Follow The Money: How London Became an Oligarchs Paradise

Protestors Demonstrating at an Oligarch Property

Since the 1990s, London has been a playground for the oligarchs of Russia. The city offered them the perfect place to hide, launder, and spend their money. The cycle of wealthy Russians coming to London and using the city to launder their wealth was a process that would never end. The Russia-Ukraine conflict and subsequent sanctions against Russia pushed this process to the forefront of British media. Sanctions were being skirted by the oligarchs in London. This left many asking - why London over any other European city? What made the city the perfect place for oligarchs to hide their money?

London's position as the most affluent and most populous city in the UK makes it ideal for oligarchs. London offers oligarchs plenty of avenues for investment, one of the most abused being the booming real estate markets. London's real estate sector is easily exploited, with oligarchs able to carry out a few tricks to maximize their financial activity. It is to be assumed that London's most famous neighborhoods, like Knightsbridge and Kensington, are to have some of the most expensive homes in the country. Oligarchs take real estate investment to the next level; instead of simply 'flipping homes' in the conventional sense, they use unique methods to maximize their investments and skirt regulations. For instance, oligarchs will purchase multi-million-pound homes and list them as a second address, even though they will only visit the property maybe once or twice a year. This phenomenon might sound quite innocent, but the mass of property that oligarchs and other foreign business people buy often leaves entire streets empty for ninety-nine percent of the year. Collectively, in London, nearly 22,000 empty homes go unused for most of the year. Another way in which oligarchs take advantage of London's real estate is through the creation of iceberg houses. These are homes that look like ordinary two or three-story houses but have vast basements that span thousands of feet. This means that on paper, you aren't getting a simple London townhouse, but a massive building with huge square footage, therefore boosting the price through the ceiling. The real estate market is also extremely attractive to oligarchs because of Britain's historic non-domicile tax status, which allows a person with their primary home outside of the UK to avoid paying taxes if they have subsequent homes within the UK.

An Architectural Drawing of an Iceberg Home

These methods allow oligarchs and other shady businesses to dump billions into London's real estate market. In fact, it is estimated that Russian oligarchs have pumped £1.5 billion into London's skyline. Once that dirty money has purchased a building, a mansion, a street, or even, sometimes, entire apartment blocks, it is protected diligently by London's regulations and laws. This is what makes London so attractive—it protects those who invest in the city. With this protection comes troves of agents who do their best to avoid regulation and protect dodgy investors, like the oligarchs of Russia. This backbone that supports oligarchs doesn't just pertain to shady businesses but also to legitimate, respected institutions. Oligarchs have access to more power and, therefore, use their connections to bolster their laundering and money-moving operations.

One such oligarch who brought his billions to the UK was Dmitry Firtash. Firtash made billions when he brokered oil and gas deals between Russia and Ukraine. Firtash didn't just spend massively in London, buying an entire block of houses in Brompton, but also found support in some of the most prestigious social circles in the country. Firtash attended multiple gatherings with serving MPs and even met with the Duke of Edinburgh, the Queen's husband. Firtash's most notable contribution was to the University of Cambridge, which established an entire course about Ukraine Studies in his honor. He was so deeply ingrained with British political institutions that the Department of Defense, the previous owners of the Brompton buildings, allowed Firtash to only pay a third of the amount upfront, giving him an initial discount of over £40 million. In other countries, this kind of attitude toward foreign billionaires is seen as corruption, something Firtash found out first-hand as he is now wanted by the US for that crime. In London, billionaires are treasured, looked after, and protected to the point where they can escape money laundering laws. England has 'Unexplained Wealth Laws' that allow for the origins of the wealth of a targeted person to be revealed if investigated; however, such a law is rarely used when it comes to shady foreign billionaires.

Not only do social and political institutions of London support oligarchs, but the economic and legal systems do too. Oligarchs simply receive better and superior treatment from numerous legal services, even before they begin embedding themselves in London. A popular example of this was the UK's Visa system. The UK's Tier 1 Visa used to offer permanent residency within the country to anyone who could afford it. No checks, no balances; it is a commodity to be purchased. This not only means that oligarchs can skip the necessary immigration checks ordinary people have to go through, but the Tier 1 privilege extended to businesses too. Unlike in Europe, where strict business and financial laws have to be upheld when looking at potential citizens, the UK's Tier 1 Visa meant that these checks were simply overlooked, allowing shady oligarchs to bring their dealings and money into the country. The strict legal system also protects oligarchs from getting accused of being serial money launderers. There have been multiple instances where oligarchs used Britain's libel laws to silence those who they see as trying to defame them. This was experienced firsthand by journalist Catherine Belton, who faced legal action from three Russian oligarchs who were named in her book, 'How the KGB Took Back Russia and Then Took on The West'. This book publicized the relationships between these oligarchs and their connections to Vladimir Putin.

London fosters an environment for the suspiciously wealthy. They can exploit systems to squeeze as much profit as possible, embed themselves in affluent social circles, buy their way into citizenship, and then sue anyone who speaks out against them.

The Support Systems that Aide Laundering

While they were briefly mentioned in the last sections, oligarchs' laundering could not be possible without the agencies that help them. These agencies do the legwork while the oligarchs just supply them with their masses of wealth, which are usually dubiously obtained from the Russian Government by stealing from public businesses, private businesses, and criminal enterprises (ranging from national to international crimes). The favorite methods of oligarchical money laundering aren't money laundering at all but instead money washing, also known as Conversion. Conversion is simple; oligarchs use their dirty money in a city with weak financial regulations and simply go on a spending spree. This is why London has gained so many monikers, like 'the Oligarchs' Playground' or 'Londongrad.' It is the perfect place for oligarchs to use their dirty money to buy high-end real estate, football clubs, cars, make donations to universities, or anything that involves throwing massive amounts of cash at something. The only problem is moving that money from Russia to London. British authorities might be lazy on money laundering checks, but the other national banks and international authorities are always on the lookout for suspicious activities. The burden of moving this money sits on the shoulders of the shell companies. This is easier said than done; even though there are London-based agencies to aid oligarchs in establishing these shell companies, having them registered in the UK is a problem. While oligarchs can skirt many regulations in London, the banking system wants its cut and could want to know where the money is coming from. Plus, taxes and fees in the UK can be large. It might be fun to spend in London, but to save and move money between accounts means massive administrative fees. So, the shell companies that will hold the ill-gotten gains will usually be registered in tax haven nations, like Cyprus or the British Virgin Islands. Not only does this allow the money not to be eaten into by legislative fees but also allows for the men behind the shell companies to enjoy a degree of anonymity. These wouldn't just be singular entities but tens, maybe hundreds of different shell companies all sending and moving money to each other, to muddy the trail if any financial investigators come sniffing around. It also stops any Russian authorities from being able to get their hands on the corrupt cash given to the oligarchs.

Now all of this money has been moved around and converted into a foreign currency. The next port of call is Enjoyment, yes, that is the actual name of the step. Usually, the enjoyment part comes at the end of the money laundering process, but for money washing, the enjoyment is an integral part of the method. Oligarchs usually have made a name for themselves and are well known for their business activities in Russia or Eastern Europe. If you're a Russian oligarch, with a net worth of upwards of billions, nobody is gonna bat an eyelid when you're seen courtside at the NBA or bankrolling an entire University Course, in the case of Firtash. Usually, oligarchs ease into their enjoyment spending. First, they will acquire stocks in successful businesses, allowing them to have some plausible deniability if anyone starts to investigate their income. However, once they have invested in a few businesses, oligarchs can live life to the fullest in London. They can purchase whatever they want, whenever they want. This is because these oligarchs are viewed as financial elites, so many turn the other way or don't think to check where the money was coming from. Money Washing, or Conversion, is simply a way of exploiting these weaker financial cities.

An Oligarch Yacht Docked in the UK

The final step is Elitism, whereby oligarchs further their social ventures. This is the meeting with politicians and becoming best friends with the University of Cambridge part of the process. This offers a layer of protective insulation around the whole process. Once you're rubbing shoulders with the Queen and Members of the Cabinet, then nobody is gonna suspect that you're living off criminal money acquired by the Russian Government. This is why oligarchs embedding themselves in these esteemed social circles is so effective. It doesn't just grant them power, but it also grants them the impression of power. If an ordinary person were to up and buy a mansion in Chelsea, there would be great concern because there would be so many questions, with the primary one being: Where did they get the money from? An oligarch's perceived power allows them to escape this alarm; it is simply just expected that powerful people splash their cash, and nobody really cares about where it comes from.

And Then It All Came Crashing Down

When financial sanctions were brought against Russia for their invasion of Ukraine, all eyes turned awkwardly to Britain. For decades, London had fostered the Russian oligarchs who were close with Putin. No longer could the UK shrug their shoulders and go back to enjoying the billions they brought into the city. Instead, they were forced to do something about it. At the end of 2022, all of Putin's closest oligarchs had all of their assets frozen. Overnight, over £2 billion worth of assets were frozen. Any bank or company account associated with the oligarchs was also locked. In the weeks before, there was talk of severing the oligarchs' spending power in London, as many feared they were sending money back to Putin to fund his war with Ukraine. The asset freeze stopped all of this and any hopes that oligarchs had of living their usual extravagant London lives. The oligarchal way of London was over. Due to poor record-keeping, all known assets were frozen, which prompted financial investigators to begin pursuing all hidden or obscured assets owned by the oligarchs, which were many and likely to add on a few billion to the known value of £2 billion. The freezing of these assets doesn't just mean they can be sold but that any investment into the asset was forbidden. Houses couldn't be renovated, football clubs couldn't accept transfers, gardeners couldn't even work on the hedges on any land owned. It was a sophisticated way of sticking the knife in the oligarchs and turning it. Their assets were frozen, and all they could do is depreciate in value. Not only that, but any rental agreements signed by oligarchs are still legally binding. They could be renting an office but are forbidden from using it or even putting lightbulbs in. Instead, the rent, and other fees, are taken from their frozen bank accounts.

As the oligarchs struggle and attempt to find loopholes, asset freezes are usually maintained for a long time. There are still buildings in London in disrepair from when there were financial sanctions against the Libyan Government and any businesses associated with them. For any financial purchase, from a carton of milk to buying a new sports car, they must go to the Office of Financial Sanctions Implementation (OFSI). Oligarchs have begun to sue OFSI because of the inconvenience of submitting paperwork every time they do a weekly shop. The cases are currently in court, but many don't expect sympathetic outcomes for the oligarchs. Further investigations have also uncovered more hidden assets owned by oligarchs, and the total value of Frozen Goods sits at just over £18 billion pounds.

Protesters Demonstrating on the Frozen Secondary Home of an Oligarch

London's disregard for and incentivization of foreign money drew in dubious oligarchs with deep pockets filled with ill-gotten cash. For decades, they were able to live lavish lifestyles and squeeze every ounce of value they could out of London's real estate. Now, they are paying for their crimes by watching their wealth slowly dwindle—Lamborghinis gather dust, land becomes overgrown, and buildings become vandalized.

Follow The Money: Crowdfunding, Terrorism & Charity

Crowdfunding is something that has become globally known over the past decade. With discussions surrounding crowdfunding come the stories of its misuse. Whether people lie to receive donations or those who e-beg on social media, crowdfunding has its fair share of controversies. It is not only fraudsters who exploit these services but also terror organisations. Crowdfunding websites allow terrorists to act in plain sight, masquerading behind or sometimes as charitable organisations to receive funds. This issue reaches beyond the crowdfunding space. The economic exemptions and rules for non-profits allow them to become a target for money laundering. These tactics from terror organisations prey on ordinary people who believe they are giving to charity, but are, in fact, contributing to terror activity.

How does Crowdfunding contribute to Terrorism?

The way in which crowdfunding websites are set up allows for terrorism to use the site with ease. This makes these donation websites the most susceptible to being exploited by terrorist organisations. These illicit organisations purposefully seek out websites that have major flaws so they can act more productively. Many crowdfunding sites have dubious and vague conditions which do not explicitly disallow terror-inciting content. They also target websites that allow owners to keep funds, even though their monetary goal was not met. The method of payment is important to these extremists. Some websites make it so donators remain anonymous, hiding their identity behind a username or allowing anonymous donating. Crowdfunding sites that allow crypto and donations through dubious financial institutions are also ideal to terrorists. These payment methods obscure the identity of the donators and of the campaign runners, allowing them to act without any attention from the authorities. Terrorists also look for similar terror incitement campaigns on the website. If they find evidence of other terror organisations operating on the website then they are reassured that they too can operate unimpeded. The details of the actual campaign are also crucial to spotting those established by terrorist organisations. The biggest indicator is a lack of or unclear background information about the campaign. Their names can be broad, generic terms. For example, 'save the children, or 'helping refugees in conflict zones'. They purposefully make these campaigns look charitable as sympathetic ideas to attract donations from more people. This also makes it possible for unsuspecting people to make donations. The same campaign being posted across numerous crowdfunding sites and offering a variety of payment methods are also a red flag for terrorist activity. Sometimes, these campaigns will offer donation links in the actual descriptions, allowing for the website's payment method to be bypassed completely. This not only means that payments won't be recorded on the website, but also allows donators to further obscure their identity.

Often, terrorist campaigns are easy to spot. The descriptions will discuss political issues in a hateful rhetoric or be openly supportive of terrorism. Usually, their goals will be far larger than similar campaigns in its category and have much more support. Another easy way is to check the legitimacy of associated charities. Sometimes, campaigns will mention another non-profit to bolster their legitimacy. In reality, these charities are usually not associated with the campaign in any way or are also controlled by terror organisations. Checking the legitimacy or contacting listed charities are the best way to find their legitimacy. Often times, a simple Google search will turn up reports of terror-linked charities. This is the same with the campaign's creator. Often times, the creator is also linked to terrorism in some way. The day the campaign is posted may also hold some significance to the terrorist organisation. Checking the day of a campaign's posting may also reveal a link to terrorism.

Donors to these campaigns can vary quite significantly. Most of the time, terrorists coordinate with pre-established donors, who direct their funds to the desired campaign. Sometimes, it can be from unwitting donors who just want to direct their money towards a charity, unknowingly supporting terrorist activity. Donors are the biggest asterisk in identifying criminal crowdfunding campaigns. All because a donator has links to terrorism or financial crime, doesn't mean that all of the campaigns they contribute to are affiliated. It is common for donators who do contribute to terror run campaigns to spread their funds across various legitimate campaigns to cover their tracks. This way authorities can't easily see which campaign is run by terrorists. When examining a campaign's donators there are certain telltale signs that show authorities that they are contributing to terrorists. Things like: abnormally large donation amounts, use of cryptocurrency to donate and if the donators have donated to other terrorist run campaigns. It can also be the case that these donators aren't real and are instead bot accounts created by a single donator. This is done to spread large donations across several smaller transactions, as to not raise the eyebrows of the authorities. Admins can usually detect these fake accounts as they share the same IP address or bank account as the other accounts.

To summarise, crowdfunding websites are vulnerable to terrorist campaigns. When looking to donate to an unverified campaign, there are several things authorities and donators can do to see if it is run by terror organisations: 

• Avoid crowdfunding sites without proper verification or bad terms of service. 
• Check if the campaign's goals are similar to other campaigns in its category. 
• Check the description of the campaign to see if the aims of the campaign are specific. 
• See if the date it was posted aligns with any significant terror events. 
• Research the donator's background. See if their accounts are legitimate and what other campaigns they have pledged to. 

Social Media's Role in Funding Terrorism

Social media's role in recruiting terrorists is well known, but what isn't is how it transformed the way in which terrorism is funded. The widespread use of social media allows for terrorist groups to send messages and cryptocurrency without impediment, especially through encrypted services like Telegram. The two biggest users of social media to bolster their funding is ISIS and Al-Qaeda. These websites allow terrorist run accounts to pool resources and in conjunction with cryptocurrency, allows them to do so nearly anonymously. Social media has regulation but maintaining the online space is extremely costly. Websites like Facebook and Twitter rely on user-submitted reports to monitor the site. This rather lacklustre approach to moderations allows for terrorists to remain active. The anonymous, unregulated nature of cryptocurrency allows these unmonitored accounts to now move funds, as well.

Many of the most popular social media sites have a documented history of allowing or unknowingly fostering communities of terrorists. During the 2010s, it was found that Facebook had not banned several ISIS-affiliated accounts who were using the site for recruitment and funding purposes. Even though these accounts violated their terms of services, they did not ban them. Furthermore, the maintaining of these pro-terror communities creates an echo chamber for such activity. It not only promotes but strengthens support among terror operatives. Furthermore, these groups can establish and coordinate fraudulent non-profit accounts to support their efforts.

The Non-Profit Issue in Serbia

Serbia is a country that has faced the most prominent issues with terrorists using non-profits to fund their operations. Serbia is the ideal place for terrorists to do this for a number of reasons. Their non-profit financial laws are not as strong as other European nations. Serbia is a cash-reliant country, where 30% of the county's transactions are done in cash. Registration laws and checks for charities in the country are also extremely lax, allowing for organizations to establish themselves as non-profit without submitting the proper documentation. Many religious non-profits are exempt from having to submit such documentation, allowing for religious terrorists to infiltrate the sector easily. Serbia has no financial agency dedicated to overseeing the non-profit sector. They only have the conventional police and tax authorities, who are already burdened with other financial enforcement work. Other European nations have regulatory bodies that focus purely on non-profits. This lack of a central non-profit regulator also means that it is harder for these authorities to properly investigate fraudulent charities, as there is no central place to find documentation. When checks are done to new non-profits, they are so loose that they're essentially meaningless. There is no strategy in place for differing authorities to communicate with one another about such issues.

The SBRA is the closest institution Serbia has to a non-profit regulatory body. However, the SBRA performs terribly. They keep little information and fail to do proper background checks. Key data, including the founder of the charity and where they operate, has mostly been lost. In a study, done by the European Union, it was found that there were 58 non-profit organizations active in Serbia and in other locations overseas. There was no documentation, aims, goals, or financial documentation from these 58 organizations. Almost nothing is known about these organizations. These failings make it incredibly easy for terrorists to infiltrate the sector.

Such little documentation and disregard of the rules make it incredibly easy for terrorists to abuse non-profits in Serbia. Of those 58 organizations active overseas, none have their other country listed. They could be active in high-risk areas, such as Syria, Somalia, or Afghanistan, where they could be actively funding terror groups. Thankfully, the European Union has been working closely with Serbia to improve their financial security laws. Even with basic data and documentation checks in place, terrorists will take a massive hit, as their exploitation of non-profits will be evident. The establishment of financial regulatory foundations will be invaluable to countering financial crime in Serbia.

Tags: Financial crime, Money laundering, Fraud prevention, Anti-money laundering (AML), Cybercrime, Financial fraud, Identity theft, White-collar crime, Compliance regulations, Risk management, Fraud detection, Regulatory compliance, Financial security, Insider trading, Banking fraud, Ponzi scheme, Corruption, Cybersecurity, Know Your Customer (KYC),Suspicious activity