British-registered shell companies routinely used Baltic banks to launder millions of dollars, American-born financier Bill Browder told Bloomberg a day after the UK's role in Danske Bank's Estonian money laundering scandal was revealed.
Browder, the CEO of investment fund Hermitage Capital Management and former employer of Russian lawyer Sergei Magnitsky, made the claim on Friday when the UK's National Crime Agency (NCA) said it would look into the role of British companies. According to the Danish bank, UK-based businesses and people followed Russia as the second-largest source of foreign clients at its Estonian branch.
"These UK companies laundered tens of millions of dollars through Baltic banks, but reported zero balances and zero activity" in publicly filed documents, Browder said in emailed comments. "When we've reported this situation to the UK authorities, they've taken no action in the past."
In his email, Browder said that in his company's investigation into Russian money laundering, they found "significant use" of UK shell companies.
"The threat posed by the use of UK company structures as a route for money laundering is widely recognised and the NCA is working with partners across government to restrict the ability of criminals to use them in this way," the NCA said in a statement.
The NCA's comments came after the Financial Times reported that it had launched a criminal investigation into an unidentified UK-registered limited liability partnership with links to the Danske Bank branch at the centre of the scandal. The NCA operates the UK's Financial Intelligence Unit, which receives analysis and shares information gathered from reports of suspicious activity.
The British Serious Fraud Office said in a statement that it could neither confirm nor deny any interest in Danske Bank. A spokesperson for the Financial Conduct Authority, which regulates banks in the UK, did not have any immediate comment and said he would look into the matter further.
According to an 87.-page bank report on the matter, customers came from 90 countries to use the Estonian branch, with people or businesses from Russia, the UK and the British Virgin Islands being the main clients outside of Estonia.
Browder lobbied for the United States Congress to pass the Magnitsky Act in 2012. The law, named for his lawyer, is intended to punish human rights offenders by freezing their assets as well as prohibit them from entering the US. Magnitsky died in a Moscow prison after launching an investigation into Russian tax fraud.
Danske: Estonian operations suspicious
According to Danske Bank, a large part of the operations of the bank's Estonian branch need to be treated as suspicious. Danske CEO Thomas F. Borgen announced his resignation on Wednesday, and criminal investigations are ongoing.
An audit ordered by Danske Bank showed that most of the 10,000 non-resident customers of the bank's Estonian branch were suspicious, and it is likely that most of the transaction flow amounting to over €200 billion was suspicious.
Danske reported eight people to the police on Wednesday on suspicions of money laundering activities. Additionally, Danske informed the Financial Intelligence Unit about 42 people connected with suspicious transactions.
Editor: Aili Vahtla