AML / CFT: how to move USD172 million without anyone really noticing
Victor Kaganov migrated from Russia, where he had been in the Russian military, to the USA in 1998 and, later, became a naturalised citizen. He set up money transmitter businesses - but he didn't licence them and he provided a service of moving money which mainly originated in Russia to some 50 countries.
Kaganov created five shell companies in Oregon. Although he did not have the licence from the Oregon authorities that money transmitters are required to have, nor did he register the businesses as an MSB with FinCEN, he was able to open bank accounts for the companies.
So much for due diligence.
And his transactions appear at least suspicious on the face of it: between 2002 and his arrest in 2009, Kaganov was a party to well over 4,000 transactions in which money was received and then retransmitted to many countries.
So much for monitoring.
While the US government is focussing on the importance of licensing and the MSBs in their coverage of this case, of much more interest would seem to be the question as to how he opened and operated bank accounts for companies that were mere shells, that had no commercial activity except receiving and paying out money, that were not licensed nor registered as required by law.
Remember this case, the next time the USA tries to tell a small foreign bank that it's controls are weak.
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