How a Russian forgery scheme evaded sanctions

FT News Briefing

The episode investigates how a Kremlin-backed payment system known as A7 used forgery and money laundering to move billions through global b

Key takeaways

• The A7 system moved nearly $7 billion through global banks including Standard Chartered and Citigroup using fake invoices.
• A7 utilized a 'forvergy factory' to produce fraudulent paperwork to justify cross-border payments between countries like the UAE, Russia, and China.

Main topics

• Russian sanctions evasion
• A7 payment system

Notable quotes

The reality is actually, it's a bit more old-fashioned than that. It's money laundering.

Conclusion

This briefing highlights how localized political and fraudulent activi

Transcript preview

Speaker 1 (0:02) Good morning from the Financial Times. Today is Tuesday, September 22nd, and this is your FT News Briefing. Russian payments have gotten around banking sanctions, and polymarket is making a play for Europe. Plus, Germany's political crisis is now the EU's problem. I'm Sonia Hudson, in for Mark Filippino, and here's the news you need to start your day. Speaker 1 (0:38) forgery scheme backed by the Kremlin moved almost $7 billion through global banks. They include Standard Chartered and Citigroup. The FT got its hands on tens of thousands of files. They show how an alternative payment system used money laundering techniques to move the funds. This all happened despite sanctions on Russia. The FT's Chris Cook helped break this story, and he joins me now to talk about it. Hi, Chris. Hiya. Before we get into how this scheme worked, can you start by telling us about the backdrop here? What is this alternative payment system called A7 and how does it tie in with Russian sanctions? Speaker 2 (1:20) So after the full scale invasion of Ukraine in 2022, the Western allies of Kyiv tried to cut. Russian businesses basically off from the global financial system by denying Russians access to SWIFT. Now SWIFT is a messaging system between banks and that's really important because that's how you send money over borders. So that strategy was actually pretty successful. In response to that Russia has tried to build up alternatives, the most important of which is A7. The promise of A7 was that it could still enable cross-border transactions using a combination of high-tech new payment structures and crypto payments. The reality is actually, it's a bit more old-fashioned than that. It's money laundering. Speaker 1 (2:04) Yeah, tell me more about how this Kremlin-backed system, A7, did this. So Speaker 2 (2:11) we've got access to this enormous leak and... they would set up a front company in some third country. So say the United Arab Emirates, they would get some cash laundered into the account, a bank account held by that front company. And then if a person in Russia needed to pay a person, say in China, they would get that person in the UAE. to send money to that person in China. And if the banks ask questions like, why is it that you keep sending money to random people in China? Like, what does it actually do for a living? A7 had an enormous forgery factory that was industrially producing fake paperwork, particularly invoices, to justify the payments. So it was, in some senses, quite high tech, but actually it was a very old-fashioned sort of invoice fraud style of money laundering. Speaker 1