By its Order No. OD-2519, dated 1 November 2019, the Bank of Russia revoked the banking licence of the Omsk-based Joint-stock company Expert Bank (JSC Expert Bank) (Reg. No. 2949; hereinafter, Expert Bank). The credit institution ranked 209th by assets in the Russian banking system1.
The Bank of Russia took this decision in accordance with Clauses 6 and 6.1, Part 1, Article 20 of the Federal Law ‘On Banks and Banking Activities’2 based on the facts that Expert Bank:
- Committed multiple violations of the anti-money laundering and counter-terrorist financing laws and Bank of Russia regulations. The credit institution repeatedly submitted incomplete and incorrect information to the authorised body, including on operations subject to mandatory control;
- Carried out dubious transactions involving foreign cash sale and money withdrawal abroad, as well as securities transactions having signs of cash flow substitution when retail companies transferred non-cash compensation for sale transactions to replace cash revenues;
- Violated federal banking laws and Bank of Russia regulations, due to which the regulator repeatedly applied supervisory measures against it over the last 12 months, which include restrictions on retail deposit-taking.
The Bank of Russia’s interactions with the credit institution aimed at improving its anti-money laundering processes failed to result in appropriate corrections of Expert Bank’s operations. The bank’s internal control procedure was recognised inefficient. Moreover, a number of facts constituted evidence for the credit institution’s deliberate involvement in the conduct of dubious transactions, with its executives having no intention to take effective action towards stopping such operations.
The Bank of Russia has sent the information on the bank’s dubious transactions to the law enforcement bodies.
The Bank of Russia appointed a provisional administration3 to Expert Bank for the period until the appointment of a receiver4 or a liquidator5. In accordance with federal laws, the powers of the credit institution’s executive bodies were suspended.
Information for depositors: Expert Bank is a participant in the deposit insurance system; therefore depositors6 will be compensated for their deposits in the amount of 100% of the balance of funds but no more than a total of 1.4 million rubles per depositor (including interest accrued).
Deposits are to be repaid by the State Corporation Deposit Insurance Agency (hereinafter, the Agency). Depositors may obtain detailed information regarding the repayment procedure 24/7 at the Agency’s hotline (8 800 200-08-05) and on its website (https://www.asv.org.ru/) in the Deposit Insurance / Insurance Events section.
1According to the financial statements as of 1 October 2019.
2The Bank of Russia took this decision due to 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 Article 7 (except for Clause 3 of Article 7) and Article 7.2 of the Federal Law ‘On Countering the Legalisation (Laundering) of Criminally Obtained Incomes and the Financing of Terrorism’, and the requirements of Bank of Russia regulations issued in accordance with the above Federal Law, and taking into account repeated application within one year of measures envisaged by the Federal Law ‘On the Central Bank of the Russian Federation (Bank of Russia)’.
3In accordance with Bank of Russia Order No. OD-2520, dated 1 November 2019.
4In accordance with Articles 127 and 189.68 of the Federal Law ‘On Insolvency (Bankruptcy)’.
5In accordance with Article 23.1 of the Federal Law ‘On Banks and Banking Activities’.
6Depositors mean individuals, including those who are engaged in entrepreneurial activity (individual entrepreneurs), and legal entities that are considered small businesses in accordance with the Federal Law ‘On the Development of Small and Medium-sized Enterprises in the Russian Federation’.