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MONEY LAUNDERING

Swedish raid in ‘record’ Liberty Reserve probe

Swedish police have confiscated servers in Sweden at the request of US authorities as part of a massive money laundering investigation of Costa Rica-based digital currency service Liberty Reserve.

Swedish raid in 'record' Liberty Reserve probe

“I’m the one who’s authorized the raid,” district prosecutor Ylva Johansson at the International Prosecution office confirmed for The Local.

“We don’t have any information on the actual confiscated material as it’s an American investigation, not a Swedish one.”

The raid was carried out in the Stockholm area last Friday, resulting in the confiscation of a number of servers suspected of playing a role in moving billions of dollars in digital currency around the world.

A Swedish man admitted that he had served as a middle-man in Liberty Reserve’s network for three years.

“It was obviously a system that could be used for money laundering,” the man, who wished to remain anonymous, told the Dagens Nyheter (DN) newspaper.

Prosecutors in the United States unsealed an indictment on Tuesday, alleging the operators of Liberty Reserve were behind a $6-billion criminal money laundering scheme US authorities labelled “the largest international money laundering prosecution in history”.

“As alleged, the only liberty that Liberty Reserve gave many of its users was the freedom to commit crimes – the coin of its realm was anonymity, and it became a popular hub for fraudsters, hackers, and traffickers,” US Attorney Preet Bharara said in a statement.

Founded in Costa Rica in 2006, Liberty Reserve ran a digital currency trading system that boasted over one million users who could transfer money by submitting only a name, e-mail address, and birth date.

Deposits could also be made via third-parties using credit cards, with the deposits then “converted” to Liberty Reserve Dollars or Liberty Reserve Euros, virtual currencies with values tied to actual US dollars or euros.

“Liberty Reserve operated, on an enormous scale, a digital currency system designed to provide cyber and other criminals with a way to launder their profits without leaving a trace,” Acting US Assistant Attorney General Mythili Raman said in a statement.

“The company’s very purpose was to launder its users’ criminal proceeds through the US and global financial system.”

The Swedish man explained to DN that he handled money transfer requests online from his home and that the most common clients were people who wanted to transfer small sums of money abroad as part of fraudulent Ponzi schemes.

“They were regular Svenssons who wanted to be rich,” he explained, adding that Swedes were able to deposit money in his bank account and that he earned a commission for using their money to buy Liberty Reserve digital currency.

The man has previously been investigated by Swedish tax authorities for his virtual currency exchange operations, which have since been shut down.

He admitted to DN that he “knew full well” that Liberty Reserve’s service was used for money laundering.

Sanna Håkansson/David Landes

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MONEY LAUNDERING

KTH students charged for money laundering

Two students enrolled at the Royal Institute of Technology (KTH) were among several Stockholm residents charged on Thursday for their role in a massive swindling operation involving 100 million kronor ($16 million) in laundered money.

The pair from the prestigious university are thought to be the ringleaders of a gang involved in a huge money laundering operation, Sveriges Television (SVT) reports.

Ten people have been arrested so far following a long investigation by fraud investigators into reports of false accounting, money laundering and weapons offences.

The main leader behind the gang is said to be a 35-year-old student at KTH, who, together with his 25-year-old, is said to have developed a sophisticated way of laundering more than 100 million kronor using up to one hundred different companies.

Most of the companies involved are in the construction, sheet metal, and roof sweeping business.

By using false invoices, those suspected of involvement in the scheme withdrew sums of more than 100,000 kronor at a time allegedly using a foreign exchange office in central Stockholm.

According to investigators, the two ringleaders netted a profit of around 15 million kronor in the operation, SVT reports.

Police believe that the gang used a premises in the Djurgården neighbourhood of Stockholm as their secret base. A pistol and an assault rifle with ammunition were found at the scene.

When arrested the students admitted to knowledge of the weapons in a hideout that prosecutors believe could also have been used by other criminals to stash weapons.

The two KTH students will stand trial in the Stockholm District Court in two weeks time.

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