Luxembourg’s BIL at centre of Azerbaijani embezzlement scandal

Accounts at Banque Internationale à Luxembourg (BIL) played a “central” role in moving embezzled funds from Azerbaijan, according to a joint investigation led by the Organsied Crime and Corruption Reporting Project (OCCRP). 

The role of BIL was highlighted in a report by the UK’s National Crime Agency (NCA), which the OCCRP obtained. 

The allegations shed light on how millions of Euros embezzled from Azerbaijan’s state-owned International Bank of Azerbaijan (IBA) were funnelled through Europe, via Luxembourg, and used to purchase high-end properties in the UK and France. 

At the centre of it is the former chairman of the International Bank of Azerbaijan, Jahangir Hajiyev, who, in 2016, was sentenced to fifteen years imprisonment by a Baku court on charges of money laundering.

According to the OCCRP report, during his time as head of IBA he ran a money laundering scheme known as the “Azerbaijan laundromat” through which he helped move huge sums of money from Azerbaijan into Europe on behalf of the elites of the petro state. 

One of his key enables was Khagani Bashirov, a Franco-Azerbaijani businessman, who helped Hajiyev and his family funnel money from Azerbaijan to Europe and the UK through Luxembourg. One of the companies he used was called VES Consultancy. It is now in dissolution, according the Luxembourg business register. 

But, between 2011 and 2015, at least $175 million moved through VES Consultancy’s account at BIL, including $14 million that originated from the IBA, the UK’s NCA has alleged, according to OCCRP. An additional $450 million reportedly moved through other VES Consultancy accounts between 2005 and 2015.

Bashirov controlled a network of companies around the globe, but Luxembourg was at the centre of his operations, with hundreds of bank accounts in the Grand Duchy, the NCA has claimed. He also established a fiduciary firm in Luxembourg, which the NCA claimed was designed to facilitate the embezzlement of funds from Azerbaijan. This firm reportedly enabled the creation of shell companies and provided complete control over their financial records, making it easier to obscure the flow of illicit funds.

Bashirov has been charged with forgery, money laundering, and breach of professional obligations by Luxembourg’s public prosecutor’s office, according to the report.

In response to questions by the Luxembourg Times, a BIL spokesperson said, “[a]s a responsible member of the financial community, BIL is fully committed to upholding the highest standards of compliance and transparency in all its processes, particularly in anti-money laundering (AML) and counter-terrorist financing (CTF). Preventing and fighting against financial crime is a critical priority for the Bank, and we strictly respect sanction regime and AML-CTF rules.”

In 2020, BIL was fined nearly €5 million by the CSSF for shortcomings in its anti-money laundering processes. The CSSF did not specify the details of the shortcomings or the transactions or people to which it pertained. But BIL had said at the time, that the fine flowed from CSSF inspections in 2017 and 2018 into clients from the Commonwealth of Independent States (CIS)- Russia and other countries that were part of the former Soviet Union. Azerbaijan is a CIS state.