What Is the Azerbaijani Laundromat? A $2.9 Billion Scandal

A $2.9 billion scandal rocked the financial world in 2017, revealing a complex web of corruption involving Azerbaijan’s elite. Known as the Azerbaijani “Laundromat”, the money-laundering scheme funneled vast sums through European banks and shell companies, hiding its origins and beneficiaries. However, behind this operation lay a tale of human rights abuses, political manipulation, and unchecked financial wrongdoing.

The Unveiling of a $2.9 Billion Laundering Scheme

The Azerbaijani Laundromat operated between 2012 and 2014, with four shell companies registered in the UK playing a central role. Banking records uncovered by Berlingske, a Danish newspaper, and the Organized Crime and Corruption Reporting Project (OCCRP), exposed how this slush fund handled $2.9 billion. The operation used shell companies with hidden or nonexistent shareholders to disguise the true origins of the money, most of which came from government insiders and entities linked to Azerbaijan’s ruling elite.

This money did more than enrich the country’s leadership. It paid for European luxury goods, laundered cash across borders, and bought influence among European politicians. As Azerbaijan’s government cracked down on journalists and human rights activists at home, it simultaneously financed foreign lobbyists and businesses to whitewash its international image.

Key Players in the Scheme

Among those implicated was Javanshir Feyziyev, a member of Azerbaijan’s parliament. In a landmark court case, Feyziyev and his family were ordered to forfeit over £5.6 million to UK authorities after investigators linked the funds to money laundering activities. Although the family contested the charges, the court found overwhelming evidence that the funds came from criminal conduct masked by fraudulent business transactions between shell companies.

Feyziyev was not alone. Several Azerbaijani officials, including those with ties to President Ilham Aliyev’s family, benefited from the scheme. Records suggest that much of the $2.9 billion came from accounts linked to the Aliyev family, with some contributions from government ministries and even Rosoboronexport, a state-owned Russian arms exporter.

Role of European Banks

Danske Bank, one of Europe’s major financial institutions, played a significant role in the laundering operation. Its Estonian branch handled the accounts for all four shell companies involved, allowing billions to pass through without proper scrutiny. Despite clear red flags, the bank failed to investigate the suspicious transactions, contributing to the success of the Azerbaijani Laundromat.

The funds were distributed to shell companies in the UK, Turkey, the UAE, and other countries, with millions ending up in accounts of legitimate businesses like car dealerships and football clubs. Most recipients were unaware of the illicit nature of the money, but their involvement shows the far-reaching effects of the laundering scheme.

Ongoing Investigations and Legal Repercussions

The discovery of the Azerbaijani Laundromat has had ongoing legal and political consequences. In addition to Feyziyev’s family forfeiting funds, other high-profile individuals involved in the scheme have faced scrutiny. In 2022, the National Crime Agency seized millions from other Azerbaijani nationals living in the UK, adding pressure on international financial institutions to tighten their regulations.

Despite these efforts, much remains to be discovered about the scheme’s full extent. The origin of some funds is still hidden behind layers of shell companies, making it challenging to trace all the money’s sources and final destinations. What is clear, however, is that the Azerbaijani Laundromat represents one of the most significant corruption scandals in history.

The Future of Anti-Corruption Efforts

The Azerbaijani Laundromat underscores the vulnerability of international financial systems to abuse by corrupt regimes. With lax regulations in place, even central banks like Danske Bank were able to facilitate massive money laundering. As investigations continue, authorities will likely face more challenges in tracking illicit funds and holding those responsible accountable. However, the impact of this case sets a precedent for how international cooperation can expose and combat corruption.

References: The Azerbaijani Laundromat | Azerbaijan ‘laundromat’ – court orders family to hand over £5.6m brought into UK