers to launder the billions of dollars through the banking system. The deception went something like this; front companies in the UK were created with the sole purpose of carrying out massive phoney business deals between themselves. These front companies then sued each other in courts in Moldova, demanding the repayment of hundreds of millions of pounds of loans. Then a corrupt judge in Moldova, a small Eastern European country whose legal system is not considered as robust as those in Western Europe, would rule in favor of the claimant company with an all-important signed court document ordering the debt to be paid. The cash, sometime amounting to hundreds of thousands of dollars was then given to the claimant company from the front company. The claimant company would then launder the money through the British banks and with a court document ordering the debt to be paid, nobody would bat an eyelid. The money is given a clean appearance and enters the EU banking system and the owners of the front claimant company are free to spend the money how they wish.

Although the British companies were registered at ordinary-looking office buildings in London, Edinburgh, Belfast, Glasgow and Birmingham, their real ownership is hidden by a web of brass-plate entities and nominee directors in secretive tax havens like the Seychelles, the Bahamas and the Marshall Islands.

For example, one of the companies based in Edinburgh lists its shareholders as two untraceable companies in Panama and Belize. They’re a bit like Russian dolls, you open one, and there is another one inside, and it goes on and on and on ...you never discover the identity of the Kingpin. He is sheltered, within the law, I guess he is just too big to jail.