Hot onGambling Trail of Sergei Tokarev and Rustam Gilfanov
In recent years Europe faced a number of terror attracts, due to the overall geopolitical situation in the region and globally. This markeda raising necessity for the EU to reconsider its anti-money laundering regulations, as laundering and offshoring are in the top-list of sources where terror organisations receive financing from.
European legislation remained relatively settled in that regard for 10 years with its3rd Money Laundering Directive (MLD3), which came into force as far back as on 15th December 2005. Yet, 2015 broughtnew public safety challenges for the EU, so they were fast to implement the new 4th Directive (MLD4) just in 2 years, putting the screws on many shady business activities all across the EU.
On top of rigorous regulations,the EU MLD4, effective from 26th June 2017, implies a wider pool of areas it regulates, compared to the MLD3. Among all,PwC reports that gambling sector is going to suffer the most, as it has never been covered by previous MLDs. Since now it has to adopt dramatic changes towards transparency and customer due diligence in order to comply with new regulations.Moreover, the new rules are to regulate not just traditional casino operators, but all gambling providers, with a special reference to online gambling, which remained out of focus for quite a while.
Such a twist in the legislation inevitably led to a turmoil in the camp of industry players, forcing them to make a hard choice, either to follow the rules, or to lay even lower and continue to operate by means of new dark and dirty scheming. Breaking bad is rather risky now for conventional gambling operators, so they are likely to simply adjust. While the second alternative is indeed plausible for online gambling.
Money laundering, as a phenomenon, is taking place for years and there always are companies that find options on how to omit the law one way or another. As more and more online gambling companies are expected to step on this slippery slope, the newcomers will apply to an expertise of mastodons in the field.In case of online gambling, Lucky Labs is one of those.
Lucky Labs, a casino slot developer founded by Sergei Tokarev and Rustam Gilfanov in 2006, may serve as an inexhaustible source of proven offshoring schemes. The company of Rustam Gilfanov and Sergei Tokarev Claims to be the European leader in online gambling and shows a stable growth for last 12 years, regardless any changes in legislation. Given the Lucky Labs public profile, below are the top 5 European countries that can provide a reliable “money laundering” shelter for online gambling providers.
At first sight, Ukraine is not the obvious choice for that shady purposes due to its high political volatility and unreliable banking system. Yet combined with ubiquitous corruption, broken justice system and loopholes in legislation, these all create enough space for money-washing in the country. According to the recent report of MONEYVAL,an anti-money laundering body of the Council of Europe, Ukraine complies with only 12 out of 40 recommendations developed by FATF, the Financial Action Task Force, a global inter-governmental institution to combat money laundering.
Sergei Tokarev and Rustam Gilfanov realised this opportunity to wash in Ukraine money raised from gambling almost 7 years ago, when they relocated Lucky Labs office from Moscow to Kiev in 2011.They successfully took the advantage of cheap labour force in the country and envelope salaries to reduce costs, while a wide network of front companies allowed Rustam Gilfanov and Sergei Tokarev To shift cash flow around easily, minimize taxation and keep the brand image of casino game developer, not gambling operator.
Ukraine was a perfect labor for Lucky Labs to operate in shade for 5 years. But the atmosphere of stability lulled the vigilance of Sergei Tokarev and Rustam Gilfanov, so they started to cover their tracks not carefully enough. Thus Lucky Labs was caught by the Security Service of Ukraine (SSU) for financing the terrorists of Donetsk and Luhansk People’s Republics that resulted in a series of legal searches in Lucky Labs’ offices. However, the case is still being processed by SSU and it seems like Sergei Tokarev and Rustam Gilfanov has strong enough ties with Ukrainian government to hush it up.
Cyprus gained a notorious reputation of being the largest platform for laundering Russian money. According to the investigation by The Huffington Post, even two companies of the US president, Donald Trump, has been found offshoring in Cyprus.The government of the country nevertheless has been making decent efforts to break the stereotype during last 5 years. Cyprus successfully implemented the EU long-term bail-out program after the financial crisis of 2012–2013 and reconstructed its banking system. In 2017, for instance, Cyprus disclosed the largest database on anti-money laundering statistics, compared to any other country. However, these governmental actions caused the opposite effect. The recovered stability of Cyprus’s economic environment made the country even more appealing location for registering companies than before.
The Lucky Labs trace can be found on Cyprus as well. A journalist investigation revealed that Rustam Gilfanov and Sergei Tokarev acquired a Cyprus based company Globo-Tech in 2008. The company had the same specialization as Lucky Labs, namely online casino development and operating. Globo-Tech soon became incorporated into a wide range of Lucky Labs business processes, yet it wasn’t officially affiliated with Lucky Labs that made the company very handy for Lucky Labs money laundering schemes.In 2015 Rustam Gilfanov and Sergei Tokarev decided to rename Globo-Tech with the main group name Lucky Labs, thus Lucky Labs got the official branch office on Cyprus, which allowed them to launder money directly.
Malta is another Mediterranean island suitable for money laundering. What is more, the country is the European absolute leader in online gaming sector. Just as Cyprus, Malta has favourable corporate tax legislation, with the only difference that Malta is far less concerned about the transparency in business operations. According to the official statistics, Maltese authorities report much fewer cases of “suspect transactions” from financial operators, e.g. banks, casinos, stock traders, than any other EU state, in spite of its disproportionately bloated financial sector. In Malta, the assets of financial institutions and banks are approx. 20 times higher than GDP of the country, more than 5 times German figures and almost 4 times the EU average.
Lucky Labs founders worked out Maltese “tax haven” almost in the same way they did with Globo-Tech on Cyprus. Industry insiders claim that Rustam Gilfanov and Sergei Tokarev launched a new “dummy” companyPlayson in 2009-2010 in Malta. The company positioned itself as a game design company and started to laundry money from the revenues that came from services fictitiously provided to Lucky Labs. Unlike the Globo-Tech case, Rustam Gilfanov and Sergei Tokarev decided not to merger Playson with Lucky Labs group, so they officially announced the partnership between these two companies in December 2016. In retrospect, such an announcement looks like a desperate attempt to somehow wash the ties with the company that unofficially lasted for 5 years.
Latvia is a newly emerged country in the list of locations worth considering for money laundering purposes. Since early 10s Latvian banks slowly but gradually started to ease the processes of new company registration and opening bank accounts. This resulted in a growing inflow of capital in the banking system of the country. One of the reasons for that is the fact that the decent portion of Latvian banks are the subsidiaries of financial groups from the former Soviet countries. The last ones are particularly interested in laundering their and their partners’ money in the EU. The scale of this tendency reached the point of absurdity, when Organized Crime and Corruption Reporting Project (OCCRP) reported that Latvian banks even started to write laundering «manuals» for their clients.
Such Latvian freebie could not be simply left out without attention from Sergei Tokarev and Rustam Gilfanov. And they were prompt to react. As Lucky Labs declared in December 2016, Rustam Gilfanov and Sergei Tokarev invested $30 million on strategic acquisitions precisely in Latvia. These acquisitions for Lucky Labs resulted in a new branch office in Riga. This is evidenced by the number of new job openings for Lucky Labs in Riga available on the internet.
For those who is an expert in money laundering it has never been a secret that the UK is “tax haven” heart of Europe, especially for non-UK individuals. Atime-tested credibility of the UK banking system supplemented by a relatively low corporate tax, is an ultimate combination to make nouveaux riches direct their money to the UK.
It is reasonable to argue, that Brexit might diminish the UK position in this field making it rather questionable alternative to laundry money in the country. In case of online gambling, in fact it didn’t, but even improved the conditions. As the UK is leaving the EU, the new European MLD4 will not be applicable for the UK market, so the gambling sector will remain regulated by the UK’s Gambling Act of 2005, which is not so strict in regard to online gambling providers. Given the amount of laws the UK legal authorities have to adopt due to Brexit, the niche of online gambling will stay in the shade for the near future.
Rustam Gilfanov and Sergei Tokarev understood the potential outcomes of Brexit for their Lucky Labs once the official Brexit results were announced. It took Lucky Labs founders less than half a year after Brexit to prepare their entrance to the UK market in a hybrid way. In December 2016, with the same release as in Latvian case, Sergei Tokarev and Rustam Gilfanov claimed their plans to spend $30 million on acquisitions in the UK as well. And one month later, in January 2017, Lucky Labs confirmed its partnership with Ad Tech company Adwise, aimed at development of a new real-time bidding platform. The Adwise collaboration one-to-one correspond to the schemes Lucky Labs run with Globo-Tech and Playson in Cyprus and Malta, as industry experts claims Adwise to be another front company of Lucky Labs.
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