When Family Offices Enable Dirty Money

When Family Offices Enable Dirty Money

Jahangir Hajiyev, former chairman of Azerbaijan’s largest bank, was recently convicted of siphoning a fortune from a bank in Azerbaijan.

How did he do it? With plenty of help from lawyers, investment advisors and a family office based in London.

Between 2003 and 2015, the banker and his wife spent a king’s ransom in London, buying an 11 million pound townhouse, a golf club near Ascot, and a $42.5 million Gulfstream jet. His fashion conscious wife Zamira managed to spend 725,000 pounds at Harrod’s in a single week. How did they do it?

Hajiyev’s official salary at the International Bank of Azerbaijan was a mere $70,650 in 2008, while Zamira had no income. Curiously, none of the professionals involved in helping the couple invest offshore assets in the UK seemed to notice the discrepancy. Fiduciary services firm Trident Trust and multi-family office Werner Capital asked no questions as they set up various entities in the Channel Islands and England to help the Hajiyevs hide their ownership in some of their major assets. 

London-based Werner Capital is a new breed of hybrid investment firms that serve the ultra-wealthy. Such firms have cropped up as stricter regulations have led banks to jettison high-risk clients. These firms do everything from “establishing complex, cross-border corporate governance structures” to helping clients buy luxury homes, secure visas and get their children into elite schools. 

However, the Hajiyev case has brought such firms under scrutiny. Zamira Hajiyeva is the subject of what is called an unexplained wealth order that requires her to disclose where her money comes from. Given that her husband is now ensconced in an Azerbaijani prison for looting his former employer, there is a rather strong suspicion that the fashion-plate obtained her funds illegally. Azerbaijan has issued an extradition order against Hajiyeva. 

With the government cracking down on money laundering and mandating enhanced due diligence in suspicious cases, firms like Werner can expect a great deal more scrutiny. 

For more on the case and how governments are cracking down on family offices, please visit:
Dirty Money Spotlights Role of Family Offices as Enablers | Wealth Management

Lucky Lotto Winners Can Turn into Losers Fast: Advisors to the Rescue Incontestability Provisions Stir the Pot