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The FinCEN files is a 16-month investigation conducted by the International Consortium of Investigative Journalists, the BuzzFeed portal and 110 editors from 88 countries, including "Gazeta Wyborcza". It is based on the analysis of more than 2.6 thousand secret documents from the Financial Crime Enforcement Network (FinCEN), the U.S. Department of Treasury's investigative office. It is also based on other sources and dozens of interviews. It provides a unique insight into illegal money flows supporting crime and corruption worldwide.

A two-storey, modernist building in Nieuwegein, a town of 60,000 people in central Holland. On the ground floor there is a Thai boxing center, with a karate school right next to it. The second floor windows covered with brown curtains attract certain attention. No trace of life can be seen from the street, and the small blue signboard with the name of the company is hardly visible. - Every now and then I have spotted people  speaking with an Eastern European accent in here - a person living nearby tells us.

Siedziba Schildershoven w NieuwegeinSiedziba Schildershoven w Nieuwegein Karlijn Kuijpers (Trouw/Investico)

This inconspicuous place is home to a financial intermediary service through which hundreds of millions of dollars passed to companies in Cyprus and in tax havens, at which point the tax authorities have lost sight of them. Through this scheme, Russian and Ukrainian oligarchs were taking huge sums of money out of their countries. The company is called Schildershoven Finance B.V.

According to the American investigators from the Financial Crime Enforcement Network (FinCEN), the investigative arm of the U.S. Treasury Department, Schildershoven is one of the key money laundering intermediaries for Ukrainian and Russian oligarchs and people from the Kremlin's inner circle.

Another one is Tristane Capital B.V. from Amsterdam.

Dutch accounts at the ING Bank Śląski

Both Schildershoven and Tristane had settlement accounts with the Polish ING Bank Śląski, from which, according to American financial controllers, suspicious transactions were originating.

The two companies were European counterparties of the so-called Moscow Mirror Network. Schildershoven bought securities for two companies - the Cypriot Serbenta and the British Ergoinvest, which in turn laundered Russian rubles. In 2017, Deutsche Bank, which handled transactions that were part of this scheme, had to pay 630 million dollars in penalties imposed by British and American financial regulators.

FinCEN's documents obtained by "Wyborcza" indicate that ING Bank Śląski could have been used in a similar way in the years 2013-14. At that time, Schildershoven was its client, while FinCEN warned in its reports about suspicious transactions that passed through the accounts of the Polish bank. It is possible that ING Śląski's cooperation with Schildershoven lasted longer - the current director of the Dutch company Vladislavs Zaharovs claims that until 2018 it had business relations with the bank. The last suspicious operation that 'Wyborcza" has a record for took place in 2016.

ING Bank Śląski refuses to make any comment on the Schildershoven transaction, hiding behind bank secrecy.

"Payments under agreement"

The potential involvement of Schildershoven in money laundering was already flagged by the American bank JP Morgan Chase in 2014, which provided FinCEN with at least four reports on the company's murky transactions. The bank's specialists wrote: "We are submitting this report to notify suspicious banking transactions involving Schildershoven Finance and one of its main counterparties Ergoinvest LLP due to the companies’ “high risk transactional patterns, suspicion concerning the source of funds, and lack of transparency”. 

According to the filing, “Schildershoven sent and received wires with multiple high-risk transactional patterns, including: sending/receiving of high-value wires (large, round dollar amounts) in clusters on the same day or consecutive days with unclear and generic payment details (sale of securities, interest claim, and payments under agreement), use of accommodation addresses (United Kingdom, Cyprus), transactions with high-risk, low-transparency entities and lack of clear business rationale”.  

FinCEN's internal reports, which were received by the International Consortium of Investigative Journalists together with BuzzFeed, show that at least some of the money laundered by the Moscow Mirror Network has been injected into criminal organizations.

Among them was Altaf Khanani's network, who completed a five-year prison sentence in the US in July this year. The Pakistani citizen worked for the Colombian and Mexican cartels as well as for Al-Qaeda and the Lebanese terrorist organization Hezbollah. Khanani's lawyer refuses inquiries to interview his client, citing his poor health.

In the Moscow Mirror Network scandal, about 10 billion dollars were at stake. Igor Putin, a cousin of Russian President Vladimir Putin, who is a member of the authorities of several Russian banks, and Arkadiy and Boris Rotenberg, oligarchs friendly to the President of Russia and subject to American sanctions, were also  apparently involved.

According to reports from FinCEN, Ergoinvest played a key role in the procedure. It was also Ergoinvest who was among the main clients of Schildershoven. In 2014, almost 307 million dollars were transferred to Ergoinvest's account from Schildershoven's account at ING Bank Śląski. All 76 transactions carried the enigmatic title of "payment under agreement".

Ergoinvest LLP is a shell company registered in Potters Bar in Hertfordshire, UK. There are at least 140 other companies listed in FinCEN reports which are registered under the same address. Apart from the address, they also share the fact that they enjoy the privileges that British law creates for them - weaker control and the ability to hide the real identity of their owners.

"Blinded by greed"

To understand why some large banks have decided to facilitate the so-called mirror trading, which may involve money laundering, we need to go back to 2011. At that time, Deutsche Bank's turnover began to fall in the aftermath of the global financial crisis.

In a 2018 interview with Reuters' reporters, the officers of the New York-based regulator Department of Financial Services (DFS) claimed that Deutsche Bank was turning a blind eye to suspicious transactions because its management was "blinded by greed and a desire for illegal enrichment". - The heavy commissions during the economic downturn meant that the source of the money was not investigated," said a DFS official at the time.

What is mirror trading? In simple terms, it is the parallel and instantaneous purchase and sale of the same number and value of securities. Purchases are paid for in "Eastern European" currencies, and sales - already on foreign markets - for "Western" currencies. (so-called reserve), e.g. for dollars or British pounds.

Example: Company A from Moscow has an account with an international bank. It orders it to buy shares of large, listed Russian companies and pays for them in rubles. At the same time (at split-second intervals), company B from London orders the same bank to sell the same number of the same shares on the London City Stock Exchange - but for British pounds or dollars. However, companies A and B have the same owner/owners (which, in theory, the bank may not know or turn a blind eye to). As a result, the owner of both companies transfers money from Russia abroad, at the same time turning rubles into a safer currency in international trade.

Schildershoven came to the Polish bank in 2013. It was exactly at that time that Bank Śląski became the only one in the region whose headquarters allowed to provide custody services (among others, securities accounts and settlement operations) in the region. In other Central and Eastern European countries this activity was liquidated. The sums were enormous.

According to an internal ING document, which we managed to obtain, in year 2014 alone, Schildershoven's operations at the bank amounted to 1.2 billion dollars.

ING Bank Śląski explains in an official reply that "every new client of securities is verified with restrictive lists in order to prevent settlement of transactions on the [securities] whose issuer is covered by restrictions. Systematic control is also exercised by dedicated internal supervision".

When asked what steps it took with respect to Schildershoven, the bank merely stated that "we are constantly monitoring and assessing market developments locally and at the level of our global group".

IMF money disappearing with an Ukrainian oligarch

The scandal does not end there. In 2014-16, after the invasion of the Crimea and the outbreak of conflict in the east of the country, Ukraine was hit by the largest banking crisis in its history. Over the next two years, almost half of the country's banks went bankrupt and their clients lost over 20 billion dollars. Kyiv turned to the International Monetary Fund (IMF) for help. Under strict conditions, the IMF agreed to allocate $17.5 billion to help the ruined country.

At least $1.8 billion of this sum was deposited with PrivatBank, one of Ukraine's largest banks, owned at the time by oligarch Ihor Kolomoisky, who backs the current president Volodymyr Zelenski. The money then disappeared.

What happened to it? Kolomoisky is accused of transferring the money to Cyprus together with his family and collaborators. According to FinCEN documents that we have analysed, part of the money was obtained by Sofossini Holdings. We managed to get to a document that directly points to Sofossini's connections with Sykon, which was founded by Panikos Symeou, a Cypriot lawyer and tax advisor. According to the newspaper "Kyiv Post" and the Ukrainian organization PEP, which tracks money laundering by personalities from the political and business life of Ukraine, he is Kolomoisky's right hand in his business empire.

The Sofossini company had an account in the Latvian branch of PrivatBank, which already had experience with money laundering. In 2014, the so-called Russian laundromat scandal hit the headlines. According to documents revealed by experts from the Organized Crime and Corruption Reporting Project (OCCRP), about 2 billion dollars were laundered in PrivatBank in Latvia for four years.

FinCEN's documents, based on Deutsche Bank's reports, show that during the four months from May to September 2014, 417 suspicious transactions amounting to more than $838 million were made to Sofossini accounts. They were ordered by Schildershoven Finance B.V., among others from an account with ING Bank Śląski.

Scandal at the ING Dutch headquarters

Our sources at the ING headquarters in Amsterdam say that ING Bank Śląski had to find out who was behind Schildershoven and Tristane. Similarly, it should have determined the origin of the money transferred by two companies. - And certainly when the first media information about Moscow Mirror Network appeared - adds our interlocutor.

Moreover, he claims that the headquarters of ING has had issues with cooperation with ING Bank Śląski on anti-money laundering and adapting the Polish bank to the standards binding for the whole group.

In order to examine how the implementation of anti-money laundering safeguards is progressing, last year ING Bank Śląski was visited by the supervisory board from the Dutch headquarters of ING Group. This was related to another scandal, which broke out a few years earlier and ended in 2018 with the imposition of a huge penalty on the Dutch head office for failure to observe procedures and allowing money laundering.

Between 2010 and 16, suspicious transactions of at least 200 million euros were detected at ING in the Netherlands - according to the sum cited by Dutch investigators in their final report. They point out, however, that there were only a few examples of transactions made due to the negligence of a bank that has not assessed the risk of money laundering. The proceedings ended with a settlement. Two years ago, ING paid as much as 675 million euros in fines and returned 100 million euros earned through the scheme. After 20 years at the company, the president of financial affairs Koos Timmermans had to leave the bank.

Disappearing records of Tristane Corporation

In an official response to our inquiries, ING Bank Śląski claims that there are no problems with adapting its procedures to the standards demanded by the headquarters. They are at the stage of "implementation". "We are on the right track to introduce this system in all business segments, according to ING Group standards" - assures the bank's press office.

The Polish bank does not want to tell whether the Dutch company Tristane is still its client; it is hiding behind banking law.

For a long time, Tristane headquarters in Amsterdam were located in a regular flat, and the company was managed by a woman whose main daily job was organizing weddings. The current seat is an inconspicuous office building in the northwest of the city.

Until recently, the company's website contained the so-called billing document, in which the numbers of three currency accounts: in euros, dollars and rubles were displayed. All three were maintained by the Polish ING Bank Śląski.

Once we started our investigation into the company, the document was removed from the web. Just like Tristane's annual reports. However, we kept them. They show that Tristane had a turnover of 960 million euros in 2015. And in 2019. - already nearly 2.2 billion euros. A lot for a company that does not formally have any employees.

According to FinCEN's reports, two American banks have raised objections to Tristane's transactions in the past. In May 2015, Bank of New York Mellon questioned the transfer of USD 1.8 million, while a year earlier JP Morgan Chase flagged transactions worth over USD 94 million. When asked about them, Ilona Kravale, the current managing director of Tristane, refuses to answer and threatens us with a lawsuit.

The Latvian liaison

ING's internal document also shows that Tristane transferred more than 98 million dollars to the Cypriot Serbenta company in 2014-15. The latter is indicated by American investigators as one of those involved in the Moscow Mirror Network.

- I know what mirror trading is, but I did not know that these companies are involved in it. Their names don't ring a bell," Pavel Dushin, managing director of Schildershoven in 2012-14, replied when we asked him about the transfers from his company to Serbenta and Sofossini. He confirms that Schildershoven had a settlement account with ING Bank Śląski.

When we tell him that during his tenure Schildershoven transferred hundreds of millions of dollars to accounts of companies associated with Moscow Mirror Network, he said: "- Oh... that's very interesting", before removing the information that he worked for Schildershoven from his Linkedin profile.

Pavel Dushin, Ilona Kravale from Tristane and Vladislavs Zaharovs, the current director of Schildershoven, all come from Riga and the surrounding region, more than 1.4 thousand kilometers from their work offices. Until recently, the capital of Latvia was regarded as one of the Russian money laundering centers. PrivatBank, owned by the aforementioned Ukrainian oligarch Ihor Kolomoisky, was the leader in this procedure.

According to FinCEN's report, the European partner in the money laundering business of Moscow Mirror Network was, apart from Schildershoven and Tristane, the Latvian company Baltic Credit Trading Group. As we learn from LinkedIn, its founder was Pavel Dushin, the same person who managed Schildershoven when the company was doing business with ING Bank Śląski.

Who is responsible for safeguarding against money laundering schemes in Poland?

The General Inspector of Financial Information (GIIF) reporting to the Ministry of Finance should prevent money laundering. We asked the Ministry whether ING Bank Śląski was under investigation for its involvement with Schildershoven and Tristane. In response, we were informed that such activities are covered by financial secrecy. We wanted to meet with the current head inspector Piotr Dziedzic. He did not find time to talk to us, explaining that he was on a previously planned holiday leave.

As we managed to find out, a bank the size of ING Bank Śląski can report even a dozen or so thousand suspicious transactions to the GIIF annually.

According to the GIIF report for 2014, i.e. the period we analysed, 3 637 suspicious transactions were registered in Poland that year. Some of them contained a description of even several hundred transfers. However, there are no descriptions of specific cases - only interested parties are informed about them.

In 2018, the GIIF received 4 100 reports on suspicious transactions. Moreover, over 35 million so-called above-threshold transactions were registered, i.e. those with the amount exceeding EUR 15 thousand. Approximately 10% of them were transferred abroad.

The United Nations Office on Drugs and Crime (UNODC) estimates that money laundering amounts to between 2 and 5 percent of global GDP annually. It is therefore between 800 billion and 2 trillion dollars. How much of it takes place in Poland?

- It is unlikely that criminals operate on a large scale only in the Baltic States, but not in Poland for some reason - says Dr Louise Shelley from George Mason University, an expert on money laundering, financing of organized crime and terrorism. - This is a problem of the whole region. The procedure is not concentrated only in a few selected countries. Criminals look for loopholes everywhere.

***Collaboration: Karlijn Kuijpers, Jan Kleinnijenhuis, Martijn Roessingh, Dirk Waterval (Trouw); Anouk Kootstra (Investico); Gaby de Groot, Johan Leupen (Het Financieele Dagblad)

***

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