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    Customs Union Fraud May Account for 40% of Russia Capital Flight in 2012

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    Fictitious import contracts with entities from Customs Union member states Belarus and Kazakhstan may have accounted for 40 percent of Russia’s net capital outflow last year, business daily Vedomosti reported Thursday, citing Central Bank data.

    CORRECTION: This story initially stated that fictitious import contracts with Belarus and Kazakhstan accounted for 40 percent of Russia's net capital outflow in 2012; according to the Central Bank, this is a possibility, not a confirmed fact. The headline and text have been changed to reflect this.

    MOSCOW, June 20 (RIA Novosti) – Fictitious import contracts with entities from Customs Union member states Belarus and Kazakhstan may have accounted for 40 percent of Russia’s net capital outflow last year, business daily Vedomosti reported Thursday, citing Central Bank data.

    About $10 billion could have been laundered through fake imports schemes via Kazakhstan, the Central Bank said in a letter posted on its website on Thursday. In a similar letter posted a week ago, the bank said comparable operations with Belarusian entities topped $15 billion last year.

    Belarusian and Kazakhstan import scams “whose real goals could be money laundering, financing terrorism and other unlawful goals” allow Russian businesses to transfer money to foreign bank accounts outside Belarus and Kazakhstan under the guise of payments for import contracts, the bank’s letter said.

    The Customs Union regime between Russia, Kazakhstan and Belarus does not allow Russia’s Central Bank to verify how genuine these deliveries are, Vedomosti said, adding this was the first time the Russian regulator has reported the scope of capital flight through these schemes.

    In his last report to the Russian parliament on Wednesday, outgoing Central Bank chief Sergei Ignatyev said shell companies had illegally funneled 760 billion rubles (about $25 billion) from Russia in the past three years.

    “The impression is created that this entire network of one-day companies is controlled by one group of persons,” he said, repeating claims he made earlier this year.

    “It is very important that this criminal probe should be investigated as fully as possible and the organizers and operators of this network of shell companies should be exposed, as well as their clients – real beneficiaries in whose interests illegitimate financial operations are carried out,” Vedomosti quoted him as saying.

    Capital flight from Russia peaked at $133.7 billion in 2008 when the global economic crisis broke out, falling to $56.1 billion in 2009. Capital outflow from Russia stood at $80.5 billion in 2011, up from $34.4 billion in 2010. Capital flight from Russia in 2012 amounted to $56.8 billion.

    Tags:
    capital outflow, Central Bank, Russian parliament, Sergei Ignatyev, Belarus, Kazakhstan
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