Russia’s Currency Printing Company, with ties to Venezuela and Syria, Looks to Reduce External Dependency After Allegations of Printing Counterfeit Banknotes for Libya

On June 3, it was reported that Russia’s state-owned currency printing company, Goznak, is planning to acquire a majority 99.5% stake in Banking Innovation Systems, a privately-owned equipment manufacturing company based in Yekaterinburg, Russia.  The acquisition appears to be an effort to reduce Goznak’s dependency on external suppliers by consolidating one of the core elements of its supply chain within Russia.  A Goznak official noted that the deal “would reduce possible risks” for the company.

That statement may be a nod toward the potential fallout associated with an announcement by the U.S. State Department only two days prior, on June 1, that Malta had seized approximately $1.1 billion worth of counterfeit Libyan dinars produced by Goznak for Libya’s shadow government, led by Russian-backed opposition leader, General Khalifa Haftar.  The Kremlin has denied any involvement, and Goznak has insisted that the notes are legitimate.  Meanwhile, Goznak has also been linked to the production of banknotes used to prop up other unstable regimes allied with Russia, such as Venezuela and Syria.

The Russian company claims the notes produced and delivered to Libya were produced fairly under a 2015 contract with the Tobruk branch of Libya’s Central Bank.  Since 2016, it is estimated that Moscow has added approximately 13 billion illegitimate dinars to Libya’s economy, contributing to the country’s inflation problem.

The company being acquired by Goznak, Bank Innovations Systems, reportedly develops equipment for the automated process of production, processing, storing, and destruction of banknotes and other “protected products.”  The acquisition is expected to close at the end of 2020 for an undisclosed sum of money.