NCAThe National Crime Agency has uncovered a multi-billion-dollar money laundering operation that took shape as UK gangs struggled to offload cash during the lockdown.
Investigators say the discovery of a Russian-speaking network embedded in the UK’s street drug market is the biggest anti-money laundering success in a decade.
A global operation based in Moscow is taking dirty money from criminal gangs for a fee and allowing it to be exchanged for untraceable cryptocurrency, shielding drug profits from detection. The Russian state has used the network to fund espionage.
The network spans 30 countries and 84 people have been arrested so far, including 71 in the UK, the NCA and its partners told reporters at a briefing earlier this week.
NCADan Jarvis, the UK security minister, said the operation had “exposed Russian kleptocrats, drug gangs and cybercriminals – all of whom depend on the flow of dirty money”.
On Wednesday, the United States Treasury sanctioned key figures at the top of the network.
Ekaterina Zhdanova, the head of a Moscow-based cryptocurrency network called Smart, was identified as being at the heart of the operation. She was sanctioned by US authorities in November 2023 on charges of transferring money to Russian elites.
Bradley Smith, the acting secretary of counterterrorism and financial intelligence for the US Treasury, said the country is “committed to disrupting any attempt by Russia to use digital assets or other illicit financial schemes to collect, store and transfer their ill-gotten gains.” .
The thread connecting Russian elites, crypto-rich cybercriminals and UK drugs gangs has been “until now invisible”, said the NCA’s director-general of operations, Rob Jones.
“We have identified and acted against the Russians who are pulling the strings at the very top,” he continued, adding that the NCA is now making it “very difficult” for key players to act.
Clues seen during a pandemic
The trail that led to the vast and complex network was identified during the 2021 pandemic lockdown, as drug gangs across Europe struggled to move money from street sales into the legal economy.
That, in turn, made it difficult for them to buy more products like cocaine from South America.
The NCA says two Moscow-based cryptocurrency networks, known as Smart and TGR, offered the solution.
Both were sitting on huge piles of cryptocurrency from the ransomware attack. That’s a form of online extortion, in which a gang disables an organization’s computer systems until a fee is paid to regain control.
TGR and Smart profited from those raids and struck deals with British drug networks, offering an almost instant way of turning dirty street money into usable assets.
NCAIn return for taking the risk of receiving cash, the Russian-led network charged a commission. Its network of couriers launders money, pushing it through seemingly legitimate businesses such as construction firms in the UK and elsewhere, or using mules to fly luggage to Dubai.
Eventually, cash re-entered the economy as it was paid into bank accounts as seemingly legitimate profits.
In fact, Smart and TGR were mimicking a legitimate bank by charging a small fee to provide a network to move money from country to country.
The first clue came in 2021 when the police intercepted drug profit courier Fawad Saidi. He was carrying £250,000 in his car.
He later admitted organizing a £15.6m dirty money scheme and was jailed for more than four years.
NCAWhen the NCA dug deeper, they found that he was working for Ekaterina Zhdanova, head of the Smart Cryptocurrency Exchange Service in Moscow.
The NCA then discovered a similar pattern of links between people involved in the drug trade and those involved in crypto across the country. They also saw further links to the notorious Kinahan drugs cartel, which has its roots in Dublin and the United Arab Emirates (UAE).
Similar to Saeedee’s operation, drug profit couriers collected money from gangs, who set up simple systems to trust each other and make transfers quick.
As soon as the cash was confirmed to have been delivered to the courier, an equivalent in cryptocurrency provided by Russia’s Smart and TGR networks was sent to the drug gang’s secret online accounts. That crypto can be used to buy large quantities of cocaine from South American cartels.
Investigators identified a group of couriers collecting money from 55 different British locations over four months on behalf of at least 22 gangs – and signs of similar schemes elsewhere in Europe.
NCAAnother UK-based courier network was run by Semen Kuksov, the son of a Russian oil executive. He and his colleagues raised more than £12m of drugs in just 10 weeks to exchange for virtual currency. He was jailed for almost six years last February.
To date, the NCA and its partners have seized £20m in cash, with an estimated £700m linked to drug sales – and the majority of arrests and charges so far have been couriers such as Saidi and Kuksov.
Rob Jones, from the NCA, said: “If you now want someone to move money from a drug deal, which has caused real damage in the UK, you’ll think twice, because you don’t know. The courier has been compromised.
“You never know if we’re going after them, and you never know where the proceeds of crime end up.
“We’re anticipating where this business will go next, and we’ll go ahead and wait.”
Sanctions and espionage
Wednesday’s US sanctions were the final step in exposing the network by targeting people at the top.
America’s Office of Foreign Assets Control said it approved TGR chief George Rossi, also known as Georgy, a Russian-born Ukrainian citizen, and Elena Chirkinyan, a Russian citizen.
Rossi presents himself as a legitimate businessman based in London, but his whereabouts are unclear.
The US Treasury said Ekaterina Zhdanova and other members of the TGR network used cryptocurrency and British financial services to transfer £2 million to the UK to buy property for an unnamed Russian national. The NCA has not disclosed whether it has taken action to seize the property.
However, Zhdanova’s alleged role in helping sanctioned individuals is part of what the NCA says are her links to Moscow.
In 2022, investigators say the Russian state used the Smart and TGR crypto-exchange services to move funds for espionage.
Then, in 2023, the NCA says the scheme helped the state-controlled Russia Today media platform, which is banned in the UK, funnel money into the country for one of its operations.
