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The Troika Laundromat: Five Quick Takeaways

Ruben Vardanyan has denied any wrongdoing.
Ruben Vardanyan has denied any wrongdoing.

With the financial world reeling from the news that an almost $9 billion global money-laundering scheme was allegedly set up and run by Russia's largest private investment bank, here are five quick takeaways based on what we know so far from the revelations published by the Organized Crime and Corruption Reporting Project (OCCRP).

1) Some People Have Been Thrust Uncomfortably Into The Spotlight

Western-friendly Russian-Armenian businessman Ruben Vardanyan has long been known for his philanthropic activities and has been photographed at events with prominent celebrities such as Hollywood actor George Clooney. Now the former head of the Troika Dialog bank is in the news for less salubrious reasons. Although the OCCRP stresses that there is no "definitive evidence" Vardanyan knew about the so-called "Troika Laundromat," he was "Troika's president, chief executive officer, and principal partner" at the time when the money-laundering scheme was in operation. He can now expect to be the subject of some extreme media scrutiny in the coming weeks.

Another person who may also attract press attention is Armen Ustyan. Somehow, this construction worker from northern Armenia who makes a living renovating apartments in Moscow has emerged as a central figure in many Laundromat transactions. The OCCRP says Ustyan's name and a copy of his passport appear in documents for one of the offshore companies implicated in the scheme and "his signature appears on at least $70 million worth of financial agreements." The seasonal laborer told the OCCRP that he had no knowledge of any of this and said he believed his signature was forged.

2) Oversight Was Lax, To Say The Least

Many suspicious transactions seem to have been funneled through Lithuania's Ukio Bankas with minimal oversight. Although Laundromat companies were using suspicious-looking sales to move money in and out of Ukio, none of these operations were flagged by the bank's compliance officers. A number of large Western banks, including Raiffeisen and Commerzbank AG, are also known to have accepted Laundromat money and it's fair to say questions are going to be asked of these institutions, although the OCCRP admits "they did sporadically inquire into the nature of some transactions." Ukio Bankas was placed in administration by Lithuanian authorities in 2013 after getting into financial difficulties.

3) Yachts, Luxury Cars, And Prince

The Laundromat's transactions were so complex and convoluted that the OCCRP says it's often hard to know exactly where the money went. The cash the group did manage to track down, however, was frequently spent on classic oligarch fare, such as "yachts, luxury cars, [and] estates."

One particular outlay that is bound to raise eyebrows is a star-studded party in Moscow in 2007 that included a private concert by the late popstar Prince, which the OCCRP says was at least partly funded by a Laundromat company.

Further revelations are also in the pipeline: The Sarajevo-based group has teased an upcoming report on its website with the headline "The Senator's Superyacht Spending Spree" and says it will soon show how "a wealthy Russian politician funded his maritime passions through a complex network of offshore companies set up by Troika Dialog." Watch this space....

4) The Russian Governor And The Spanish Villas

Although the OCCRP's report has uncovered some more information on well-known financial scams, such as the Magnitsky case and the Sheremetyevo Airport fuel fraud, it has also shed some light on other potential corruption cases. One person who might find himself answering uncomfortable questions in the near future is Vladimir Artyakov, the former governor of Russia's Samara region. The OCCRP found that Laundromat companies gave an 80-year-old Russian woman nearly $15 million in unsecured loans and that a large portion of this cash was used to buy two mansions on Spain's Costa Brava. According to the OCCRP, the octogenarian lived in the same Moscow apartment as Artyakov and the Spanish real estate is now owned by his son, Dmitry, and his wife.

5) Don't Expect Heads To Roll Anytime Soon

Because things like fake contracts and invoices were used to cover transactions, it's safe to assume that the laundromat may well have been engaged in illegal activity. However, given the complexity of the financial operations involved, it's likely that pursuing a criminal prosecution will be fiendishly difficult. With so much money being shuffled through accounts in several countries and in various currencies, investigators will have a torrid time trying to ascertain which jurisdictions' laws applied and if a crime occurred. And even if they can prove that some of these transactions were criminal, it's quite possible that the statute of limitations will have expired.