Baltic shells: on the mechanics of trade-based money-laundering in the former Soviet space

Abstract

Purpose

The purpose of this paper is to describe a platform of interconnected international shell companies operated through Baltic banks, used for trade-based money laundering (TBML) across Russia, Ukraine and other post-Soviet states.

Design/methodology/approach

This is a case study that draws extensively on the results of journalist investigations and court cases to describe one example of a money-laundering platform.

Findings

Platforms of international shell companies operated through Baltic banks play a key role in TBML for the post-Soviet countries. They are created for systematic laundering of revenues from tax evasion, tax fraud, corruption and criminality across the post-Soviet space, and also globally.

Research limitations/implications

This study implies that TBML for the post-Soviet space is a specialized industry, hosted by collaborating banks centered in the Baltic states, in conjunction with mass use of international shell companies.

Practical implications

This study implies that analysis of suspicious transactions cannot remain on the level of single companies but has to take into account the interconnected payment patterns produced by such a platform.

Originality/value

Provides the first study of a trade-based money-laundering platform operating in the post-Soviet space.

Citation

Stack, G. (2015), "Baltic shells: on the mechanics of trade-based money-laundering in the former Soviet space", Journal of Money Laundering Control, Vol. 18 No. 1, pp. 81-98. https://doi.org/10.1108/JMLC-10-2013-0040