FRANKFURT/VIENNA, Feb 17 (Reuters) – The USA’ 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 crucial position within the Russian economic system.
Responding to questions from Reuters, the financial institution stated it had obtained a request from the U.S. Treasury Division’s Workplace of Overseas Belongings Management (OFAC) in January to “make clear funds enterprise and associated processes maintained by RBI in mild 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 in regards to the transactions and exercise of sure purchasers, a supply instructed Reuters.
The U.S. company had requested a reply by February, stated that particular person, including that Raiffeisen’s legal professionals negotiated an extension, pledging to reply the questions in three tranches of knowledge to be despatched to in early April, Might and June.
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A spokesperson for U.S. Treasury Division declined to remark.
Raiffeisen instructed Reuters in an announcement that it was cooperating totally with OFAC and that it understood the request was not triggered by a particular transaction or enterprise. It stated it had processes in place to make sure compliance with sanctions.
A spokesperson stated it was “assured that the knowledge offered to OFAC will fulfill their request”, including that the questions posed have been of a ‘basic 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 in the end result in penalties in opposition to Raiffeisen, stated two individuals with direct information of the matter.
Raiffeisen is deeply embedded within the Russian monetary system and is likely one of the solely two international banks on the Russian central financial institution’s listing of 13 “systemically necessary 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 japanese Europe. An Austrian official stated that Austrian authorities have been monitoring the state of affairs at Raiffeisen and its enterprise in Russia carefully due to the financial institution’s significance.
Nearly a 12 months since Moscow launched what it calls a “particular army operation” in Ukraine, Raiffeisen is amongst a handful of European banks that stay in Russia.
But it surely has confronted criticism, together with from traders over its choice to conserving doing enterprise with Moscow. The financial institution has beforehand defended its place, saying its publicity to Russia is contained.
Raiffeisen made a internet 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 may penalise those that break them. Its most aggressive sanctioning software freezes U.S. property and excludes banks from accessing U.S. {dollars} – crucial for worldwide commerce and finance.
The hardest sanctioning software in OFAC’s arsenal, often known as the SDN listing, freezes property held in the US and bars American corporations or residents from buying and selling with these listed, freezing a financial institution or particular person out of all greenback funds.
This grants the US affect far past its shores to implement its sanctions. Alternatively, OFAC may also resort to much less stringent measures resembling levying fines and sending warning letters over sanctions violations.
Two former U.S. officers, asking to not be named, stated, nevertheless, that Washington was sometimes reluctant to take such draconian steps.
Viktor Winkler, a German sanctions lawyer, declined to make particular remarks about Raiffeisen, however stated that it was frequent for OFAC to request data of banks and that it didn’t routinely 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, the US 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 stated the brand new sanctions wouldn’t have a major influence on their operations.
In 2018, the U.S. Treasury sanctioned Latvia’s ABLV Financial institution, attributable to issues about illicit exercise linked largely to Russia, prompting the financial institution to rapidly unravel.
Johann Strobl, Raiffeisen’s CEO, instructed 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 will not be “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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