FRANKFURT/VIENNA, Feb. 17 (Reuters) – The United States sanctions authority has launched an investigation into Raiffeisen Bank International (RBIV.VI) over its activities related to Russia, leading the Austrian lender, which plays a crucial role in the Russian economy.
In response to questions from Reuters, the bank said it received a request in January from the U.S. Treasury Department’s Office of Foreign Assets Control (OFAC) to “clarify RBI’s payment activities and related processes in light of recent developments regarding Russia and Ukraine.”
OFAC had asked Raiffeisen for details of its exposure in Russia, the partially occupied Donbas, Ukraine and Syria, including on the transactions and activities of certain clients, a source told Reuters.
The US agency had asked for an answer by February, that person said, adding that Raiffeisen’s lawyers had negotiated an extension and promised to answer the questions in three installments of information to be sent in early April, May and June.
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A spokesman for the US Treasury Department declined to comment.
Raiffeisen told Reuters in a statement that it was fully cooperating with OFAC and understood that the request was not caused by any specific transaction or company. It said it had processes in place to ensure sanctions were adhered to.
A spokesperson said to be “assured that the information provided to OFAC will comply with their request”, adding that the questions asked were of a “general nature”.
Raiffeisen has not been penalized in the past, but the January information request is of concern to European financial regulators responsible for overseeing the bank because of the potential it could eventually lead to fines against Raiffeisen, two people with direct knowledge of the matter said. the case.
Raiffeisen is deeply embedded in the Russian financial system and is one of only two foreign banks on the Russian central bank’s list of 13 “systemically important credit institutions”.
As Austria’s second largest lender, it also supports much of that country’s economy and has extensive operations in Eastern Europe. An Austrian official said Austrian authorities were closely monitoring the situation at Raiffeisen and its activities in Russia because of the importance of the bank.
Nearly a year after Moscow launched a “special military operation” in Ukraine, Raiffeisen is among a handful of European banks to remain in Russia.
But it faced criticism, including from investors, over its decision to continue doing business with Moscow. The bank has previously defended its position by saying its exposure to Russia is limited.
Raiffeisen made a net profit of around EUR 3.8 billion last year, largely thanks to a profit of EUR 2 billion plus from its activities in Russia. Russian savers have now deposited more than 20 billion euros in the bank.
The US Treasury Department imposes sanctions and can punish those who violate them. The most aggressive sanctions tool freezes US assets and bars banks from accessing US dollars – critical to international trade and finance.
The toughest sanctioning tool in OFAC’s arsenal, known as the SDN List, freezes assets held in the United States and prohibits U.S. companies or citizens from trading with the listed companies, barring any bank or individual from any dollar payments.
This gives the United States leverage far beyond its shores to enforce its sanctions. Alternatively, OFAC may also resort to less stringent measures, such as imposing fines and sending warning letters for sanctions violations.
However, two former US officials, who asked not to be named, said Washington was typically reluctant to take such draconian steps.
Viktor Winkler, a German sanctions attorney, declined to comment specifically on Raiffeisen, but said it was common practice for OFAC to request information from banks and that this did not automatically lead to fines.
OFAC has sanctioned five major Russian banks, including the state-backed Sberbank (SBER.MM) as part of a response to that country’s invasion of Ukraine, as well as wealthy oligarchs.
Shortly after the Russian invasion of Ukraine, the United States cut Sberbank from processing payments through the US financial system. The European branch, based in Vienna, was closed shortly afterwards.
Sberbank previously said the new sanctions would not have a significant impact on their operations.
In 2018, the US Treasury Department cleared the Latvian ABLV bank over concerns of illegal activities largely related to Russia, causing the bank to quickly break up.
Johann Strobl, Raiffeisen’s CEO, told shareholders in March that he is exploring options for the Russian company, but that it will take some time to come to a conclusion because the bank is not a “sausage stand” that has moved from one to the other. the other day may be closed.
Additional reporting by Alexandra Alper in Washington, DC; Edited by Paritosh Bansal and Anna Driver
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