Investigators in three countries - the United States, Russia, and Britain - are looking into the activities of Konstantin and Natasha Kagalovsky, who may be linked to illegal deposits of billions of dollars by Russian mobsters in the Bank of New York.

The collapse of the rouble meant foreign holdings became more valuable

A third individual, Lyudmila Edmunds, who works for the Bank of New York's London office, was fired on Friday for alleged gross misconduct, violations of the bank's internal policies, falsification of bank records and failure to cooperate, according to wire reports.

Her husband,Peter Berlin, was linked to a company called Benex, which was used to transfer the funds.

None has yet been charged with a criminal offence, but the Bank of New York has suspended Ms Kagalovsky, a senior vice-president, as investigations continue.

Mr Kagalovsky worked for the Russian bank Menetap, and was Russia's representative to the International Monetary Fund between 1992 and 1995.

But the couple claim that they are the victims of press innuendo and rumours spread by the US government.

"Konstantin and Natasha wish to state unequivocally that they have never been involved in money laundering in any way, shape or form," the couple said in a statement issued by their lawyer in New York, Stanley Arkin.

"We are highly confident that at the conclusion of these investigations, this will be abundantly clear."

Billions of dollars

Money laundering and capital flight has been a problem for Russia for years.

Many economists believe that far more money has been transferred out of Russia to overseas accounts than has been paid by Western institutions in aid and loans.

US investigators believe that up $15bn (£10bn) in hot money was laundered through the Bank of New York.

They have been monitoring five accounts at the Bank since September 1998, but it is believed that the accounts were operating for at least six months before the probe began.

US authorities have reportedly seized some $20m remaining in the accounts, and have taken the bank records relating to the scheme.

In London, the National Crime Squad has confirmed that it has searched the home of Ms Edmunds.

It says that the investigation could take weeks or months to complete.

Meanwhile, Russian officials pledged co-operation for the first time.

Acting Prosecutor General Vladimir Ustinov said that "if any wrongdoing on the part of Russian citizens or organisations is established, then we must begin criminal proceedings."

And authorities in Hungary have resumed their investigation of Semyon Mogilevich, an alleged Russian mob leader who is based in Budapest.

Other scandals

US officials believe that the Bank of New York scandal may be only the tip of an iceberg.

"The more we dig, the more we find," one said.

In another scandal, Swiss authorities are investigating whether construction firm Mabetex paid $1m in bribes and paying off the credit cards bills of Boris Yeltsin's daughters Tatyana Dyachenko and Yelena Okulova in order to secure contracts to renovate the Kremlin.

That investigation was launched by the former chief Russian prosecutor, Yuri Skuratov, who was sacked after a videotape showing him in a sex scandal was broadcast on Russian TV.

He claims he was forced out to block the investigation of corruption in high places.

But the Russian media is now saying that the investigations are going too far, tarnishing Russia's reputation and scaring off investors.

"There is no doubt we have a powerful campaign to discredit the leadership of Russia, its businessmen, and the country itself. The consequences of this campaign will be destructive," said the Izvestia newspaper.