Russian mafia `laundered $10bn at Bank of New York' p

Mary Dejevsky
Friday 20 August 1999 00:02 BST

INVESTIGATORS ARE studying accounts at the Bank of New York, amid suspicions of large-scale money-laundering by Russian mobsters through the bank. The bank said yesterday it was co-operating with an international police inquiry.

Billions of dollars have passed through the bank in the past year in what could be the biggest money-laundering operation detected in the United States. The bank, one of the oldest in America, acknowledged that the funds originated in Russia, where organised crime is rife in banking circles.

According to The New York Times, quoting unidentified investigators, the accounts have been linked to Semen Mogilevich, regarded by the US and European authorities as a big player in Russian organised crime. The paper reported yesterday that some $4.2bn (pounds 2.7bn) passed through one account in the period from October 1998 to March 1999 in more than 10,000 separate transactions. Because the account has remained open throughout the current financial year, it is believed the total amount could exceed $10bn.

It is likely to take many months before the investigators go through all the documents and penetrate the complex web of companies to find out where the money came from and where it was sent. Some is believed to have gone to finance contract killings and to pay off drug barons.

The investigation at the Bank of New York is believed to have begun a year ago on the basis of information supplied by the British authorities. They are said to have found references to a front company linked to Mr Mogilevich while sifting boxes of documents for an investigation into UK activities of the Russian mafia. Two senior employees of the bank, both dealing with Eastern Europe and Russia, have been suspended. One is a senior vice-president of the bank in New York, the other holds a similar rank in the bank's London branch.

In a statement, the bank said: "The Bank of New York has been co-operating with the office of the United States Attorney for the Southern District of New York in a confidential investigation of the use of bank facilities to transfer funds from Russia to other countries." It insisted that there were "no allegations of wrongdoing by the bank" and that no customer funds had been lost.

The US has strict regulations that require banks to report cash deposits above a certain amount and any "unusual activity" in accounts. Neither the bank nor the US Treasury, which collects the information, would comment on whether reports had been filed in relation to the suspect account or any others at the Bank of New York.

The bank, which has more than $67bn in assets, was founded in 1784 and is known for getting foreign companies to list on US stock markets.

Mr Mogilevich, who is believed to be living in Budapest, was named in a 1996 Senate hearing as the leader of an organised-crime group in the United States. A year earlier the National Criminal Intelligence Service in Britain said he was "one of the world's top criminals" with a "personal wealth of $100m".

The report centred on a money-laundering scheme allegedly run by companies linked to Mogilevich in Britain.

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