A massive money laundering network, established during the pandemic lockdown to help UK gangs offload cash, has been dismantled by the National Crime Agency (NCA).
Investigators describe this as the most significant blow to money laundering networks in a decade.
The sophisticated Russian-speaking network, embedded within the UK’s street drugs trade, operated out of Moscow.
For a fee, it laundered drug profits by converting them into untraceable cryptocurrency, shielding the funds from detection. According to the NCA, the network also supported Russian state espionage activities.
The network’s reach extended across 30 countries, leading to 84 arrests, including 71 in the UK. During a briefing earlier this week, the NCA revealed the operation’s scope, which prompted the US Treasury to sanction key figures on Wednesday.
At the centre of the operation is Ekaterina Zhdanova, head of the Moscow-based cryptocurrency platform Smart.
Zhdanova had previously been sanctioned by the US in November 2023 for allegedly facilitating financial transactions for Russian elites.
Bradley Smith, Acting Under Secretary for Terrorism and Financial Intelligence at the US Treasury, emphasised the commitment to thwart Russia’s use of digital assets for illicit financial activities.
“We remain resolute in disrupting efforts to use these schemes to store and transfer ill-gotten gains,” he stated.
The network’s activities came to light during the 2021 pandemic lockdown, when drug gangs across Europe faced difficulties moving large amounts of cash from street sales. This disruption hampered their ability to purchase drugs, such as South American cocaine.
Two Moscow-based cryptocurrency networks, Smart and TGR, stepped in to offer a solution. Both had amassed significant amounts of cryptocurrency from ransomware attacks, a cybercrime where victims are extorted to regain control of their systems.
These platforms provided UK drug gangs with a quick and discreet way to convert cash into cryptocurrency.
In return, the Russian-led network charged a commission and used couriers to launder the cash, funneling it through seemingly legitimate businesses or smuggling it abroad, often to Dubai.
The operation mimicked traditional banking by offering a network for cross-border money transfers in exchange for a fee. The scale of the operation was first revealed in 2021 when police intercepted courier Fawad Saiedi, who was transporting £250,000.
Saiedi later admitted to moving £15.6 million in drug profits and received a prison sentence of over four years.
Further investigation linked Saiedi to Zhdanova’s Smart network. Similar patterns emerged nationwide, with connections to the notorious Kinahan cartel, which operates from Dubai.
In one case, couriers collected cash from 55 UK locations over four months, serving at least 22 drug gangs. Identical schemes have since been identified across Europe.
