UK to investigate any UK bank involvement in "Laundromat" case

An HSBC logo with Chinese characters sits on display outside an HSBC Holdings Plc bank branch in London, UK in 2015.
An HSBC logo with Chinese characters sits on display outside an HSBC Holdings Plc bank branch in London, UK in 2015.PHOTO: BLOOMBERG

LONDON (REUTERS) - Britain said on Tuesday (March 21) that authorities would investigate newspaper allegations that UK-based banks had been used in a global money laundering scheme.

A Reuters report published earlier this month shone light on a Moldovan "Laundromat" probe into an alleged Russian-led money laundering scheme, in which US$22.3 billion (S$31.2 billion) passed through Moldova using Russian shell companies and fictitious loans from offshore companies based in Britain from 2011 to 2014.

The Organized Crime and Corruption Reporting Project (OCCRP), an East European media network, and Russian newspaper Novaya Gazeta have also shared documents and data with the Guardian newspaper and media partners about the alleged involvement of British banks.

British lawmakers tabled an urgent parliamentary question after newspaper reports that banks including HSBC, the Royal Bank of Scotland, Coutts and Standard Chartered were named as among banks that did not turn away suspicious money transfers.

"The Financial Conduct Authority (FCA) and the National Crime Agency (NCA) ... will investigate closely whether recent information from the Guardian newspaper regarding money laundering from Russia, or indeed any other media source, would allow the progression of an investigation," city minister Simon Kirby said in parliament on Tuesday .

"What is important is that if these allegations are correct, if they present any new information, that both the NCA and the FCA act on it appropriately," added Kirby, responding to a question raised by the opposition Labour Party.

The NCA said the case involved a number of UK-established companies and that, according to current information, the bank accounts involved were almost entirely held in non-UK jurisdictions.

It said the money therefore did not "generally"move through the UK's financial system.

"The NCA remains willing to consider any formal request for assistance from the Moldovan authorities in connection with their investigation, and will consider whether information provided by the Guardian or other media sources would allow the progression of an investigation," it said in a statement.

The FCA, tasked with ensuring that banks and financial services companies have adequate, proportionate and efficient safeguards to prevent them being used for financial crime, declined to comment.

According to data compiled by the OCCRP and published by the Guardian, HSBC saw US$545 million routed through its UK and foreign branches.

HSBC is still subject to a five-year deferred prosecution agreement made in 2012 with US authorities over lapses in its anti money laundering controls.

"HSBC is strongly committed to fighting financial crime,"the bank said in a statement. "The bank has systems and processes in place to identify suspicious activity and report it to the appropriate government authorities. This case highlights the need for greater information sharing between the public and private sectors, each of whom holds important information the other does not."

RBS, which owns Coutts, and Standard Chartered also said they were committed to combatting financial crime and money laundering. Standard Chartered said it would investigate any indications of suspicious activity.

The NCA said potential money laundering investigations were complicated when it was impossible to establish a criminal source for funds, such as drug supply, human trafficking or corruption without cooperation from the foreign jurisdictions.