An internal review at Austria-based Raiffeisen Bank International AG has found no proof of "transgressions" on the part of the group or its customers in transactions linked to collapsed Lithuanian bank AB Ukio Bankas, CEO Johann Strobl said.
RBI has been in close contact with Austrian authorities since the review was launched in early 2019 and has informed them of the findings, Strobl said. Given that the review is complete and the authorities have taken no action, "for us, this case is closed," he told analysts during a second-quarter earnings presentation.
The RBI review was prompted by the Organized Crime and Corruption Reporting Project's report released March 4 that linked Ukio to a large-scale money laundering scheme dubbed the Troika Laundromat RBI was named as one of the institutions involved in the scheme in its role as a correspondent bank of Ukio.
RBI was also linked to a separate complaint about failures of banks' money laundering controls filed by Kremlin critic Bill Browder's Hermitage Capital Management Ltd. with Austrian authorities in early March.
The Austrian Public Prosecutor's Office has decided not to take action on Browder's complaint, Strobl told analysts. This was not a surprise because a similar complaint had been filed twice before and there was no new information, Strobl said.
In the Ukio-related leak, there was a list of entities who had done business with the Lithuanian bank, Strobl said. RBI identified its customers, ran another know-your-customer review and went through historic transactions with Ukio, amounting to around €3 million, he said. There were a few transactions that "couldn't be fully explained" because of the amount of time that had passed, but they were not found to be suspicious, he said. The bank kept in contact with Austrian authorities throughout the internal probe and shared all its findings. They have chosen not to take further action, Strobl said.
Domestic AML fine
A domestic money laundering investigation into the lender, however, still remains open and could take some time to complete, Strobl told analysts. In this case, the bank is fighting a €2.75 million fine imposed by the Austrian Financial Market Authority in April 2018 over a breach of due diligence requirements for the prevention of money laundering and terrorism financing. The fine was the result of FMA investigation running since 2016, related to revelations in the Panama Papers, which was a leak of millions of files from one the world’s biggest offshore law firms, Mossack Fonseca.
RBI, which sees itself as fully compliant with anti-money laundering requirements, appealed the FMA decision with the Federal Administrative Court in Austria. However, the court rejected the bank's appeal Aug. 6.
This does not complete the case, according to Strobl. "We will go on to the next instance and try to get the clarification on the requirements and the interpretation of the standards because we firmly believe that we adhere to the standards," he told analysts.
RBI plans to approach the Federal Administrative Court again to get further clarification, Strobl said. The key points of disagreement between RBI and the regulator revolve around the definition of risky businesses and clients, the identification of ultimate beneficial owners of the accounts, and the frequency of know-your-customer checks. Strobl said he hoped the fine would be reduced, although that is unlikely.