FRANKFURT/VIENNA, Feb 17 (Reuters) – The US’ sanctions authority has launched an inquiry into Raiffeisen Financial institution Worldwide (RBIV.VI) over its enterprise associated to Russia, rising scrutiny of the Austrian lender that performs a important position within the Russian economic system.
Responding to questions from Reuters, the financial institution mentioned it had obtained a request from the U.S. Treasury Division’s Workplace of International Belongings Management (OFAC) in January to “make clear funds enterprise and associated processes maintained by RBI in gentle of the latest developments associated to Russia and Ukraine.”
OFAC had requested Raiffeisen for particulars of its publicity in Russia, the partially occupied Donbas, Ukraine and Syria, together with concerning the transactions and exercise of sure purchasers, a supply advised Reuters.
The U.S. company had requested a reply by February, mentioned that particular person, including that Raiffeisen’s attorneys negotiated an extension, pledging to reply the questions in three tranches of data to be despatched to in early April, Could and June.
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A spokesperson for U.S. Treasury Division declined to remark.
Raiffeisen advised Reuters in a press release that it was cooperating totally with OFAC and that it understood the request was not triggered by a particular transaction or enterprise. It mentioned it had processes in place to make sure compliance with sanctions.
A spokesperson mentioned it was “assured that the knowledge supplied to OFAC will fulfill their request”, including that the questions posed had been of a ‘common nature’.
Raiffeisen has not been sanctioned prior to now, however the January data request is worrying European monetary regulators chargeable for oversight of the financial institution due to the potential that it might finally result in penalties in opposition to Raiffeisen, mentioned two folks with direct information of the matter.
Raiffeisen is deeply embedded within the Russian monetary system and is likely one of the solely two overseas banks on the Russian central financial institution’s listing of 13 “systemically vital credit score establishments”, underscoring its significance to Russia’s economic system, which is grappling with sweeping Western sanctions.
As Austria’s second-biggest lender, it additionally underpins a lot of that nation’s economic system in addition to having in depth operations in jap Europe. An Austrian official mentioned that Austrian authorities had been monitoring the state of affairs at Raiffeisen and its enterprise in Russia intently due to the financial institution’s significance.
Nearly a 12 months since Moscow launched what it calls a “particular navy operation” in Ukraine, Raiffeisen is amongst a handful of European banks that stay in Russia.
Nevertheless it has confronted criticism, together with from buyers over its choice to holding doing enterprise with Moscow. The financial institution has beforehand defended its place, saying its publicity to Russia is contained.
Raiffeisen made a web revenue of roughly 3.8 billion euros final 12 months, thanks largely to a 2 billion euro plus revenue from its Russia enterprise. In the meantime, Russian savers have lodged greater than 20 billion euros with the financial institution.
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The U.S. Treasury imposes sanctions and might penalise those that break them. Its most aggressive sanctioning instrument freezes U.S. belongings and excludes banks from accessing U.S. {dollars} – important for worldwide commerce and finance.
The hardest sanctioning instrument in OFAC’s arsenal, often known as the SDN listing, freezes belongings held in america and bars American firms or residents from buying and selling with these listed, freezing a financial institution or particular person out of all greenback funds.
This grants america affect far past its shores to implement its sanctions. Alternatively, OFAC may also resort to much less stringent measures akin to levying fines and sending warning letters over sanctions violations.
Two former U.S. officers, asking to not be named, mentioned, nevertheless, that Washington was usually reluctant to take such draconian steps.
Viktor Winkler, a German sanctions lawyer, declined to make particular remarks about Raiffeisen, however mentioned that it was widespread for OFAC to request data of banks and that it didn’t robotically result in penalties.
OFAC has sanctioned 5 main Russian banks, together with state-backed Sberbank (SBER.MM) a part of a response to that nation’s invasion of Ukraine, in addition to rich oligarchs.
Shortly after Russia’s invasion of Ukraine, america minimize off Sberbank from processing funds by means of the U.S. monetary system. Its European arm, primarily based in Vienna, was closed shortly afterwards.
Sberbank beforehand mentioned the brand new sanctions wouldn’t have a big impression on their operations.
In 2018, the U.S. Treasury sanctioned Latvia’s ABLV Financial institution, as a consequence of considerations about illicit exercise linked largely to Russia, prompting the financial institution to shortly unravel.
Johann Strobl, Raiffeisen’s CEO, advised shareholders in March that he’s inspecting choices for the Russian enterprise, however reaching a conclusion would take a while as a result of the financial institution isn’t “a sausage stand” that could possibly be closed in a single day.
Further reporting by Alexandra Alper in Washington, D.C.; Enhancing by Paritosh Bansal and Anna Driver
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