Financial Crime World

Lost Fortunes of Libya: €500 Million in Tainted Currency Laundered via Estonia, Seven Years On

Background

  • €500 Million stolen from Central Bank of Libya: Allegedly some of the proceeds laundered through Estonia.
  • Order from German Bundesbank: Libya made a notable order of newly minted €100 and €200 denominations worth €150 million in late 2010.
  • Libya pre-Arab Spring: Vital and influential player in the region despite limitations on political freedom.

Arab Spring and Civil War

  • Libyan conflict: Civil war ensued after the Arab Spring uprisings, leading to the overthrow of the Gaddafi regime and the de facto partition of Libya into two opposing camps.
  • Stolen funds: A UN Panel of Experts report from the end of 2017 revealed that key warlord from the western Libyan faction stole over €159 million from the Central Bank’s Benghazi branch.

Tainted Currency

  • Contaminated cash: Over half of the stolen cash was contaminated with biologically hazardous water.
  • Laundering: Some of the tainted cash was laundered through Estonia, both literally and figuratively.

The Challenge of Handling Contaminated Cash

  • Spending: Some of the damaged cash was spent on war efforts or luxurious pursuits, but around €80 million worth was too contaminated to be spent normally.
  • Moving the soiled cash: Reports emerged of attempts to move the contaminated cash to Turkey and eventually to Europe as part of the laundering process.

Response and International Collaboration

  • Estonian authorities: While aware of the situation, they continued to exchange the tainted bills due to legal and diplomatic hurdles.
  • Global concern: Financial regulatory bodies and researchers continue to monitor the situation and emphasize the importance of addressing financial crimes and promoting transparency and financial stability.

Precautions and Best Practices

  • Checking the authenticity and origin of funds: Central banks and financial institutions are advised to consult with reputable experts or intelligence agencies for verification.

Conclusion

  • Ongoing concern: The Libyan crisis, with its complex power struggles and allegations of large-scale corruption, remains an active concern for financial regulatory bodies and researchers.