Banking licence of RUSSOBANK revoked and provisional administration appointed
By its Order No. OD-3271, dated 21 December 2018, effective from the same date, the Bank of Russia revoked a banking licence from the Moscow-based credit institution Joint-stock Commercial Bank RUSSOBANK (Registration No. 2313), further also referred to as the credit institution. According to financial statements, as of 1 December 2018, the credit institution ranked 268th by assets in the Russian banking system.
The credit institution’s operations were on many occasions found to be non-compliant with the law on countering the legalisation (laundering) of criminally obtained incomes and the financing of terrorism with regard to the completeness and reliability of information provided to the authorised body about operations subject to obligatory control.
Moreover, the credit institution was involved in dubious transit operations. Retail companies’ shadow sales of cash receipts to third parties and siphoning off funds abroad made up an essential part of these operations. The supervisory body’s interactions with the credit institution towards improving its anti-money laundering processes failed to bring about appropriate corrections to its business model. This is the reason the bank’s internal controls were found dysfunctional, suggesting strong reputational risks in its business. Moreover, a number of facts constituted evidence for the credit institution’s deliberate involvement in the conduct of suspicious transactions, with its executives having no intention to take effective action towards stopping such operations.
The Bank of Russia repeatedly (4 times over the last 12 months) applied supervisory measures against JSCB RUSSOBANK, including supervisory action for non-compliance with AML/CFT regulations.
Under these circumstances, the Bank of Russia took the decision to revoke JSCB RUSSOBANK’s banking licence.
The Bank of Russia took this decision due the credit institution’s failure to comply with federal banking laws and Bank of Russia regulations, repeated violations within one year of the requirements stipulated by Articles 6 and 7 (except for Clause 3 of Article 7) of the Federal Law ‘On Countering the Legalisation (Laundering) of Criminally Obtained Incomes and the Financing of Terrorism’ and taking into account repeated applications within one year of measures envisaged by the Federal Law ‘On the Central Bank of the Russian Federation (Bank of Russia)’.
Following the banking licence revocation, JSCB RUSSOBANK’s professional securities market participant licence was also cancelled.
By its Order No. OD-3272 , dated 21 December 2018, the Bank of Russia appointed a provisional administration to JSCB RUSSOBANK for the period until the appointment of a receiver pursuant to the Federal Law ‘On Insolvency (Bankruptcy)’ or a liquidator under Article 23.1 of the Federal Law ‘On Banks and Banking Activities’. In accordance with federal laws, the powers of the credit institution’s executive bodies were suspended.
JSCB RUSSOBANK is a member of the deposit insurance system. The revocation of a banking licence is an insured event as stipulated by Federal Law ‘On the Insurance of Household Deposits with Russian Banks’ in respect of the bank’s retail deposit obligations, as defined by law. The said Federal Law provides for the payment of indemnities to the bank’s depositors, including individual entrepreneurs, in the amount of 100% of the balance of funds but no more than a total of 1.4 million rubles per depositor.
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