British-led operation uncovers multi-billion dollar money laundering scheme running in London, Moscow and Dubai, with Russian spies and European drug traffickers using cryptocurrencies to evade sanctions I can now do it.
Britain’s National Crime Agency said on Wednesday that its “Operation Distabilize” investigation into Smart, which acts as a financial hub for global cash-rich criminals and targeted individuals who rely on cryptocurrencies outside the banking system, was sanctioned. It was announced that the investigation centered on two companies, TGR.
According to the NCA, the network was used between late 2022 and summer 2023 by customers including the Kinahan cartel and Irish cocaine traffickers involved in numerous contract murders, as well as ransomware groups and “Russian espionage operations.” It is said that it was also used to provide funding.
The illicit network, which operates in more than 30 countries, is struggling with interactions between hostile states and organized criminals at a time when economic sanctions are forcing countries such as Russia to find new ways to operate in the West. It shows that it is increasing. The incident also shows the increasing use of cryptocurrencies by people cut off from the global banking system.
Rob Jones, the NCA’s director of operations, said the investigation was the “most significant money laundering operation” the NCA had ever undertaken.
“It’s aimed at . . . a laundromat with a large collection of street cash and cryptocurrencies,” he said. “From McMafia to Narcos to le Carré. There’s espionage, there’s transnational organized crime, there’s Russian-speaking elite money laundering and cybercriminals.”
The network uses couriers to collect physical cash from criminals in certain countries, including the UK, in exchange for cryptocurrencies, with Tether being the most preferred. The cash is then laundered through the companies and equivalent value is made available in other countries.
This two-way, mutually beneficial transaction allows cash-rich cocaine kingpins to evade Western sanctions while simultaneously laundering stolen cryptocurrencies and accessing cash from Russian cybercriminals and elites. It was meant to help.
NCA officials say Tether has replaced Bitcoin as the “modern cryptocurrency” because its ties to the U.S. dollar help ensure that money retains value for criminals.
Wall Street brokerage firm Cantor Fitzgerald acquired a 5% stake in Tether. Howard Lutnick, Kantar’s majority owner and longtime CEO, has become a prominent evangelist for stablecoins and a major customer of his company. Lutnick, who co-chairs President Donald Trump’s transition team, was appointed by the president-elect last month to lead the Commerce Department.
The NCA said Russian state media group RT, which was sanctioned by the UK, also used smart networks to secretly transfer cash to support “the activities of Russian-language media organizations in the UK”. Other parts of the Russian-speaking network interacted with crypto exchanges used by Russia to procure Western technology for its invasion of Ukraine.
More than £100bn is laundered in or through the UK every year, with up to £5bn of that done through cryptocurrencies, NCA officials say. The use of cryptocurrencies for money laundering has increased significantly in recent years as travel bans caused by the coronavirus pandemic have made it difficult to move cash.
TGR, which has offices near London’s Oxford Circus and in Dubai, collaborated with Smart by accepting a large sum of cash on behalf of owner Ekaterina Zhdanova.
Zhdanova, a 38-year-old Moscow-based woman who has appeared on the cover of Russian business magazines, is facing charges from the U.S. Treasury Department for transferring more than $100 million to the United Arab Emirates on behalf of an anonymous sanctioned oligarch. accused. Zhdanova was sanctioned by the United States last year and is currently detained in France.
The NCA cited another example in which Smart and Zhdanova worked with TGR to move more than £2m for a Russian client, allowing them to avoid “customer awareness” checks to buy UK property. .
In just four months, the network collected cash from 55 locations across England, Scotland, Wales and the Channel Islands. At least 22 suspected criminal groups were using the network.
As part of the investigation, the NCA arrested 84 people, many of whom were jailed, and seized £20 million in cash and cryptocurrencies. Five individuals and several companies associated with this network have been subject to economic sanctions from the U.S. Treasury Department. The operation involved the FBI and DEA in the United States, as well as police in France and Ireland.
Wally Adeyemo, deputy secretary of the U.S. Treasury, said earlier this year that “terrorist organizations and other malign actors” are “using cryptocurrencies to evade our sanctions.” MI5 Director-General Ken McCallum said in October that Russia and Iran were “agents of criminals, from international drug traffickers to low-level criminals,” to carry out sabotage, espionage and murder operations in the UK. It is widely used as such.”
According to the NCA, TGR is run by George Rossi, his second-in-command Elena Chirkinyan, and Andreis Bredens. All three TGR executives were sanctioned by the U.S. Treasury Department on Wednesday.
“Russian elites, through TGR Group, exploited digital assets, particularly stablecoins backed by the US dollar, to circumvent US and international sanctions and further enrich themselves and the Kremlin.” said Bradley T. Smith, acting U.S. counterterrorism secretary. financial intelligence.
The NCA said that Smart and TGR’s crypto wallet addresses show regular exposure to Galantex, a UK- and US-licensed crypto exchange, in 2022, which was linked to Russia’s invasion of Ukraine. “Payments to companies for parts of used weapons.” .
Money laundering illustration by Cleve Jones