A British-led operation has uncovered a multi-billion dollar money laundering scheme run from London, Moscow and Dubai that allows Russian spies and European drug traffickers to evade sanctions using cryptocurrency.
Britain’s National Crime Agency said Wednesday that its “Operation Destabile” investigation focused on two companies – Smart and TGR – that acted as a financial center for cash-rich global criminals and imposed sanctions on individuals who relied on cryptocurrency outside the banking system.
The NCA said the network was used from late 2022 until summer 2023 by clients including the Kinahan cartel, Irish cocaine traffickers linked to numerous contract killings, and by ransomware groups and funded “Russian spy operations”.
The illegal network, which operates in more than 30 countries, illustrates the growing interaction between hostile states and organized criminals as economic sanctions have forced countries like Russia to find new ways to operate in the West. The case also shows the increasing use of cryptocurrencies by those cut off from the global banking system.
Rob Jones, director general of operations at the NCA, said the investigation “is the most significant money laundering operation” the NCA has ever undertaken.
“It focuses on . . . a launderette that brings together street money and cryptocurrency on a large scale,” he said. It “takes you away from McMafiaon to Narcosup to Le Carré, where you have espionage, where you have transnational organized crime and elite Russian-speaking money launderers and cyber criminals.”
The network used couriers to collect physical money from criminals in a country, such as Britain, in exchange for cryptocurrency, with Tether being the most preferred. The cash would then be laundered through companies and the equivalent value made available in other countries.
This mutually beneficial, two-way trade saw cash-rich cocaine kingpins simultaneously helping Russian cybercriminals and elites launder stolen cryptocurrencies and access cash while evading Western sanctions.
Tether has replaced bitcoin and, according to NCA officials, has become the “cryptocurrency du jour” because its peg to the US dollar helps criminals ensure the value of the money is preserved.
Cantor Fitzgerald, the Wall Street brokerage, has taken a 5 percent stake in Tether. Howard Lutnick, Cantor’s majority owner and longtime CEO, has become a prominent evangelist for the stablecoin, becoming a key customer of his company. Lutnick, co-chair of Donald Trump’s transition team, was nominated last month by the newly elected US president to lead the Commerce Department.
Tether said it “unequivocally condemns the illegal use of stablecoins and is fully committed to combating illegal activities.”
Britain’s sanctioned Russian state media group RT also used the Smart network to secretly move money to support “the activities of a Russian-language media organization in Britain,” the NCA said. Other parts of the Russian-speaking network interacted with a crypto exchange used by Russia to purchase Western technology for Moscow’s invasion of Ukraine.
According to NCA officials, more than £100 billion is laundered in or through Britain every year, including up to £5 billion through cryptocurrency. The use of crypto to launder money has increased significantly in recent years, spurred by the Covid-19 pandemic, when travel bans made it harder to move cash.
TGR, which has an office near Oxford Circus in London and in Dubai, worked with Smart by receiving large amounts of physical cash on behalf of owner Ekaterina Zhdanova.
Zhdanova, a 38-year-old living in Moscow, has graced the covers of business magazines in Russia and became accused by the US Treasury Department of moving more than $100 million to the United Arab Emirates on behalf of an unnamed sanctioned oligarch. Zhdanova was sanctioned by the US last year and is currently in custody in France.
The NCA cited another example in which Smart and Zhdanova worked with TGR to transfer more than £2 million for a Russian client, allowing them to bypass ‘know your customer’ checks to buy UK properties.
In just four months, the network has carried out fundraising events in 55 different locations across England, Scotland, Wales and the Channel Islands. At least 22 suspected crime groups used the network.
As part of the investigation, the NCA arrested 84 people, many of whom are in prison, and seized £20 million in cash and cryptocurrency. Five people affiliated with the network and several companies have been subject to economic sanctions by the U.S. Treasury Department. The operation also involved the US FBI and DEA, as well as French and Irish police.
Wally Adeyemo, Deputy Secretary of the United States Treasury, said earlier this year that “terrorist groups and other malign actors” were “using cryptocurrencies to circumvent our sanctions.” In October, MI5 Director General Ken McCallum said said Russia and Iran made “extensive use of criminals as proxies – from international drug traffickers to low-level con artists” to carry out sabotage, espionage and assassination operations in Britain.
According to the NCA, TGR is led by George Rossi, his second-in-command Elena Chirkinyan and Andrejs Bradens. All three TGR directors were sanctioned by the US Treasury Department on Wednesday.
“Through the TGR Group, Russian elites sought to exploit digital assets — particularly U.S. dollar-backed stablecoins — to evade U.S. and international sanctions, further enriching themselves and the Kremlin,” said Bradley T. Smith, U.S. Secretary of State for Terrorism and Terrorism. financial intelligence.
The NCA said Smart and TGR’s crypto wallet addresses showed regular exposure to Garantex, a crypto exchange approved by the UK and US in 2022 that has been linked “to payments to companies for parts of weapons used by Russia in the invasion of Ukraine” .
Money laundering illustration by Cleve Jones