Financial Crime World

Azerbaijan Banking Industry Rocked by Latest Scandal: Experts Warn of Widespreading Corruption and Money Laundering in Europe

Azerbaijan’s Reputation Takes a Hit as Transparency International Reveals Pervasive Corruption

Azerbaijan, ranked 30th out of 100 in Transparency International’s Corruption Perception Index, has been embroiled in a massive money laundering scandal. The “Azerbaijan Laundromat” has shed light on the pervasive corruption in the country and its far-reaching consequences for European institutions.

The Scandal Unfolds

The Azerbaijan Laundromat centers around four UK-based shell companies that had bank accounts in Estonia, allowing for the 2.5 billion EUR or 160,000 transactions to be secretly processed within the European Union without detection. The lack of oversight and controls enabled corrupt officials and organized crime groups to operate with impunity.

Experts Warn of Widespreading Corruption

Experts warn that the Azerbaijan Laundromat is not an isolated incident. According to Transparency International EU Director Carl Dolan, the Azerbaijani government’s corruption has not only ravaged the country but also exported its tentacles to the West.

  • “The Azerbaijan Laundromat revelations show how corruption is systematically exported from Azerbaijan and undermines democratic institutions in the West,” Dolan stated.
  • The UK is home to a thriving company formation industry that gives money launderers access to UK firms and legal system, said Dolan, citing a recent report by Transparency International UK titled “Hiding in Plain Sight.”

Complicity of Major Banks

The scandal also highlights the complicity of major banks in facilitating money laundering. The Estonian branch of Danske Bank, for instance, had previously been involved in a major tax fraud and was also used in an earlier money laundering scheme known as the Russian Laundromat.

Calls for Greater Transparency and Controls

Experts are calling for greater transparency and controls to prevent such scandals from occurring again.

  • “Financial supervisory and criminal justice authorities should take strong action against banks complicit in money laundering,” said Dolan, emphasizing the need for criminal penalties, withdrawal of banking licenses, or even shutting down legal entities.
  • Formation of UK companies is amongst the cheapest and fastest in the world, costing as little as £12 and taking a matter of minutes to complete the forms. This ease of setting up shell companies has created an ideal environment for money launderers.

Conclusion

The Azerbaijani Laundromat serves as a stark reminder of the pervasive corruption that plagues Azerbaijan and its impact on European institutions. As experts continue to unravel the complex web of deceit, one thing is clear: the time for action is now.