Over the past several decades, Russia's oligarchs have sent billions of dollars worth of illegal income abroad. By doing this they have made it difficult to detect.
Since Russia's attack on Ukraine, many countries of the world are resorting to new sanctions and laws to find this 'dark money. His move is likely to harm these oligarchs close to Russian President Vladimir Putin.
How much 'dark money' does Russia have in the world?
According to the Atlantic Council, a US-based think tank, Russians are estimated to have about $1,000 billion in hidden 'dark money abroad.
The organization, in its report released in 2020, estimated that a quarter of this amount is with Russian President Vladimir Putin and his close allies, known as 'oligarchs'.
That report said, "Russia can use this money for espionage, extremism, industrial espionage, bribery, political manipulation, propaganda, and many other things."
Where did this black money come from?
Another US think tank 'National Endowment for Democracy' claims that Vladimir Putin has encouraged his close ones to make money.
According to the organization, Putin encouraged his allies to "plan to steal from the state budget, extort money from private businesses and seize profit-making enterprises".
This organization says that in this way they have prepared private businessmen running in thousands of crores.
Russian opposition leaders Boris Nemtsov and Vladimir Milov claim that between 2004 and 2007, $60 billion was transferred from oil giant Gazprom's money to businessmen close to Putin.
According to the Pandora Papers released by the International Consortium of Investigative Journalists, businessmen close to Vladimir Putin have become very wealthy. It is claimed that these businessmen can help themselves to move their assets here and there.
Where is all this money after all?
In the past, most of this money went to Cyprus, because the tax system there was friendly. To many, the island became known as the 'Moscow of the Mediterranean Sea'.
According to the Atlantic Council, there were $36 billion transferred from Russia in 2013 alone. Most of this money reached there through shell companies (fake companies). These shell companies are used to hide the real owners.
However, in 2013, the International Monetary Fund (IMF) convinced Cyprus to close thousands of bank accounts of shell companies.
British-controlled islands such as the British Virgin Islands and the Cayman Islands are also favorite destinations for Russian money. Some of this money is sent to major financial cities like New York and London for investment.
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At the same time, a report by Global Witness states that in 2018, about $ 45 billion are lying in such 'tax haven' places near Russia's oligarchs.
Anti-corruption organization Transparency International claims that at least $2 billion in wealth in Britain is held by Russians or Kremlin affiliates facing charges of financial crimes.
The prevalence of Russia's money laundering was highlighted in a report titled 'Russian Laundromat' released in 2014 by the Organized Crime and Corruption Reporting Project.
The report claimed that between 2011 and 2014, 19 Russian banks had converted $21 billion from black to white in 5,140 companies from 96 countries.
How is money hidden?
Shell companies are the most common way to hide money. Russian oligarchs mainly resort to shell companies to hide their money abroad.
"These oligarchs employ the world's best lawyers, auditors, bankers, and lobbyists to develop legal means to hide and launder money," says the Atlantic Council.
According to the organization, "an oligarch has several anonymous shell companies with offshore jurisdiction. Their money flows between them at lightning speed."
The International Consortium of Investigative Journalists published the 'Panama Papers' in 2016. It was shown that a single company had created 2,071 shell companies for Russian oligarchs.
What's going on to find Oligarch's money
After the attack on Ukraine, Western countries have announced several measures to trace Russian money. The US is forming a task force named 'Kleptocapture' to crack down on the money of Russian oligarchs.
This task force will be handled by the Justice Department there. Its job will be to confiscate the property collected by illegal means.
At the same time, the UK government has decided to increase the use of the Unexplained Wealth Order (UWO). This could force people to prove where they raised money to buy property in Britain. Failure to do so may result in their property being confiscated.
The Account Freezing Order (AFO) empowers the courts to order confiscation of money if it is suspected that any money has been raised through criminal activities.
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