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Date: 18th September 2014


Regulator “does not recognise” a money laundering partner?

Central Bank does not react to the issues of BTF-bank associated with the international money launderer FBME.

Foreign media with a focus on financial institutions are full of headlines about the growing scandal related to the Cypriot-Libyan-Tanzanian bank FBME, which was recently found to be involved in money laundering. Large sums were passed through this international financial “laundromat”, with some speculating it to be in the billions of dollars. Meanwhile, certain divisions of FBME until recently provided their services to clients in Russia, where the bank still has number of business partners. Among those is the Russian boutique-bank BTF (Trade Finance Bank), which is a part of an international alliance with FBME BANK Ltd. According to experts, this alliance is well known in Russia among clients that use low-tax offshore zones.

Just recently a representative of the Moscow LLC CB “Trade Finance Bank” (BTF-bank) was forced to concede that the relationship with FBME negatively affected the Russian bank. According to the BTF-bank representative, the rating agency “Expert RA” has downgraded its forecast for the Trade Finance Bank due to said relationship. “The change in the forecast is related with significant probability to the financial distress of one of the counterparties of Trade Finance Bank, more specifically the Cyprus FBME Bank. This may have an impact on the financial results for our credit institution,”- said the representative of the BTF-bank.

However, this alarming development appears to be ignored by the domestic regulator, despite the first signs appearing on Cyprus, where the illegal activities of FBME Bank are still being investigated, and now continuing with the Russian partner BTF-bank. In connection with the situation in which the BTF-bank finds itself, the regulator not only keeps being mysteriously silent, but also does not attempt to undertake any forms of inspection or supervision in relation to the bank. Meanwhile the situation may turn ugly for the clients of BTF-bank, who risk becoming hostages of an international scandal mostly because of risky policies and indiscriminate partner choices made by the bank.

By the way, this is not the first time that BTF-bank was a part of a scandalous situation. The previous instances by themselves implied an intervention of the regulator. For example, analysts question the credit of 70 million dollars given by BTF-bank to the company “Medion”, which is affiliated with financial structures of a disgraced Kazakh businessman Mukhtar Ablyazov, who was arrested by Interpol in France. As noted in the newspaper “Versia”, it is surprising that “with the bank having a total of 400 million USD on its balance sheet, they (BTF-bank) allowed themselves to issue in one hands such a sum, not to mention that it was in violation of direct instructions from the Central Bank.” Where on earth is the reaction of the regulator in relation to the violation of rules established by them? Where is the control on quality and appointment of said credit to a suspicious company with registered capital of only 20,000 rubles and a registered address at the same place as dozens other companies?

Incidentally, the case of strange lending to Ablyazov’s companies is not the only example of the mysterious credit relations of BTF-bank with wanted persons. A few years ago the same BTF-bank provided a credit loan to the former head of the MARTA holding Georgy Trefilov, who is currently hiding in London from Russian investigative authorities and is accused of illegally obtaining credit and fraud.

Gennady Pavlov