March 5th, 2013

Chairman of the Bank of Russia: half of illegal capital flight is controlled by one well-organized group of individuals

Sergei Ignatiev, the head of Russia’s Central Bank, estimates the volume of illegal capital outflow from Russia mounted to around $35bn. He believes that almost half of this sum left Russia through identical schemes organized by one interconnected group of individuals.

Sergei Ignatiev knows more than he reveals publicly

Central bank spots illegal capital outflow by financial transactions of legal entities that have no economic activity other than these transactions and don’t pay any taxes. Sergei Ignatiev explained that this illegal capital could be formed by proceedings from drug traffic and corruption.

$35bn is around 2% of Russian GDP. Most countries have a bigger share of shadow economy. More important is that almost $20bn of illegal outflows is controlled by one group of beneficiaries, and they are not shy to be visible to the Central Bank clerks. Sergei Ignatiev rarely gives any interviews and he is even more careful in his statements than his colleagues from western countries. According to Sergei Aleksashenko, a first deputy central bank governor in 90ies, Sergei Ignatiev couldn’t have made his statement without reporting his findings first to the Russia’s political leadership and legal authorities. However, no official reaction followed the interview.

According to the unnamed source of Financial Times, the financial schemes Mr. Ignatiev is talking about are identical to those discovered by Sergei Magnitsky, a lawyer who died in Moscow’s police custody after attempting to investigate the case of financial fraud. People familiar with the Russia’s autocratic regime assume that such high-scale and transparent to Central Bank capital outflow could have become possible only with the help of somebody from the Putin’s inner circle.

Sergei Ignatiev has a lot of reasons to be cautious both in his words and actions. Perhaps, the most important of them is his deputy Andrei Kozlov who was shot dead after initiating a bold crusade on money-laundering schemes in Russian banking system.


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