Last year’s $230 billion money-laundering scandal of mostly Russian money discovered by an employee at the Estonian branch of Danske Bank, Denmark’s largest, has opened a Pandora’s Box in Europe.
The European Union’s tighter anti-money laundering policies sparked by the sandal are now targeting customs warehouses and so-called “freeports”, massive facilities used to store things like fine art and wines, classic cars and other luxury items. Some of these ports have informal ties to people involved in the Danske Bank fraud, namely those from Azerbaijan, where some $3 billion was laundered through a slush fund used to bribe members of the EU parliament and its institutions.
Until recently, freeports were quiet and off-radar. An October EU government study by the European Parliamentary Research Service (EPRS) shined a spotlight on Europe’s major freeports as a de facto offshore bank account that could be used by anonymous shell companies to execute financial transactions with little oversight, and zero taxes.
“I’ve seen the wire transfers of the Danske bank transactions,” says L. Burke Files, president of the American Anti-Corruption Institute in Tempe, Arizona. Some of the Azeri money was used legitimately to pay for strategic communications work in Washington, DC. Two lobbying firms with current ties to Azerbaijan did not return requests for comment.