Russia's illicit capital outflow ‘controlled by well-organized group’

A single organized group could be in control of over half of the illicit capital outflow from Russia totaling almost $50 billion in 2012, Central Bank research suggests.

Last year $49 billion or 2.5 percent of the country’s GDP was illegally transferred to foreign bank accounts, Vedomosti daily reports.

The bank’s analysis revealed that over a half of the illegal operations were carried out through interconnected firms.

“This can include waging drugs supplies…  shady import… bribes and kickbacks to officials… managers buying wholesale from private companies,” Sergey Ignatyev, the head of Russian Central Bank told Vedomosti. “This can also be tax evasion schemes,” he added.

"You get the impression that they are all controlled by one well organized group of people," Ignatyev said. "With a serious concentration of efforts by law enforcement agencies, I think it is possible to find these people." Ignatyev however did not identify this “organized group of people” in his interview.

The Сentral Bank chief is sure that if law enforcement concentrates on this problem those involved can be identified and busted.

Ignatyev insists on introducing legislation allowing banks to close down accounts use for dubious transactions. He wants to change the rules for setting up companies.

The Central Bank intends to publish the study later on Wednesday.

Ben Arris, editor-in-chief at Business New Europe, believes such an announcement by a Central Bank official was made as part of a rapidly expanding anticorruption drive, launched by the Russian government.

“Russia’s been criticized for corruption which is a serious problem and has been for a long time. So the political will to do something about it has been growing steadily stronger ever since defense minister was sacked last November. And since then we have seen like a raft on weekly basis,” Ben Arris told RT Business. 

The insight goes some way to explaining the rather unexpected comment coming from a conservative governmental body like the central bank.

“Mr Ignatyev is not on high media profile so these comments are double-shocking coming from him because he is usually very quiet, stolid and conservative, you know central bankers they are. And here he is out making headlines around the world. He is saying, in fact, that 60% of the money that is going out of the country comes from crooks. And this is an official statement from the central bank which is not what we used to hear from the Kremlin,” Ben Arris said.

It's thought that the nature of the comments hint of a government backed clampdown on corruption, targeting both the public and high ranking officials.

“The government is now focused on controlling the system better and stopping the leakage. And Ignatyev’s comments are very much in that context,” Mr Arris shared his view with RT.

Russia lost a whopping $151 billion in black money leaving the country in 2001-2010, making it the fifth largest victim of illicit capital outflow, according to a report of Global Financial Integrity (GFI), the US financial watchdog.