Finma, Switzerland’s financial regulator, said Gazprombank’s Swiss branch “failed to carry out adequate economic background clarifications into business relationships and transactions with increased money laundering risks”.
Gazprombank Switzerland was banned from taking on new private clients.
Gazprombank is Kremlin-controlled but is not majority-owned by state gas monopoly Gazprom. It courted controversy in 2016 when leaked documents in the Panama Papers, a trove of documents leaked from Panama-based law firm Mossack Fonseca, detailed its relationship with Sergei Roldugin, a cellist and childhood friend of Russian president Vladimir Putin.
The documents tied Mr Roldugin to a $2bn offshore network despite having no obvious source of such income. Mr Putin later admitted that the documents were genuine but claimed Mr Roldugin had used the money to buy expensive musical instruments and move them to Russia.
In 2014, according to the Panama Papers, an offshore company tied to Mr Roldugin opened an account at Gazprombank Switzerland and denied any ties to a politically exposed person. The company estimated its initial deposit at the equivalent of about €5.6m, with more expected to come later.
Finma revealed on Thursday it had carried out “in-depth” investigations at 20 Swiss banks following publication of the Panama papers. As well as its action against Gazprombank, others had been told to tighten anti-money laundering procedures, Finma said, without giving details.
The Swiss supervisor found that from 2006 to 2016, Gazprombank Switzerland kept insufficient records of its transactions and relationships, failed to report suspicious activity to Swiss money laundering authorities and often did not validate documentation it obtained from clients.
“The bank’s organisation and risk management and control functions have therefore shown serious shortcomings in the prevention of money laundering,” Finma said. An external regulator would oversee improvement measures.
Gazprombank Switzerland said it accepted Finma’s decision, which it pointed out partly covered a period before it bought the bank in 2009.
The bank said it had overhauled its compliance framework after the Panama Papers were published and made changes to its organisation and risk management in accordance with Swiss law.
A person close to Gazprombank said the Swiss bank’s private clients made up less than 1 per cent of its business, adding that Finma had not fined it, limited its core corporate lending business or taken action against any bank executives.
Separately, Finma ordered PKB PrivatBank, a small bank in Lugano in the Italian-speaking part of Switzerland, to pay compensation of SFr1.3m ($1.4m) following breaches in money laundering regulations linked to Brazil’s Petrobras corruption scandal.
In response, PKB said the events “took place several years ago”. It added: “For PKB, whose trust was abused by a deceitful employee, this case represents a first as the bank has always adhered to the highest standards of conduct.”
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