Bankers Targeted in $20 Billion Moldovan Laundering Case

Moldova plans to charge four or five bankers with money laundering, saying they helped shift as much as $20 billion in illicit cash from Russia to Latvia.

“The investigation is close to being finalized,” Vasile Sarco, head of the country’s money-laundering prevention unit, said by phone. Moldova’s central bank has fined a local lender and its management after a probe into $18 billion to $20 billion of suspicious transactions between 2010 and 2014, Governor Dorin Dragutanu said.

The scheme was first reported by the Organized Crime and Corruption Reporting Project, a non-profit investigative journalism center, which said it’s the largest it’s encountered in the former Soviet Union. The figure is more than double the size of Moldova’s $8 billion economy. Latvia, which became the euro area’s 18th member in January, has grown into a hub for ex-Soviet cash, drawing comparisons with Cyprus.

Citing a yearlong investigation, the OCCRP -- which has offices in Bucharest and the Bosnian capital of Sarajevo -- alleged that 19 Russian banks used fake debts and court cases in Moldova to legitimize the money, transferring the funds from Moldova’s Moldindconbank to Latvia’s Trasta Kommercbanka AS.

Moldindconbank called the accusations “groundless,” saying all of its operations have “fully respected Moldova’s legislation and central bank rules,” according to a statement e-mailed Sept. 11.

A ‘Fact’

Trasta strictly followed all laws, spokeswoman Marina Lebedeva said by e-mail, declining to comment further citing legal restrictions.

Russia’s anti-money laundering authority, Rosfinmonitoring, declined to comment on the case. Viesturs Burkans, head of Latvia’s anti-money laundering division, also declined to comment, citing legal restrictions.

The case “is known as a fact,” according to Kristaps Zakulis, director of Latvia’s bank regulator. “There have been and are attempts, not only in Latvia, but in other countries’ financial systems” to move money around, he told a Sept. 4 news conference.

Latvian and Moldovan banks -- alongside lenders in Switzerland, Cyprus and Lithuania -- were used to launder parts of $230 million in proceeds from Russia’s biggest-known tax fraud in 2007, according to Hermitage Capital. Hermitage legal adviser Sergei Magnitsky, who exposed the scheme, later died in a Moscow jail.

Latvia levied a fine of about 140,000 euros ($180,000) on one bank it refused to identify. Moldova identified several suspicious transactions and fined one bank, according to central bank head Dragutanu, who didn’t name the lender in question. Five bankers are under investigation, he said.

JPMorgan Chase & Co. last year cut off local Latvian lenders from dollar clearing along with 500 lenders around the world, according to the Latvian commercial bank association.

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