Austrian regulators have fined Raiffeisen Bank International for failings in its money laundering controls, the country’s Financial Markets Authority said on Friday, imposing a fine of just over 2 million euros ( $2.1 million).
The fine, a record amount in Austria, was imposed after regulators found lapses in the RBI’s money laundering and terrorist financing controls at two correspondent banks, the regulators said.
A person with direct knowledge of the matter named those countries as Cuba and Bahrain.
The sanction, while minor compared to those that could be imposed by the United States, further tarnishes Raiffeisen’s image as Russia’s largest Western bank comes under increasing pressure to cut ties with the country.
The United States, whose authorities are examining Raiffeisen’s ties to Russia, has more leverage than Austria because it controls access to the dollar, a cornerstone of international trade and a lifeblood of the banking sector.
Last month, the U.S. Treasury warned Raiffeisen in writing that its access to the U.S. financial system could be restricted because of its ties to Russia, according to Reuters.
The warning, the harshest ever issued to the largest Western bank in Russia, follows months of pressure from Washington, which has been scrutinizing Raiffeisen’s activities in the country for more than a year.
While many Western governments and businesses have drastically reduced ties with Moscow since the invasion of Ukraine more than two years ago, Austria remains tied to Russia by vital gas pipelines, with Vienna still serving as a hub for cash from Russia and its former Soviet neighbors.
The RBI had pledged to divest its Russian operations, which provide payment facilities to hundreds of companies in the country, after coming under pressure from international regulators. But two years into the war, little has changed.
Although Italian bank UniCredit also has operations in Russia and is equally reluctant to part with them, RBI is much larger and has become a test case of Western willingness to end ties with Russia.
($1 = 0.9340 euros) (Reporting by John O’Donnell, Editing by Miranda Murray)
