Russia’s illegal outflows reached $49 billion last year, more than half of it controlled by one organized group, central bank Chairman Sergey Ignatiev said.
The illicit transfers, which account for 86 percent of net capital flight in 2012 and about 2.5 percent of Russia’s $2.1 trillion economy, include the proceeds of bribe-taking and embezzlement by officials, payments for drug trafficking and tax evasion, Ignatiev said in an interview with the Moscow-based Vedomosti newspaper, posted on the central bank’s website today.
The bulk of the unlawful money flows “seem to be controlled by one well-organized group of people,” said Ignatiev, 65, who steps down in June.
President Vladimir Putin has backed an initiative by lawmakers to repatriate as much as $1 trillion held by high-ranking officials and companies abroad. Russia is placed the worst of any Group of 20 nation in Transparency International’s 2012 Corruption Perceptions Index published in December, placing it 133rd out of 176 countries, below Uganda and Nicaragua.
Russia needs to pass a law enabling banks to shut down accounts through which suspicious transactions pass and crack down on the corporate practice of setting up shell companies for criminal activities, Ignatiev said. A web of interconnected companies are behind most of the suspect bank transfers, he said.
“A serious effort by law-enforcement agencies would succeed in establishing the identity of these people and the beneficiaries of the operations,” he said.
Illicit capital outflows from Russia were as much as $211.5 billion between 1994 and 2011 as the underground economy moved funds abroad, according to a report published Feb. 13 by Global Financial Integrity, a group that studies financial flows.
Russia is “the most-opaque economy we have analyzed,” and the data probably underestimate the real scale of the outflows, Raymond Baker, GFI’s director, said in a note accompanying the report. “By utilizing their own pocket banks to handle the transactions, Russian corporations have been able to transfer hundreds of billions of dollars out of their country.”