Picture: 123RF/ DZEJMSDIN
Picture: 123RF/ DZEJMSDIN

Should banks be forced to accept a client who could be on the wrong side of the law?

A court in Finland is about to decide the answer to that question, and its verdict may have far-reaching implications.

Russian billionaire Boris Rotenberg is suing four Nordic banks for not doing business with him. The oligarch, an associate of President Vladimir Putin, is on the US sanctions list. But Rotenberg says that due to his status as a dual citizen of Russia and Finland banks based in Europe must process his transactions.

The banks — Svenska Handelsbanken, Nordea Bank, OP Group and Danske Bank — disagree. The concern is that they risk losing access to the dollar market if they breach US sanctions.

Jakob Dedenroth Bernhoft, a Copenhagen-based lawyer specialising in compliance and money-laundering issues, says whatever is decided in the Helsinki district court on Monday will set an important precedent.

“All the other banks will look at this decision from the court for guidance on what to do in a similar situation,” Bernhoft said.

Money laundering

For Nordic banks, the notion that they should be forced to process suspicious transactions seems totally at odds with the current climate. Against a backdrop of money-laundering scandals, regulators have ratcheted up compliance requirements, and banks are under increasing pressure to identify dodgy customers.

There’s a recent precedent of a European bank collapsing after it came under threat of being excluded from the US financial system: Latvia’s ABLV Bank was liquidated in February 2018 after the US treasury department proposed banning it, saying the bank helped process illicit transactions.

In the case of the Nordic banks, Bernhoft says he thinks they will prevail.

“If the banks think the transactions from Russia are dirty money in some way, they are obliged to refuse to receive them,” Bernhoft says.

The lawsuit, filed in October 2018, targeted Handelsbanken for refusing to accept cross-border deposits, and Nordea, OP and Danske for not processing payments to vendors for basics including Rotenberg’s electricity bills.

According to documents provided to the court, Rotenberg has a current account at Handelsbanken, which the bank supplied on the recommendation of Finland's financial ombudsman.

Rotenberg has told the court he has never been under suspicion of laundering money. He lost the first round in the case in February last year, when the court in Finland dismissed an injunction he had sought against the banks. The main hearing in the case was held in September.

Rotenberg’s attorney declined to comment ahead of Monday’s ruling.

Bloomberg


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