More Snapshots from the FinCEN Files

More than 400 journalists in 88 countries worked together for 16 months on this investigation. Together they scoured over 2,100 confidential reports filed to the U.S. Treasury Department’s intelligence unit over the course of several years. In total, they have produced dozens of stories on what they found.

Below is a selection of interesting snapshots that reporters from OCCRP and our member centers found in the FinCEN Files. They show how a notorious Ukrainian arms dealer was able to move dollars even after he was accused of trying to smuggle weapons from North Korea to Iran; detail the underground financial network both a Russian organized crime group and the boss of a state-owned company used to shift their cash; and expose how Lithuania’s largest company has been secretly selling fuel to the separatist region of Transnistria for years.

Watch this space for more finds from the FinCEN Files in coming days and weeks.

  1. FinCEN Files Show How a Notorious Weapons Dealer Moved Money Abroad
  2. Russian Gang Leader and State Company Boss Used Same Underground Network to Move Illicit Funds
  3. Russian Billionaire’s Offshore Firm Paid Millions to Vladimir Putin's Adviser
  4. Real Knitting, Dubious Transactions
  5. Leaked Data Exposes Covert Lithuanian Trade with Transnistria
  6. Russian Telecom Giant Paid Over $5 Million to an Offshore Firm Implicated in Embezzlement

🔗About This Investigation

The FinCEN Files is a 16-month-long investigation by the International Consortium of Investigative Journalists, BuzzFeed News and more than 400 international journalists in 88 countries, including those from OCCRP and its network of member centers.

The investigation is based on more than 2,100 secret bank reports filed to the U.S. Treasury Department’s intelligence unit, the Financial Crimes Enforcement Network, other documents and dozens of interviews.

FinCEN Files Show How a Notorious Weapons Dealer Moved Money Abroad

An offshore firm tied to an infamous arms broker was able to keep trading in dollars despite his alleged involvement in major international weapons smuggling, the FinCEN Files reveal.

On December 11, 2009, Thai police boarded a Soviet-built Ilyushin cargo plane refueling in Bangkok en route from North Korea to Iran and found it loaded with 35 tons of weaponry, in flagrant breach of U.N. arms sanctions on both countries. Images of the mysterious plane with tail number 4L-AWA flew around the world.

An investigation by the U.N. Panel of Experts on North Korea established that the New Zealand-based shell firm SP Trading was behind the shipment and was owned by Ukrainian arms broker Iurii Lunov, operating together with Kazakh aviation businessman Aleksandr Zykov.

Ten weeks after the incident, Deutsche Bank Trust Company Americas filed a Suspicious Activity Report (SAR) to U.S. authorities on SP Trading, followed by a second SAR in 2011 about the notorious formation agent who had registered the firm.

But OCCRP has found that, despite having flagged SP Trading as suspicious back in February 2010, Deutsche Bank’s U.S. subsidiary was still processing dollar payments four years later for an offshore firm believed to have links to Lunov. Deutsche Bank did not immediately respond to a request for comment.

Dollar wire transactions require the involvement of a U.S. bank even if, as in this case, the transfer is for an account at another bank.

Back in 2010, Lunov’s SP Trading was a customer of the notorious Estonian branch of Danske Bank, which has been accused of laundering hundreds of billions of dollars and closed in 2019. Deutsche Bank’s U.S. subsidiary was the correspondent bank to Danske, providing dollar transactions for its customers, including SP Trading.

Although the SP Trading scandal broke in December 2009, Danske did not close the company’s account until Lunov asked them to do so five months later, according to emails obtained by OCCRP. In their correspondence, he thanked the bank for its collaboration.

The fact that SP Trading went “unchallenged and ignored” shows how bad the situation is, said Martin Woods, an anti-money laundering expert. “An entire supply chain of supposedly regulated businesses, including banks and company formation agents as well as official government company registration offices fail[ed] to act.”

The emails also reveal that Lunov had a second account with the Danish bank in the name of a U.K. shell firm, Ostwest Alliance Ltd, which was also involved in arms dealing.

“It is clear that we should have never had that portfolio of non-resident customers,” Danske Bank’s Chief Compliance Officer Philippe Vollot told OCCRP and FinCEN Files reporters. “It is also clear that we were too slow in realising the extent of the issues and to close it down.”

🔗Red Flags, Checkered Past

If Ostwest’s involvement in the arms trade was not enough to warn Danske Bank, there were also red flags in Lunov’s past. The arms broker had played a role in another sanctions-busting scandal almost a decade earlier. Another shell firm with the name SP Trade along with the same Kazakh company central to the 2009 case, GST Aero, later renamed East Wing, were behind the smuggling of nuclear-capable Soviet X-55 cruise missiles to Iran and China — likely destined for North Korea — in 2000 and 2001. Lunov was never convicted or charged. But his partner in the deal, Vladimir Evdokimov, received a jail sentence of six and a half years from the Ukrainian court overseeing the case.

Lunov requested that Danske close both accounts in April 2010 and asked for the balance to be transferred to a bank account belonging to a recently created Cyprus firm, Esselex Investments Ltd.

While this indicates that Lunov had ties to Esselex Investments, their exact relationship is unknown. Ownership of the Cypriot company records is hidden behind proxies, but like Ostwest, Esselex declares itself to be an arms trader in its articles of incorporation.

Esselex was still able to make dollar transactions through its Estonian bank account via Deutsche Bank Americas correspondent accounts as late as 2014, another SAR from the FinCEN Files reveals. (Given offshore secrecy, it is not clear whether Lunov still had a relationship to Esselex at that point.)

The SAR flagged $8.5 million in payments from Esselex and other shell companies to a British firm called Samertaym LLP over two weeks in June and July 2014, through Deutsche Bank. Deutsche Bank noted that these transfers had no clear business purpose and raised suspicions of money laundering.

Esselex still exists. In 2016, it was listed as the purchaser in a draft contract with UK firm S-Profit Ltd for the sale of an S-125 M1 Pechora anti-aircraft system for $3.9 million.

OCCRP and Amnesty International obtained the contract while investigating S-Profit for intent to breach an EU arms embargo on South Sudan but could not confirm whether the contract was implemented or not.

Lunov did not respond to questions sent by OCCRP, nor to repeated phone calls.

- Graham Stack

Russian Gang Leader and State Company Boss Used Same Underground Network to Move Illicit Funds

Suspicious activity reports filed by U.S. banks reveal that an organized crime group that illegally extracted over US$2 billion from Russia, and the boss of a state-owned military firm who allegedly took kickbacks, may have relied on the same underground financial network.

Sergei Magin, the leader of one of the largest “dark money” organized crime groups in modern Russia, was released from a prison colony in March 2019 after serving almost eight years. His criminal enterprise reportedly managed to extract more than $2 billion from banks in Russia and cash out the money abroad. Magin — whose gang nickname is “Seryozha Two-Percent,” a nod to his service fee — and his accomplices reportedly made more than $10 million in commissions for the schemes.

Three months before Magin’s release, Leonid Teyf, the former deputy head of Russia’s state-owned military supply company, Voentorg, was arrested in the U.S. on corruption-related charges. U.S. authorities allege that Teyf, his wife Tatyana, and their accomplices embezzled $150 million from Russia, and that Teyf took kickbacks from contractors working for Voentorg, which is owned by Russia’s Ministry of Defense. Over $39 million was transferred to U.S. bank accounts that belonged to the Teyfs and their accomplices.

The FinCEN Files reveal that Tatyana Teyf received money from a Hong Kong company that had just received millions from a Russian company Magin used in his extraction scheme. According to an indictment, a total of $2 million was transferred from Hong Kong into Teyf’s U.S. bank account.

Suspicious Activity Reports filed by the New York branch of Standard Chartered Bank show that Hong Kong-based Ringo Trading Limited transferred $391,900 into Teyf’s account, for debt repayment in December 2012. In the weeks before, Ringo Trading had received more than $5.4 million from the Russian company Premier Group for the transport of unnamed goods.

Ringo Trading had already been flagged as suspicious in Hong Kong because the entity appeared to be a “pass-through” vehicle for transferring funds, according to the bank report.

A document seized by investigators during a search of Magin’s apartment, and obtained by OCCRP’s Russian partner Important Stories, lists the names of Russian companies used by Magin’s network to move money out of Russia, as well as the destination jurisdictions where that money would be withdrawn. Premier Group was on the list in connection with Hong Kong.

Magin was released eight months early after paying a fine of around $3,000. Leonid Teyf faces up to 20 years in an American prison, while his wife and other accomplices face up to 10 years. In addition to money laundering and other financial crimes, Teyf is accused of planning the murder of his wife’s lover.

- Roman Anin and Irina Dolinina

Russian Billionaire’s Offshore Firm Paid Millions to Vladimir Putin’s Adviser

An offshore holding company owned by billionaire Alisher Usmanov paid an adviser to Russian President Vladimir Putin US$6 million between 2006 and 2008. The payments to the adviser, Valentin Yumashev, from Epion Holdings Ltd, a company registered in the British Virgin Islands, were reported to U.S. authorities by JP Morgan Chase Bank because of corruption risks. The bank listed a generic “services” agreement as the reason for the transactions.

Before Yumashev worked for Putin, he headed the administration of his father-in-law and first Russian president Boris Yeltsin. According to reporting by Russian news outlet Meduza, Yumashev “personally” chose Putin as Yeltsin’s successor two decades ago.

In 2018, the Kremlin’s website announced the appointment of Yumashev as an unpaid, voluntary adviser to the Russian president. Putin’s press secretary clarified that Yumashev had actually held this position since 2000.

It’s unclear what kind of services Yumashev provided to Usmanov, whose companies span the telecommunications, mining and media industries. An acquaintance of the presidential adviser alleged in an interview with Russian newspaper Vedomosti that Yumashev has been working as a lobbyist since 2000.

“He has access to the corridors of power, and a call from him to ministers, heads of large companies, and to powerful businessmen isn’t something out of the ordinary. His circle of connections is wide. Yumashev is respected, he’s perceived as a person close to Vladimir Putin, and as someone who acts with [the president’s] approval,” said the unnamed source.

Yumashev reportedly settled a business conflict between the billionaire co-owners of Norilsk Nickel, Oleg Deripaska and Vladimir Potanin. Deripaska was married to Yumashev’s daughter until 2018 and, according to an interview the presidential adviser gave to Russian newspaper MK in 2011, the oligarch subsidized the family’s expenses.

“If we earned millions, then somewhere they must be physically represented. But neither Tanya nor I have any planes or villas in France or England,” Yumashev said, referring to his wife. “If in 2001 my daughter had not married Oleg Deripaska, we would have had a significantly different standard of living,” he added.

That was three years after Yumashev received $6 million from Usmanov’s company for unknown services.

Neither Yumashev nor Usmanov responded to requests for comment.

- Irina Dolinina

Real Knitting, Dubious Transactions

In the quiet village of Gajdobra, in northwest Serbia, sits a hosiery factory touted by the government as a shining example of the kind of foreign investment the country needs.

Since its arrival in 2011, the Real Knitting factory, which produces tights and socks for export and has been presented in Serbian media as a Russian-Italian venture, has received almost 2 million euros in government subsidies. It was even granted a plot of state-owned land in 2014 so it could expand its operations.

On a sleek website, Real Knitting touts its Italian provenance, calling itself “the story of a successful Italian know how company driven by a true entrepreneurial spirit.”

But all may not be as it seems with Real Knitting. It is actually owned by a Serbian firm, while its parent company, Alpha Retail Group Ltd, is registered in Hong Kong and owned by an Armenian citizen living in Lithuania.

And for several years, Alpha Retail has been moving large amounts of money across the world for unclear reasons.

One of these questionable transactions, around $1.2 million, was sent to the Real Knitting factory at the beginning of 2013.

The transaction was among 723 other “suspicious wires” flagged by Bank of New York Mellon as part of a review of dollar transfers it had processed on behalf of Latvia’s Norvik bank (now called PNB Banka).

This information came to light as part of the FinCEN Files, a 16-month-long investigation by the International Consortium of Investigative Journalists, BuzzFeed News, and OCCRP based on top-secret bank reports filed to the U.S. Treasury Department’s intelligence unit.

The bank noted that the transfer was suspicious because it was made by a shell company, its origin was not known, and it was transferred through jurisdictions considered high risk for money laundering — in this case, via Latvia.

Representatives of Real Knitting and Alpha Retail did not respond to multiple requests for comment.

Journalists from KRIK and OCCRP researched Serbian company records and discovered more oddities.

In addition to the $1.2 million flagged by BNY Mellon, over $7 million in U.S. dollars and 17.9 million euros were wired from Alpha Retail to its Serbian factory, in 49 separate transactions, all described as loans, between 2011 and 2015. After the money arrived, the factory’s sole shareholder, Alpha Retail, decided to repay the funds to its bank account in Singapore. (It is unclear how exactly how much of the total was paid back.)

Experts who viewed the documents said the transactions were difficult to explain by normal patterns of business activity.

“It is not possible to determine the origin of the money that arrived [in Serbia] as loans from the mother company,” said independent auditor Ljubisa Stanojevic.

Alpha Retail Group was founded by a Russian, Alexandr Viktorovich Efimenko, but the company’s ownership was transferred three separate times, finally ending up in 2017 in the hands of Armenian businessman Koryun Chilingaryan, who is based in Lithuania, according to documents from the Hong Kong business registry.

Before taking over the firm, Chilingaryan managed two textile companies in Lithuania, both of which were fined for illegal activities. In one case, his textile company was dinged by Lithuanian tax inspectors for not paying taxes. A second company he managed, which sold Italian underwear, was fined for employing workers illegally.

The Real Knitting factory in Serbia was also fined by labor inspectors two years ago because it didn’t have adequate worker safety equipment or allow workers to have weekends off.

The factory employs around 600 people, many of them commuting to Gajdobra from surrounding villages.

🔗Factory workers complain of sweatshop conditions

Current and former workers at the Real Knitting factory told KRIK journalists they had been subjected to harsh working conditions, including extreme temperatures and a refusal to let workers take bathroom breaks.

Tamara Čambor, who spent almost five years operating a sewing machine at Real Knitting for a monthly wage of around 300 euros, met a journalist for a coffee in her home town of Bačka Palaka, chain-smoking as she recalled working in stifling heat in the summer, and such bitter cold in the winter that she had to wear her jacket indoors.

At times, summer temperatures in the factory became so extreme that workers would faint.

“Three times the ambulance came and took women who passed out,” she said.

Čambor believes she was fired after participating in a strike in which she negotiated with the boss in the winter of 2015, because workers were too cold to go on.

“If I hadn’t been fired, I would probably have quit myself, because ... it was terrible,” she said.

The factory director and Real Knitting’s parent company did not respond to multiple requests for comment.

- Bojana Jovanović, Sara Smolović, Dragana Pećo, Šarūnas Černiauskas

Leaked Data Exposes Covert Lithuanian Trade with Transnistria

Sandwiched between Moldova and Ukraine, the self-proclaimed state of Transnistria still bears the hammer and sickle of the Soviet Union that gave it birth on its flag. Miles away in the Baltic state of Lithuania, where the collapse of the USSR began, that same symbol is officially banned.

But despite their very different ideologies, Lithuania’s largest company has been quietly trading with the separatist-controlled region of Moldova for years.

Details from a cache of leaked bank reports show Orlen Lietuva — which is largely owned by the Polish state and operates the only oil refinery in the Baltics — has sold millions of dollars worth of petroleum to Transnistria’s largest corporation, Sheriff LLC. Discrepancies in official trade figures indicate the value of Orlen Lietuva’s Transnistrian sales could even stretch into the tens of millions.

Most of these fuel exports appear to have been routed through Ukraine into Transnistria to avoid paying import duties to Moldova, international trade data suggests.

Transnistria, a narrow strip of land east of the Dniester river on Moldova’s border with Ukraine that declared independence after Russia-backed separatists fought a brief civil war in the early ’90s, is not subject to European Union sanctions on trade, so the shipments are not illegal. But Laurynas Jonavicius, a political scientist based in Vilnius, said revelations that Orlen Lietuva had been supplying Sheriff and bypassing Moldovan import tolls could cause a scandal in Lithuania, Moldova, and Poland.

“If that is true, this could be a story with resonance,” he told OCCRP.

Sheriff is the most powerful company in Transnistria, a sprawling behemoth with interests in everything from petrol stations, hotels, and supermarkets, to a TV channel and the region’s major telecoms network. Its holdings also include large regional bank Agroprombank and Moldovan football champions F.C. Sheriff Tiraspol. Its yearly sales typically exceed Transnistria’s annual budget.

Founded by two former security officers, the conglomerate also has wide-reaching political influence. As well as sponsoring the ruling party and subsidizing the state, Sheriff has also reportedly influenced the choice of top Transnistrian politicians, including the current president.

Jonavicius said Sheriff has a “monopoly on all aspects” of life in Transnistria. “Trade, economy, energy, legal business, illegal business, sports, culture — whatever you pick, it’s connected to Sheriff,” he explained.

A leaked Suspicious Activity Report (SAR) filed by HSBC Bank U.S.A. in May 2016 flags one of Sheriff’s founders and the company’s director at the time, Ilya Kazmaly, as a “politically exposed person. It also lists Orlen Lietuva as Sheriff’s top trade partner in Lithuania, noting the oil refiner received $4.4 million through Agroprombank between April 2012 and October 2015.

In total, HSBC reported 95 transactions by Sheriff totalling almost $8.3 million. Orlen Lietuva received more than half of that amount in 16 wire transfers.

Other sources suggest the scope of Orlen Lietuva’s Transnistrian trade could be far larger. While Orlen Lietuva never mentions Sheriff or Transnistria in its official annual reports, Sheriff lists the Lithuanian refiner among its principal suppliers, using its old name, Mazeikiu Nafta.

Disparities in trade data also indicate significant amounts of refined oil may have flowed from Lithuania into Transnistria through Ukraine. For many years Chișinău had no authority over the separatist region’s eastern border, so goods imported via this route were not counted in official statistics or subject to Moldovan duties.

U.N. Comtrade data show Lithuania exported $131.37 million worth of fuel to Moldova between 2011 and 2019, but Moldova only recorded importing $37.38 million worth of petrol products from Lithuania over the same period. That means up to $94 million of petrol products may have made their way into the breakaway region through Ukraine.

Victor Parlicov, who was the chairman of Moldova’s national energy regulatory body when Lithuania’s petrol exports were peaking, said the disparity in the data is likely down to Transnistria’s imports. The discrepancies started in 2010, when Moldova started raising excise duties on fuels, and grew rapidly. By 2016, U.N. data shows Lithuania was declaring almost eight times as much in fuel exports as Moldova was declaring in imports.

At that time, Parlicov told OCCRP, “Sheriff definitely was not licensed [as an importer] and definitely was not giving accounts to Moldova about their oil imports.” He said the Transnistrian company only registered as a Moldovan fuel importer in 2018.

Lithuania’s official fuel exports to Moldova had dropped dramatically after 2017, when Moldova and Ukraine began implementing joint customs controls on the Transnistrian border. They began at the Pervomaisc-Kuchurgan checkpoint, which Ukraine’s Hromadske TV reports is responsible for most illegal trade flows in the region.

Orlen Lietuva confirmed its petrol exports to Moldova largely tallied with Lithuania’s official statistics. The company said its exports to Moldova had decreased, not because of any change in policy there or in Ukraine, but “due to an increased demand in Poland.” U.N. statistics, by contrast, show that Lithuania’s exports of petroleum products to Poland have actually been decreasing, falling from 1.35 million tons in 2015 to less than half that four years later.

Sheriff’s central office in Tiraspol at first declined to give further comment for this article, then promised a response from the company’s lawyers, which did not arrive in time for publication.

🔗A Sweet Trade

Leaked bank data shows a company owned by wealthy Lithuanian businessman Kestutis Verslovas has also been quietly trading with Transnistria’s most powerful company.

Married to one of Lithuania’s most famous designers, Verslovas is a local celebrity and a regular at glamorous parties in Vilnius. The primary source of his 13-million-euro fortune is Transis, a trading company he established in 1991.

HSBC Bank U.S.A. flagged 16 transfers Sheriff made to Transis between April 2012 and October 2015, totalling at least $1.7 million, to the U.S. Treasury Department’s intelligence unit. The only Lithuanian business that received more was Orlen Lietuva.

Moldova recorded importing almost none of the goods Transis supplies, including poultry, pork, beef, rice, and sugar, from Lithuania over the period covered by the transfers, according to U.N. Comtrade statistics. Lithuania, however, said it exported sugar worth more than $1.7 million to Moldova — almost the same amount as the transfers received by Verslovas’ company from Sheriff.

Moldova brought in restrictive measures to protect its sugar producers in the early 2000s, including a superheavy import toll, which had reached 75 percent by 2008. But later media reports estimate as much as two-thirds of sugar being sold in Moldova was in fact smuggled into the country from Transnistria.

Alexander Koss, head of Moldova’s association of sugar manufacturers, estimates that $1.7 million of sugar would have covered almost half of Transnistria's yearly demand in 2013 and 2014. Koss believes Lithuanian businesses were not breaking any Moldovan laws, since paying import duties is not their obligation.

“They make deals with a Moldovan agent, but the agent is in Transnistria. Paying custom duties is the obligation of the customer,” he explained.

Verslovas told OCCRP his job was simply to get merchandise “from point A to point B” and not to worry about import duties. He also said he was only responsible for cargo until it “reached the border” — without specifying which one. His company, Transis, said it could not comment as the matter is confidential.

- Šarūnas Černiauskas, Vladimir Thorik

Russian Telecom Giant Paid Over $5 Million to an Offshore Firm Implicated in Embezzlement

Russian telecommunications giant MTS sent US$5.37 million to a British Virgin Islands company linked to the son of a former Azerbaijani minister, documents from the FinCEN Files show. The payments were ostensibly for telecom-related services, but both companies have since been implicated in bribery schemes.

New York-based Deutsche Bank Trust Company Americas reported the transactions to U.S. authorities in what is known as a Suspicious Activity Report. While a SAR is not an allegation of criminal activity, banks file them to let the U.S. financial intelligence agency know when they see transactions that might be problematic.

The British Virgin Islands firm, Caspian Telecommunication Ltd., was little known but doing big business with state-owned telecom companies in Azerbaijan and Belarus. In 2015, Caspian’s subsidiary, Cartburg Networks Corp, signed a cooperation agreement with Belarus’s Beltelecom to provide telecom services to clients in both countries.

Then in December 2015, Caspian’s owner, Ayaz Kerimov, was indicted on embezzlement charges following an investigation into bribes paid to officials at Azerbaijan’s Ministry of Communications. Investigators found that the person actually controlling Cartburg Networks was Anar Mahmudov, the son of Azerbaijan’s former Minister of National Security. One of the Ministry of Communications officials arrested in the embezzlement case was a Mahmudov family member, according to local press reports.

Anar Mahmudov’s father, Eldar Mahmudov, was dismissed from his powerful post as Azerbaijan’s national security minister in October 2015, and his associates were reportedly arrested on various charges linked to corruption and extortion.

The Mahmudov family has reportedly amassed a sizable fortune during the minister’s decades in government — including through state contracts — and invested more than 100 million euros in companies and real estate in the UK, Spain, Luxembourg, Lithuania, and Cyprus. Anar Mahmudov and his sister reportedly oversaw the family businesses.

Anar Mahmudov and his lawyers did not respond to requests for comment on the payments. An MTS spokesperson told OCCRP, “MTS has no business in Azerbaijan and never had any. In December 2013 MTS and Caspian Telecommunication signed a typical agreement for international communication service,” giving each other’s users access to services in their respective areas of coverage.

“The agreement was valid in 2014-2015 and the payments were made from both parties involved,” the spokesperson added.

However, MTS has a history of dodgy dealings in Central Asia. The company entered into a non-prosecution agreement with U.S. authorities when they indicted the daughter of Uzbekistan’s former president, Gulnara Karimova, for taking bribes from telecom companies in exchange for lucrative state contracts. MTS agreed to pay $850 million to the U.S. Department of Justice to settle allegations that its subsidiary in Uzbekistan was one of the companies involved in the bribery scheme.

- Roman Shleynov

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