Operation Destabilise, a landmark international investigation, has revealed a multi-billion-dollar Russian money laundering scheme that directly impacts the UK’s property market.
Spearheaded by the National Crime Agency (NCA) the operation has exposed the global reach of two criminal networks, Smart and TGR, which launder illicit funds for organised crime, Russian oligarchs and cybercriminals.
The investigation highlights the growing concern of Russian money flowing into the UK, with both Smart and TGR providing a gateway for Russian elites to bypass international sanctions and invest in British assets, including real estate.
Over 84 arrests have been made globally, with £20 million in cash and cryptocurrency seized in connection with crimes linked to the UK, including drug trafficking and ransomware attacks.
MONEY LAUNDERING THROUGH UK PROPERTY
A significant concern arising from Operation Destabilise is the use of UK property as a vehicle for money laundering.
Between late 2022 and 2023, the Smart network, led by Ekaterina Zhdanova, facilitated the transfer of millions of pounds into the UK through intermediaries, bypassing critical anti-money laundering measures.
The funds were often used to purchase properties, enabling Russian nationals to secure assets in the UK while masking the source of the funds.
In one high-profile case, Zhdanova and her associates moved over £2 million into the UK for a Russian client to fund property purchases.
NATIONAL SECURITY THREAT
One City pundit tells Property Soup: “This operation undermines the integrity of the UK property market, allowing illicit wealth to enter the country, distorting local economies, and threatening national security.
“These activities raise concerns that UK property could be a magnet for illicit money, contributing to the rising costs of homes and driving up housing demand in certain regions, ultimately making it harder for legitimate buyers to enter the market.
“The NCA’s efforts to combat this form of financial crime will likely lead to increased scrutiny of property transactions, particularly in high-demand areas like London, where foreign investment has been a longstanding issue.”
Smart and TGR’s role in money laundering extends beyond property, with cryptocurrency being central to their operations.
The networks’ use of cryptocurrency to convert cash into digital assets has allowed criminal gangs, including the notorious Kinahan cartel, to circumvent traditional banking systems and law enforcement.
“Cryptocurrency transactions offer an almost instantaneous method to move money across borders without physical detection.”
Cryptocurrency transactions offer an almost instantaneous method to move money across borders without physical detection, which is particularly appealing to organised crime groups looking to reinvest illicit profits into activities like drug trafficking, firearms, and cyber extortion.
The NCA uncovered a system where UK-based couriers, working on behalf of these criminal networks, would collect illicit cash, exchange it for cryptocurrency, and make the digital assets available to the gangs.
This system allowed criminals to avoid moving physical cash across borders, instead using digital wallets to fund their illegal operations. This is where the impact on the UK property market becomes evident. Criminals could easily use cryptocurrency to purchase real estate, further complicating the enforcement of anti-money laundering laws in property transactions.
HIGH-VALUE ASSETTS
Operation Destabilise has had far-reaching consequences, with the NCA and its international partners disrupting a vast global network.
The criminal networks, which spanned over 30 countries, were also linked to Russian espionage efforts, further escalating concerns about national security. Notably, these groups helped the Russian state evade financial sanctions, raising alarm about the integrity of the UK’s financial system.
The operation has also exposed the financial ecosystem that supports the illicit movement of funds, particularly within the UK. As criminal groups use these networks to launder vast sums, including through property investments, the UK government faces mounting pressure to implement stronger measures to counteract this form of financial crime.
CRIME PREVENTION
Rob Jones, Director General of Operations at the NCA, says: “Operation Destabilise has exposed billion-dollar money laundering networks operating in a way previously unknown to international law enforcement or regulators.
“For the first time, we have been able to map out a link between Russian elites, crypto-rich cyber criminals, and drugs gangs on the streets of the UK. The thread that tied them together – the combined force of Smart and TGR – was invisible until now.
“The NCA and partners have disrupted this criminal service at every level. We have identified and acted against the Russians pulling the strings at the very top, removing the air of legitimacy that enabled them to weave illicit funds into our economy.
“We also took out the key coordinators that enabled the cash-based element of their operation in the UK, making it extremely difficult for them to operate here and sending a clear message that this is not a safe haven for money laundering.”
HIDDEN IN PLAIN SIGHT
Nik Adams, T/Assistant Commissioner of City of London Police and NPCC lead for economic crime, adds: “The networks disrupted by Operation Destabilise were hidden in plain sight, operating from within our communities, moving vast sums of money linked to the drugs trade and serious violence on our streets.
“Money laundering causes untold harm to the British public, it deprives society of legitimate funds that pay for schools, hospitals and social services. Under Destabilise, the NCA, alongside policing and other partners, has led UK law enforcement efforts to make our streets safer.
“Community intelligence and neighbourhood policing play a vital role in how we identify and tackle those causing the greatest harm in our communities, and together we can ensure crime doesn’t pay.”
SIGNIFICANT STEP
Security Minister Dan Jarvis says: “Illicit finance inflicts immense harm around the world and this major global operation marks a significant step against economic crime.
“Led by the National Crime Agency working with Border Force, Op Destabilise has exposed Russian kleptocrats, drug gangs and cyber criminals – all of whom relied on the flow of dirty money.
“The UK and its allies will continue to work together to crack down on illicit finance and the criminality it enables.”
