Fueled by cryptocurrencies and operating in broad daylight under the authorities’ radar, a Russian businessman and influencer used money laundering from cocaine trafficking to circumvent sanctions and finance Kremlin espionage
In the underworld of organized crime, where there are murderers, drug cartels, Russian hacker gangs and spies, a secret network that operated silently made it possible to move billions in dirty money to any part of the world. This empire, built by a network of Russian businessmen, had branches that ranged from the streets of London, to the skyscrapers of Dubai and the corridors of the Kremlin. But a simple oversight, during the pandemic, caught the attention of authorities, who began by discovering one of the largest money laundering operations ever seen.
In 2021, some of the main European crime families were starting to have serious problems. The confinement of the covid-19 pandemic was interfering with its money laundering operations. With most businesses closed, it had become practically impossible to move the “dirty” money from cocaine trafficking and “launder” it through legitimate businesses. The problem was becoming so serious that these organized groups were starting to have difficulty purchasing more drugs from their suppliers in Latin America.
At the same time, in other parts of the world, a phenomenon was intensifying. With millions of people “locked” inside their homes and digital activity increasing at an unprecedented rate, the number of cyber attacks has skyrocketed. The main victims were companies, who saw their systems “hijacked” and, in desperation, paid billions of euros in ransoms to regain access to their data. This has left some major cybercriminal groups with lots of cryptocurrencies, but limited options for accessing the stolen money.
These two elements created the perfect storm. In Moscow, where preparations were underway for the largest military invasion of Europe since the end of the Second World War, two companies were created: Smart and TGR. These societies created a network of couriers spread across more than 30 countries with the purpose of physically collecting large amounts of cash from traffickers. Then, in exchange for a commission, they converted this money into an equivalent value in cryptocurrencies and made it available in other countries, after their vast network of mules laundered the money.
The scheme became crucial not only for major European gangs, operating from luxury buildings in Dubai, and Russian cybercriminal groups, but also for an increasing number of Russian spies and elites who needed access to large amounts of money without attracting attention. The scheme significantly increased in scale when Vladimir Putin launched the invasion of Ukraine, creating the need to find new ways to circumvent Western sanctions.
At the center of this entire scheme was a 38-year-old Russian influencer called Ekaterina Zhdanova, who was, at least on paper, the director of Smart. On social media, Ekatarina showed a luxurious lifestyle, in ski resorts and some of the most expensive restaurants in the world, and boasted of moving “large volumes” of cryptocurrencies. But authorities believed that she was much more than a mere cryptocurrency trader and, in 2023, she was sanctioned by the United States of America on suspicion of being at the center of a money laundering operation used by some of the main Russian oligarchs. According to the UK’s National Crime Agency (NCA), Zhdanova’s network was one of the main sources of funding for Russian espionage operations in Europe.
The scheme was only discovered almost by chance. During the pandemic, Fawad Saiedi, one of the men used as a courier by Smart, was stopped by the police in a routine operation. Authorities found a backpack inside his car with £250,000 in cash. It was just the tip of the iceberg. Under interrogation, Saiedi admitted to having coordinated the distribution of more than £15.6 million in dirty money from various criminal groups in the United Kingdom.
A deeper look by authorities began to reveal a pattern in 55 points across the country, all linked to individuals close to the world of cryptocurrency brokers. As soon as couriers from Russian companies Smart and TGR received money from criminal groups, the money in cryptocurrency was transferred to a secret account. The chosen cryptocurrency was almost always Tether, which replicates the value of the dollar, which protects owners against fluctuations common to other currencies.
This scheme allowed criminals to continue financing their operations without the need to move physical money. The scheme, uncovered by authorities in the mega-operation called “Operation Destabilise”, led to the arrest of 84 people in 55 locations in England, Scotland, Wales and the English Channel islands. But the scale of the service provided by criminals worries the authorities. During the summer of 2024, these money laundering services charged 3% of all money laundered. Based on these percentages, the authorities calculate that the 20 million euros seized from criminals indicate that the drug trafficking groups laundered more than 700 million euros.
“The networks dismantled by Operation Destabilize were hidden in plain sight, operating from our communities, moving large sums of money linked to drug trafficking and serious violence on our streets,” insists Nik Adams, British Police Commissioner.
And the quantities moved were dizzying. Semen Kuksov, 24, was caught laundering more than 14 million euros from drug dealers in the Kinahan group in just a ten-week period. The young man, with Russian and Maltese nationality, was sentenced to six years in prison. But the young man’s connections with the Russian elite raise suspicions. Semen Kuksov’s father is Vladimir Kuksov, one of the most important executives in the Russian oil industry, which finances the Kremlin’s coffers.
In 2023, Ekaterina Zhdanova’s Smart helped a sanctioned Russian oligarch, whose identity has not been revealed by authorities, circumvent Western sanctions and buy more than £2 million to acquire several properties in the United Kingdom. At the same time, both TGR and Smart used Garantex, a broker sanctioned because it is frequently used by companies that supply military technology to Russia, bypassing sanctions. This financial route was essential for the Kremlin to acquire components that were inaccessible due to sanctions imposed by Western countries.
However, the authorities are increasingly concerned about the role of Russian spies in the West, not only to circumvent sanctions imposed by the West, but also to promote the political destabilization of the continent. One of the Kremlin’s main propaganda tools in the West, the sanctioned television station RT, was caught using this mule network to access funds. In the past, Russian intelligence services have used RT to undermine trust in Western democracies and promote the Kremlin’s political vision. Between the end of 2022 and the summer of 2023, the Smart network was used to finance Russian espionage operations, according to the NCA.
“For the first time, we have managed to establish a link between Russian elites, cryptocurrency-rich cybercriminals and drug trafficking groups on the streets of the UK. The factor that united them – the combined strength of Smart and TGR – was invisible until now. The NCA and its partners have dismantled this criminal service at every level”, says Rob Jones, director of operations at the NCA.
