Austrian banks dragged into Russian money-laundering scandal
Kremlin critic alleges hundreds of millions of euros flowed through country’s lenders
The Nordic money-laundering scandal has spread to Austria after a prominent Kremlin critic filed a complaint urging Vienna prosecutors to investigate $967m of suspicious money flows from Danske Bank to Raiffeisen and other lenders in the country.
Bill Browder, an anti-money-laundering activist and investor, said Austrian banks had for years ignored red flags and enabled Russian criminals to launder funds abroad, according to documents sent to the Vienna Public Prosecutor’s Office and seen by the Financial Times.
Raiffeisen shares fell 12.3 per cent on Tuesday. Investors were reacting to Hermitage Capital Management’s accusations, which are linked to a series of regulatory investigations and the release of an investigative report into money laundering by the Organized Crime and Corruption Reporting Project.
“Raiffeisen takes the allegations very seriously and is conducting an internal investigation,” a spokeswoman said. The bank “is not familiar with the concrete allegations,” but past investigations into some of them “confirmed [them] to be unfounded”.
Hermitage alleged that Raiffeisen handled $634m — the lion’s share of the suspect funds that flowed to Austrian banks.
Mr Browder, who runs Hermitage, said many of the entities sending money to Austrian accounts had a number of suspicious characteristics that were ignored or not properly vetted.
Some were unknown companies with no business activity; others lacked normal expenses; and many were shell companies registered in opaque jurisdictions such as Belize, the Seychelles, the British Virgin Islands or Panama, according to the complaint.
Several of the account-holders who received the money lacked clear connections to the country and conducted no business there, Hermitage said. Some of the funds were used to buy luxury houses, charter yachts and rent private jets.
“The combination of these factors should have raised immediate red flags,” Hermitage said. “This illicit scheme would not have been possible without the gross negligence or acquiescence from the employees of Austrian banks.”
On Monday, Mr Browder filed criminal complaints against Nordea in all four of the main Nordic countries, accusing the bank of handling €700m of suspect funds from Russia and other former Soviet states. Several of the countries’ prosecutors are examining the claims, although Swedish authorities are not investigating.
The shares of Dutch banks also fell after the OCCRP report said the three largest lenders in the country were used by the so-called Troika Laundromat to move cash from Russia via the Moscow-based lender Troika Dialogue.
Nordic banks have faced a torrent of money-laundering accusations in the past year linked to their lightly supervised Baltic units. Shares in Danske halved last year after it conceded that €200bn from former Soviet states had flowed through its tiny Estonian branch over a nine-year period.
The scandal has also embroiled international lenders such as Deutsche Bank, Bank of America and JPMorgan Chase, which handled many of the suspect transactions for Danske.
Swedbank lost a fifth of its value last week after Swedish television alleged $5.8bn had moved between Swedbank and Danske accounts with some of its customers showing “several risk indicators of suspected money laundering”.
US-born Mr Browder, whose company made billions in Russia until he was barred from the country in 2005, has spent years tracing the proceeds from an alleged $230m Russian tax fraud and has described himself as Russian president Vladimir Putin’s “number one foe”.
His particular focus is on the “Magnitsky list”, US legislation imposing visa bans and asset freezes on Russian officials linked to the death of Mr Browder’s former tax adviser, Sergei Magnitsky.
Magnitsky exposed a massive fraud by Russian officials and a criminal gang was arrested by Russian authorities over a tax case against Mr Browder’s firm, and he died a year later in 2009 in a Russian jail after being beaten.