Financial Crime World

Kazakhstan’s Shadowy Past: The FinCEN Files Reveal Suspected Money Laundering Activities of Former Oligarchs

Subtitle

  • Hundreds of millions of dollars in suspicious transactions involving Kazakhstan’s former elite and U.S. banks uncovered in leaked documents

The International Consortium of Investigative Journalists (ICIJ) and BuzzFeed News’ recent release of the FinCEN Files, a massive trove of leaked financial documents from the U.S. Financial Crimes Enforcement Network (FinCEN), has shed light on thousands of potentially illicit transactions that involved U.S. banks between 1999 and 2017. Among the numerous high-profile individuals and countries implicated in money laundering and other financial crimes, Kazakhstan’s former oligarchs have emerged as a significant focus of the investigation.

Ilyas Khrapunov and Family

  • Former mayor of Almaty under Nursultan Nazarbayev’s regime
  • Allegations of defrauding the city through opaque public tenders
  • Hundreds of millions of dollars of suspicious origin flowed through U.S. banks on behalf of the Khrapunov family
  • Fled to Switzerland after falling out with Nazarbayev

The leaked documents reveal that Ilyas Khrapunov, a Kazakh businessman who served as the mayor of Almaty under former president Nursultan Nazarbayev, and his family are at the heart of the suspicious transactions. The records reveal that hundreds of millions of dollars of suspicious origin flowed through U.S. banks on behalf of the Khrapunovs.

Mukhtar Ablyazov

  • Former banker and major political opposition figure
  • Involved in numerous scandals, ranging from embezzlement in Kazakhstan to money laundering in the U.S.
  • Fell out with Nazarbayev in the early 2000s
  • Contempt of court in the U.K., extraordinary rendition from Italy, prison sentence in France

Another prominent figure is Mukhtar Ablyazov, a former banker, who also became a major political opposition figure after falling out with Nazarbayev in the early 2000s. Ablyazov was involved in several scandals, ranging from embezzlement in Kazakhstan to money laundering in the U.S., contempt of court in the U.K., extraordinary rendition from Italy, and a prison sentence in France. In 2018, the U.K. High Court fined his son-in-law and business associate, Ilias Khrapunov, $500 million for allegedly helping Ablyazov launder funds from BTA Bank, which he previously owned.

Noteworthy Transactions

  • Transactions totaling billions of dollars
  • U.S. banks continued processing transactions despite Interpol arrest warrants
  • The Bank of New York Mellon, which is responsible for the custody of Kazakhstan’s national fund, was involved in numerous transactions

These transactions, which involve billions of dollars, are particularly noteworthy because in many cases, U.S. banks continued processing them despite Interpol issuing Red Notices for the arrests of some of the individuals involved. Additionally, numerous transactions to or from Kazakhstan were processed through The Bank of New York Mellon, which is also responsible for the custody of the country’s national fund and is mired in a long-lasting lawsuit.

Other Kazakh Individuals

  • ICIJ did not respond to a request for further information on other Kazakhs potentially implicated
  • Local press suggests that the country’s wealthiest elites could be involved

Although the FinCEN Files do not yet identify other Kazakhs potentially implicated in these illicit transactions, local press suggests that the country’s wealthiest elites could be involved. ICIJ did not respond to a request from The Diplomat for further information on this matter.

Conclusion

  • U.S. banks facilitated suspicious transactions despite Interpol arrest warrants
  • The importance of transparency and effective regulatory action in preventing the flow of illicit funds

The FinCEN Files serve as a reminder that even with the U.S. government’s efforts to combat money laundering, financial institutions, including Deutsche Bank, continued to facilitate suspicious transactions. These revelations underline the importance of transparency and effective regulatory action in preventing the flow of illicit funds.

Stay tuned for more updates on the FinCEN Files and their implications for Kazakhstan and the region as a whole.