A maze of offshore companies
Mr Nikolaï* took advantage of his status as a majority shareholder of a bank to request loans from creditors. He never paid back these loans. The money was cycled through offshore accounts in several countries. The analysts of the Money Laundering Reporting Office Switzerland (MROS) were in great need of help from their foreign counterparts to crack this maze of a case.
In the mid-2010s, Mr Nikolaï* was a prominent businessman close to the circles of power in his country in Eastern Europe. He was also a very wealthy shareholder of a large bank in his native country. He was granted loans through this bank, which were, in turn, loaned to third-party offshore companies with Mr Nikolaï as the beneficiary. The funds transferred to the accounts in the name of offshore companies circulated in several countries, and were cycled through Cyprus before ending up in Switzerland. Switzerland was the last link of a well-honed strategy.
An unsuspected criminal
The Swiss banks that held the accounts where the money landed were not alerted at first of the large amounts of money credited to these accounts. It is worth noting that these accounts were in the name of offshore companies, but actually held by Mr Nikolaï. Nothing appeared to be unusual. A few years later, Mr Nikolaï received media attention. The creditors who had lent money to Mr Nikolaï’s bank claimed the loans were never repaid. In the media, Mr Nikolaï was accused of disloyal management and breach of trust for his actions in that bank that had, in the meantime, gone bankrupt.
Who is hiding behind the offshore companies?
The information published in the media set off alarm bells for the Swiss bank – were the funds deposited in Switzerland by Mr Nikolaï part of a fraudulent scheme? The Swiss bank, like any financial intermediary in Switzerland, was obliged to report any suspicions of money laundering. It proceeded to alert MROS, setting in motion an investigation. MROS began analysing the situation and sent requests for information to the other Swiss financial intermediaries involved. It also exchanged information with its foreign counterparts and tried to determine the origin of the funds credited in Switzerland. Cooperation was excellent, but white-collar criminals tend to be creative. In this case, the assets were cycled between different accounts belonging to offshore companies. This slowed down the work of MROS, which had to request assistance from its counterparts to determine who was hiding behind these companies.
A borderless frontier
After several months of investigations, MROS identified a web of transactions indicative of money laundering. The case was forwarded to the Swiss prosecuting authorities on suspicion of laundering the proceeds of unfair management and/or breach of trust. Gathering this evidence was only possible thanks to efficient international exchange of information. There are no borders for the circulation of money, nor for the work of MROS.
*Name changed for privacy reasons.