The Groundworks of the Money Laundering Scheme
Russian Oligarchs, Viktor Vekselberg and Vladimir Voronchenko, are accused of running a money laundering operation through their real estate properties in the United States. The Department of Justice has alleged that six luxury properties have been using their properties to funnel millions of dollars.
Voronchenko, Vekselberg’s friend and business associate, obtained an attorney who would be connected with the purchase of these properties. The attorney managed the finances of the properties, including property taxes, insurance premiums, and other fees associated with the Properties in U.S. dollar transactions from the attorney’s interest on lawyer’s trust account (IOLTA account).
Preventing Money Laundering and Sanctions Evasion in Real Estate
Money laundering is a crime that is pervasive throughout many economic avenues in the United States. Real estate is particularly vulnerable to money laundering schemes. For more information click here.
On January 25, 2023, the Financial Crimes Enforcement Network (FinCEN) issued an Alert on Potential U.S. Commercial Real Estate Investments by Sanctioned Russian Elites, Oligarchs, and their Proxies. The Alert’s purpose is to help financial institutions with identifying potential sanctions evasion activity by providing potential red flags related to this activity.
Russian Oligarchs Attempt to Avoid Sanctions
Before Vekselberg was declared a Specially Designated National (SDN), companies owned by Vekselberg sent approximately 90 wire transfers totaling 18.5 million dollars to the IOLTA account between February 2009 and March 2018. The attorney used these funds to make numerous payments to maintain and service the properties.
After Vekselberg was declared as an SDN, the source of the funds used to maintain and service the properties changed. The IOLTA account started to receive wires from a shell company controlled by Voronchenko, Smile Holding Ltd., located in the Bahamas, and from a Russian bank account held by a Russian national who was related to Voronchenko. Approximately 25 wire transfers totaling 4 million dollars were sent to the IOLTA account between June 2018 and March 2022.
Even when the source of the payments changed, the management of the payments remained the same. After Vekselberg was sanctioned in 2018, Voronchenko tried to sell some of their properties. No licenses from OFAC were applied for or issued for any of these payments or attempted transfers.
On May 13, 2022, federal agents served Voronchenko on Fisher Island with a Grand Jury subpoena. The Grand Jury called for his appearance for testimony and documents relating to the properties.
Nine days later, on May 22, 2022, Voronchenko took a flight from Miami, Florida, to Dubai, United Arab Emirates, and then went to Moscow, Russia. Voronchenko did not appear before the Grand Jury and has not returned to the United States.
How TTI Can Help
Sanction Evasion, Money Laundering, and Real Estate can pose problems with staying in compliance. Truth Technologies‘ provides software that can help prevent financial crime within your organization. Contact us today for a free demo and see how we can help your organization adhere to the Bank Secrecy Act and AML/KYC regulations.
For more information click here: https://www.justice.gov/usao-sdny/pr/civil-forfeiture-complaint-filed-against-six-luxury-real-estate-properties-involved