Austrian regulators smacked Raiffeisenbank International with a 2.74 million euro fine on March 30 over charges that the bank failed to impose adequate anti-money laundering and terrorist financing controls.
The fine is the biggest in Austrian history and comes nearly two years to the day after documents exposed in the April 2016 Panama Papers leak revealed a series of loans going from the bank to companies affiliated with Ukrainian President Petro Poroshenko.
The leak sparked an investigation from Austria’s Financial Market Authority into whether the Vienna-based international lender had followed proper procedures in extending the loans.
“There have been some concerns about financing by Raiffeisen Bank International going to companies whose ultimate beneficial owner is Petro Poroshenko, so we ordered an on-site inspection,” Klaus Grubelnik, the Financial Market Authority’s spokesman, told the Kyiv Post at the time.
Grubelnik did not immediately reply to a phone call about the fine issued on March 30.
Regulators accused the bank of “inadequate checking of the identity of beneficial owners and failure to regularly update the necessary documents, data, and information required to be able to understand ownership and control structures with regard to high-risk customers in specific individual cases” in a statement.
When the Kyiv Post called Raiffeisenbank International’s Vienna office, a security guard picked up the phone and said that nobody was in the building and that the request would be handled on April 3.
In a statement cited by Austrian media outlets, a Raiffeisen spokeswoman said that the bank would appeal the fine in court and that the regulatory requirements to prevent money laundering were “excessive.”
The charge itself does not suggest that Raiffeisen engaged in money laundering itself; rather that the bank failed to perform proper checks to prevent laundering. These would include demanding that additional documents be filed in cases of high-risk or politically exposed persons to ensure that the origin of their funds was not being obscured.
And though the Panama Papers revelations triggered the Financial Market Authority’s investigation, the wrongdoing that they uncovered does not necessarily imply that the loans themselves were unlawful. Austrian media wrote that Poroshenko’s case, as well as that of Russian businesswoman Olga Mirimskaya, triggered the investigation.
Raiffeisen’s reputation in Eastern Europe as a bank with more lenient compliance and a willingness to cut deals made it the go-to lender for numerous oligarchs wishing to move money westward.
Perhaps most notoriously, gas middleman Dmytro Firtash attempted to have Raiffeisen finance a gas trading arrangement by RosUkrEnergo, the controversial part-Gazprom part-Firtash owned trading firm. The deal was called off under pressure from U.S. government officials, cables released by Wikileaks show.
