How Russian Oligarchs Stow Away Their Money in the US and UK

Kleptocrats invest in football clubs, luxury apartments, and higher education with few restrictions

Scott Galloway
11 min readMar 21, 2022


Mount Everest has been scaled by 6,000 climbers, and 300 have died. Of those, 85% died on the descent. Just as invasion is (usually) harder than occupation, criminality itself is often easier than figuring out how to spend your ill-gotten gains. Digital bank records and international regulatory systems make it hard to turn blood money into Lambos and Alhambra necklaces.

Enter money laundering: The UN estimates that $2 trillion in proceeds from crime are laundered into the legitimate economy every year. This goes way beyond Jason Bateman stuffing cash into the walls of his house in the Ozarks. It’s billions in off-shore accounts, corrupt construction projects, and thousands of cash-intensive businesses ranging from strip clubs to five-star restaurants that do better than their footfall would suggest.

It’s a big business attracting more law enforcement scrutiny, new laws, and international task forces. The feds got Al Capone for tax evasion — following the money is one of law enforcement’s best weapons.


Yet until just a few weeks ago, a first cousin to money laundering received far less attention: money washing. The conversion of corrupt, if not illegal, oligarch money into Kensington flats and Premier League football clubs. London, aka Londongrad, has become the global capital of money washing, but it’s more widespread than that. Much more.

The sources of this money are kleptocratic regimes: Governments that operate like organized crime syndicates, extracting wealth from the resources and hard work of the people they rule. Think of Russia, Saudi Arabia, the other petrol states, and countries ranging from Argentina to Zimbabwe where corruption lets billions leak from the legitimate economy into the pockets of the elite, the patrons of the money washers.

This wealth isn’t necessarily “illegal” — the elegance of cronyism — but there are heavy strings attached.

Klepto-fortunes are made in countries where the rule of law is fluid and shaped by competing elites … who are also walking a tightrope. Russian oil oligarch Mikhail Khodorkovsky was one of the wealthiest people in the world until he fell out of favor with Putin and spent a decade in prison, ending up with just $500 million. He was lucky. Nikolai Glushkov, the former finance director of Aeroflot, was found strangled with a dog leash in his London flat, just before he was scheduled to appear in court to testify about Kremlin corruption. (Note: Don’t know what happened to the dog.)

A common feature of kleptocracies is that they are unappealing places to spend money. A hundred million dollars in London, Paris, and St. Barts buys a better life than any amount of money will afford you in Riyadh. And you don’t obtain modern economy status with a mansion or a megayacht, but with courtside seats next to Kanye or a position on the board of MoMA. There are forms of washing everywhere. Anna Wintour sells prestige in the form of admittance to the Met Ball, via purchase of print ads in Vogue. Admission to elite society is for sale, but big spenders from autocracies require fabric softener before admission.


Just like drug kingpins, oligarchs have money but can’t spend it. Enter the money washer. This is any jurisdiction with strong property rights, ample luxury goods, and a willingness to overlook origins. Also a society that accepts oligarch money for real estate, yachts, and midfielder salaries. Money laundering is done in secret, because it requires hiding the source of money. Money washing hides in plain sight, because that’s the point (appearances). Money washers merely ask the broader community to ignore the money’s origins.

Money laundering experts outline three components: Placement (getting dirty money into the legitimate financial system), Layering (concealing its source through dishonest transactions), and Integration (making it available for spending). Money washing also has three components: Removal (getting kleptocash out of the kleptocracy), Enjoyment (converting dead money into a luxury lifestyle), and Elitism (entry into the elite cultural and political circles of the adopted country).

The key principle of washing is removal: getting money out of Russia (or Iran or Kuwait or Venezuela) and into the West — the American/European financial system.

The first port of call for many oligarchs is a web of shell companies located in places including the Virgin Islands and the Caymans. This converts their cache into dollars and euros and removes it from the grasp of the kleptocracy back home, which could have a change of heart. But ultimately oligarchs want things, not numbers. Buying Western assets, vs. just shifting money into Western accounts, looks more like legitimate business activity, and the purchase can earn a return and garner Western prestige.

Oligarchs have taken stakes in everything from aluminum producers to Big Tech companies. Russian oligarch Mikhail Fridman’s LetterOne holds $25 billion in Western telecoms and oil companies; in 2016 it invested $200 million in Uber. The Saudis are prominent Valley investors as well. Sports teams are another target. Roman Abramovich’s ownership of Chelsea F.C. is only the highest-profile example of Russians owning or investing in soccer teams. Three out of the four clubs in last year’s Champions League semifinals were owned by oil sheikhs or Russian oligarchs. Abramovich has a 767 with a black mask painted around the cockpit windows. He calls it Bandit. Believable. (Try explaining all this to your 11-year-old who wears pajamas with “Lukaku” on the back.)

Luxury real estate is a top-shelf option. It’s scarce, experiences low volatility, and you get to live in a phat pad. Similar to a sports team, it serves the second objective of money washing: enjoyment. Forbes identified $2.8 billion in extraordinary real estate owned just by Russian oligarchs. Putin’s former judo partner’s brother owns three villas in the French Riviera. (Rumor is, Steven Seagal lives in the pool house, where he vapes mango-flavored Juul pods, streams Cobra Kai, and yells at the microwave.) Petr Aven kitted out his 8.5-acre Surrey estate with a “KGB-proof” mansion, complete with panic room and intelligent electronic fencing. It makes sense that oligarchs are worried their cash could be stolen … for a second time.

Achieving elite status is washing’s third phase, and the finest laundromats attract cash with their reputational accoutrements. Pay-to-play aristocracy is London’s true sex appeal: Secure a recommendation from the prime minister to the queen, and bang, you’re a lord. Unsurprisingly, the best way to gain royal favor is to be very rich: Half of Brits with a net worth over $5 billion have received a title of nobility from the crown.

It works just as well for foreigners. Aluminium oligarch Len Blavatnik (the richest person in England) became Sir Len Blavatnik after he donated £50 million to the Tate Modern. Evgeny Lebedev, the son of billionaire Russian banker and former KGB officer Alexander Lebedev (and also the owner of London’s 200-year-old Evening Standard), became Lord Evgeny Lebedev after Boris Johnson vouched for him despite national security concerns.

Wash, American Style

In the U.S. a favored way of increasing your social capital is to donate money to food banks and voting rights groups. Just kidding, it’s higher ed.

Department of Education data reveals billions of dollars in foreign donations to U.S. institutions. Much of that may be from legitimate sources, but it provides cloud cover for the influx of dirty money. The National Endowment for Democracy reports that oligarch gifts are often commingled with money from other sources (some stains need pre-soaking), but they’re then leveraged to influence academic direction, secure campus speaking opportunities, and (shocker) gain admission for family members. MIT has raked in almost $1 million from Russian oligarchs, and NYU (my HQ) has received more than $4 million. Yale has a Blavatnik Fund for Innovation (Sir Len Blavatnik) as well as a Blavatnik Fellowship. Harvard’s Islamic Studies Center was named after a Saudi prince. These are great washes — they signal care and empathy for future generations and distract from your fortune’s origins while ensuring your kid gets a seat.

Another effective wash? Museums, cultural institutions, and nonprofits. In 2012 the Brooklyn Academy of Music accepted $1 million from former Putin crony Prokhorov. Dimitry Rybolovlev donated $1 million to the Mayo Clinic. Vladimir Potanin gave the Kennedy Center for the Performing Arts $5 million. Foreign oligarchs don’t have a monopoly on this tactic. The oligarchs of pharma, the Sacklers, built a wing at the Met (the wing opposite is named after a Rockefeller). The bonus perk of museum-washing is you get to hang with more artists (fun) and fewer asset managers.

All of this works in concert. Becoming a member of the social elite reinforces property rights. Mr. Abramovich lost his Kensington mansion last week. Would things have played out differently if he’d spent his money at the House of Lords instead of Annabel’s?


But London is the undisputed capital of money washing. Why? Paris is prettier, LA has more celebs and better weather. But nothing beats focus: London became money washing heaven on purpose, and it’s been doing this longer than anyone — since at least 1799, when King George III introduced the non-domicile tax system. It’s still in force today, with only limited reforms. Anyone living in the U.K. whose “real home” is abroad doesn’t have to pay taxes. When agricultural depression ruined the economics of the landed aristocracy, the titled classes imported foreign wealth via marriage. Three hundred and fifty U.S. heiresses married into the British aristocracy prior to WWI, including Winston Churchill’s mother. A good trade: The Lords gets to keep the wealth; the foreigners get to live in Downton Abbey.

In the post-Cold War globalization era, the U.K. doubled down on making London a magnet for foreign wealth: It deregulated the financial sector, loosened taxes, tightened libel laws to keep journalists out of the new arrivals’ hijinks, connected PR firms to oligarchs who colluded with MPs, and created a “golden visa” that gave residency rights to anyone who invested £1 million in the country.

Today, 87,000 homes in the U.K. are owned by foreign shell companies — £1.5 billion of those are owned by Russians linked to the Kremlin. Then NIMBYism and embrace of a scarcity economy takes over. Limits on home renovation and expansion meant to preserve England’s Englishness have put homes out of the reach of the English.

Glass Houses

Londongrad may be the money washing capital, but it has competition. When it comes to shielding oligarch wealth behind impenetrable layers of shell companies and trusts, the surprising up-and-comer is South Dakota. A series of modifications to existing trust law permits the concealment and protection of assets with no questions asked: The state holds an estimated $360 billion in trust assets.

Oligarchs love U.S. real estate as well: Those skinny Manhattan ultra-high-rises that have sprung up in the past decade are a response to the influx of foreign money into the city. The condos inside are known as “the world’s most expensive safety deposit boxes.”

In America, some laundromats offer better evasion services than others. Florida, for example, has no income tax and allows you to keep your home when you file for bankruptcy. Nearly a third of U.S. houses bought by Russians in the past six years were located in the sunshine state.

The global money washing industry is thriving throughout the U.S. and Europe, and kleptocash has seeped into every corner of our economies. This has profound consequences, for us and for the exploited citizens of the kleptocracies themselves. When Russia began privatizing in the 1990s, it was clear that crime and corruption were rampant. But Western leaders reasoned that once the oligarchs gained their wealth, they’d develop an interest in stability and the rule of law to protect it, and to support the development of an economy and society where they could enjoy their ill-gotten gains. It’s an age-old phenomenon: Bandits become bandit kings and eventually see the virtues in shedding the banditry — or at least corralling it with law and law enforcement.

But as Russia scholar Karen Dawisha wrote in Putin’s Kleptocracy, that view “failed to foresee the extent to which globalization would allow Russian elites to continue to maximize their gains by keeping domestic markets open for their predation while minimizing their own personal risk by depositing profits in secure offshore accounts” — and enjoying the fruits of the Western economy by buying yachts, enjoying five-star meals, and hanging with celebrities. As she later put it, “the rule of law for Russia is in London.”

The oligarchs may be the ones stealing from the Russian people, but we are the pawn shop that fences their stolen goods. The waiter at Little Nell in Aspen is getting a larger slice of the Russian oil economy than the vareniki chef in St. Petersburg. That’s not an exaggeration as rich Russians (no joke) hold as much money outside Russia as the entire Russian people hold inside Russia. Since Russia’s invasion of Ukraine, we’ve been demanding that Western businesses stop operating in Russia. There’s good reasons for that. But we should be looking in the mirror at how our own businesses are serving the needs of oligarchs outside Russia.

Little of this has been done in secret — shell company shell games are just for the lawyers; we know who owns those yachts. Public displays of wealth are often the point. In 2020 a U.K. government report acknowledged that “a lot of Russians with very close links to Putin who are well integrated into the U.K. business and social scene are accepted because of their wealth,” and warned that these links were being actively used to undermine the country’s democracy and distort media coverage. (Dawisha couldn’t find a British publisher for Putin’s Kleptocracy, and two separate Financial Times reporters have faced libel suits for their coverage of the oligarchs.) There is growing evidence that washed oligarch money isn’t so clean after all, and remains linked to the Russian state. Yet nothing has been done.

Both the U.S. and the U.K. have laws in draft that would begin to push back on money washing. But until Russian bombs started falling on Kyiv, the legislation wasn’t moving. The U.S. “Enablers Act” has been in committee for six months. Perhaps the specter of a great power trying to crush a 40-million-person country will inspire us to take a hard look at our own money washing machine and the real costs of those yachts.

Regulatory capture by Russians in the West elevates capitalism over democracy, and that has implications beyond foreign influence. Each football club and villa purchased by oligarchs moves us down the path to cronyism and our own oligarchy. My state’s junior Senator, Rick Scott (R-FL), this week proposed halving the budget of an oversight agency (the IRS) that helped uncover the largest case of Medicare fraud in history. The guilty firm’s CEO? Comrade Rick Scott.

LIfe is so rich,

P.S. If everyone on your team is leaving for greener pastures, you’re not alone. Join me and Adam Grant on March 23 to discuss: Why is everyone quitting?



Scott Galloway

Prof Marketing, NYU Stern • Host, CNN+ • Pivot, Prof G Podcasts • Bestselling author, The Four, The Algebra of Happiness, Post Corona •