Seems likely there was a failure of the FinCen Know Your Customer (KYC) rules. I like the plot twist in the filing:
"Kolomoisky is now reported to have made a return to Ukraine for the first time in several years, a decision which is believed to be linked to the recent victory in the Ukrainian presidential election of the television star and comedian Mr. Volodymyr Zelenskiy, behind whom Kolomoisky is widely reported as being the principal power and financial backer. Press reports speculate that there is a deal between Mr. Kolomoisky and Mr. Zelenskiy: in exchange for Kolomoisky’s support, Mr. Zelenskiy will ensure the return of PrivatBank to the ownership of Mr. Kolomoisky in order to circumvent any pending or threatened litigation against Kolomoisky." -- https://www.atlanticcouncil.org/images/royaltyfree/kolomoisk...
That is some serious corruption allegations right there.
From a financial controls perspective it seems like the US government was pursuing these folks (according to the complaint) so somebody was making complaints.
Seems like an interesting strategy to use ill gotten gains to elect a pliable television personality to the role of chief executive, Then once that is accomplished pressure them so that they will use the power of the office to obstruct any attempt to bring the criminals to justice.
Pretty far fetched though, you would have have someone on the inside running your faux campaign, etc. Perhaps I'm reading too much Stieg Larsson.
It’s not far-fetched it’s just a regular day out here.
Previously it was the other way around — to be in office yourself and book profits for your son in law (Kuchma—Pinchuk) or other related person. Conflict of interest? Never heard about that.
This was commercialized and outsourced at some point, but only at MP level, so you could enjoy Presidential impunity yourself.
Zelensky happened as a controlled exit strategy because all other contenders had highly toxic reputations to assume office for themselves after being in some office or another for nearly 30 years, so it was a chance that somebody really from the outside would get ir
Also it’s not really chief executive, as executive power is in the hands of PM, so upcoming elections matter even more. You are however on point, since president proposes candidates for General Prosecutor and head of Intelligence-Counterintelligence Service.
The man in question however could simply bribe officials on lower levels with the same effect and for far price.
To top it — extradition of a citizen is constitutionally prohibited, so everybody could sleep well and show middle finger to the rest of the world, as we traditionally do here.
> Seems likely there was a failure of the FinCen Know Your Customer (KYC) rules
In this case, it seems nothing has failed. From what I read, news of this were all around, and they knew their customer more than very well.
Anybody going to launder that much of money can setup or buy his own bank and hire an army of financial lawyers to keep it compliant on paper.
All those CFT, KYC laws do sound as completely nonsensical and ineffectual in light of that. Why to go after money laundry clients, when they should really go after the bank laundry owner
There was already a large mafia infrastructure for laundering money is my guess. It was big through the 90’s, got busted, then got busted again in 2012 by the FBI for money laundering through real estate.
Some of the properties mentioned in the full complaint were owned by KD Group, the company at the center of the early-2010’s mob money laundering scheme
I suspect that if you look hard enough at many areas that have a significant turnover in high value real estate transactions, you will find examples of international money laundering like this. NYC is widely believed to be a hotbed of this activity, and likely many other US cities are, also.
In Ukraine many people strongly believe that Kolomoyskiy has sponsored presidential campaign for Zelenskiy - comedian, who played president on TV (on the TV channel "1+1" that belongs to Kolomoyskiy) and won elections. Supposedly he now has a direct influence on Mr. Zelenskiy and the new government.
So Kolomoyskiy observed the wave that swept US, UK, IT and almost FR, and decided to orchestrate a similar situation with his own chosen puppet? Dude's pretty smart...
Ukrainian politics was always a TV show with a ton of populism and anti-establishment vibe was always there, so it’s the other way around — toxic electoral culture spilled over to the West.
When politics turns into a show it’s obvious that professional showman beauts amateurs.
Admittedly, I didn't read every link in the article, but this quote is almost unbelievable to me:
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From 2006 through December 2016, the total movement of funds (credits) into the [ultimate beneficiary owners’] laundering at PrivatBank Cyprus was $470 billion, which amounts to approximately double the Gross Domestic Product of Cyprus during the same period.
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Nearly half a trillion dollars??? That would make them the richest men in the world, many times over. How can that be possible?
Laundering that amount doesn’t mean they accrued that much profit on it. If you spent any time in Cleveland in 2006 versus 2019 the hundreds of billions in redevelopment seems pretty ...reasonable
First, the amount appears to be the total through a bank, where this number would be aggregated over a several (possibly many) individuals.
Second, the amounts reported do not reflect the total funds laundered (illicit funds made to appear legitimate) but the total revenue stream, which would be offset by liabilities. For example, one laundering technique I've read about involves buying real estate and selling it at an inflated price to someone who has the illicit funds. For example, A has illicit cash and wants to transfer it to (apparently) legitimate profits by B. B buys a property for $1m. B sells the property to A1 for $2m. B keeps the $1m difference as profit. A1 later sells the property at a loss, and the cycle is complete. Repeat this a few thousand times, but probably with a smaller % margin. But assuming a 100% margin (and the whole laundering effort being exactly this scheme) that'd be $450B total revenue but $225B actually laundered.
Interesting side effect: This pushes up the cost of housing in an area until the launderers abandon it, at which point demand and purchase volume dries up significantly and valuations sink. Additional profit could be made off this market manipulation.
The economics of Vancouver real estate is more complicated than that. Don't let the press fool you. And reporters aren't all doing independent research they are often using the same source or using each other. For instance, Global news is using research from a Postmedia reporter. And all Postmedia newspapers are reprinting or relying on that one reporter's research. Also, when you look at the German report on money-laundering effects on RE there is a lot of guessing but the press reports it as fact. Sigh.
What also irks me is this Postmedia reporter also wrote about a middle-eastern money-laundering ring operating in Canada (for Hezbollah) but there was hardly any (if any) coverage of it on Global News (tv). Usually there is this cross-publishing between Global News and Postmedia. It just wasn't sexy enough for television. Probably because it didn't fit the narrative of Chinese Gangs ruining Vancouver RE through money-laundering.
Now here’s the crazy part. Cleveland has a rich history of money laundering. The FBI recently broke up a mob related group in 2012 being ran through The KD Group.
Is this even real? First of all, the dollar amount is unbelievable. Second, it's not being reported on most of the Ukrainian news sites I frequent (or it's well hidden). Third, it's far, far bigger than the missing funds as reported by most media (5.5B).
5.5B is the bank itself. Think about how much money Firtash, Ahmetov, Timoshenko and Kolomoyski together siphoned through gas prices, coal and electricity trickery in like 20 years.
Why would private parties file suit under any of these statutes? The Ohio RICO act lollll, these are matters for the state
Could it be just to bring attention to them in the civil suit and then hope the department of justice comes in with the criminal sanctions and asset freezes? Maybe PrivatBank makes a little money in the process?
54 comments
[ 2.8 ms ] story [ 115 ms ] threadIt links to this commentary which is much more interesting to read https://www.atlanticcouncil.org/blogs/ukrainealert/how-kolom...
Looks like the claim is that they misappropriated clients funds and invested it in USA under companies whose control can be linked back to them.
I am somewhat puzzled how this could fly under the radar of US banks... this is much bigger deal than the recent Danske Bank scandal in Estonia.
Goes way more in depth, giving local history on some of the construction projects.
"Kolomoisky is now reported to have made a return to Ukraine for the first time in several years, a decision which is believed to be linked to the recent victory in the Ukrainian presidential election of the television star and comedian Mr. Volodymyr Zelenskiy, behind whom Kolomoisky is widely reported as being the principal power and financial backer. Press reports speculate that there is a deal between Mr. Kolomoisky and Mr. Zelenskiy: in exchange for Kolomoisky’s support, Mr. Zelenskiy will ensure the return of PrivatBank to the ownership of Mr. Kolomoisky in order to circumvent any pending or threatened litigation against Kolomoisky." -- https://www.atlanticcouncil.org/images/royaltyfree/kolomoisk...
That is some serious corruption allegations right there.
From a financial controls perspective it seems like the US government was pursuing these folks (according to the complaint) so somebody was making complaints.
To make sure you have a local community support when things start to heat up, I would not be surprised by
- How much London real estate these businessmen own
- How much money also was poured into Israel communities
Pretty far fetched though, you would have have someone on the inside running your faux campaign, etc. Perhaps I'm reading too much Stieg Larsson.
Previously it was the other way around — to be in office yourself and book profits for your son in law (Kuchma—Pinchuk) or other related person. Conflict of interest? Never heard about that.
This was commercialized and outsourced at some point, but only at MP level, so you could enjoy Presidential impunity yourself.
Zelensky happened as a controlled exit strategy because all other contenders had highly toxic reputations to assume office for themselves after being in some office or another for nearly 30 years, so it was a chance that somebody really from the outside would get ir
The man in question however could simply bribe officials on lower levels with the same effect and for far price.
To top it — extradition of a citizen is constitutionally prohibited, so everybody could sleep well and show middle finger to the rest of the world, as we traditionally do here.
In this case, it seems nothing has failed. From what I read, news of this were all around, and they knew their customer more than very well.
Anybody going to launder that much of money can setup or buy his own bank and hire an army of financial lawyers to keep it compliant on paper.
All those CFT, KYC laws do sound as completely nonsensical and ineffectual in light of that. Why to go after money laundry clients, when they should really go after the bank laundry owner
What will happen to the property? Confiscated to the government?
Some of the properties mentioned in the full complaint were owned by KD Group, the company at the center of the early-2010’s mob money laundering scheme
It really doesn't matter though, Zelensky was a protest vote against the status quo and everything that entails.
When politics turns into a show it’s obvious that professional showman beauts amateurs.
First, the amount appears to be the total through a bank, where this number would be aggregated over a several (possibly many) individuals.
Second, the amounts reported do not reflect the total funds laundered (illicit funds made to appear legitimate) but the total revenue stream, which would be offset by liabilities. For example, one laundering technique I've read about involves buying real estate and selling it at an inflated price to someone who has the illicit funds. For example, A has illicit cash and wants to transfer it to (apparently) legitimate profits by B. B buys a property for $1m. B sells the property to A1 for $2m. B keeps the $1m difference as profit. A1 later sells the property at a loss, and the cycle is complete. Repeat this a few thousand times, but probably with a smaller % margin. But assuming a 100% margin (and the whole laundering effort being exactly this scheme) that'd be $450B total revenue but $225B actually laundered.
Interesting side effect: This pushes up the cost of housing in an area until the launderers abandon it, at which point demand and purchase volume dries up significantly and valuations sink. Additional profit could be made off this market manipulation.
https://globalnews.ca/news/5259196/home-prices-in-metro-vanc...
https://business.financialpost.com/news/fp-street/dirty-cash...
Funny enough, KD Group is a primary beneficiary of this ”new” money laundering: https://m.clevescene.com/scene-and-heard/archives/2019/06/11...
https://en.m.wikipedia.org/wiki/PrivatBank
Could be half a trillion easily.
[1] https://en.m.wikipedia.org/wiki/Pavlo_Lazarenko
Could it be just to bring attention to them in the civil suit and then hope the department of justice comes in with the criminal sanctions and asset freezes? Maybe PrivatBank makes a little money in the process?
[1] https://therealdeal.com/miami/2016/01/13/secret-buyers-in-mi...