Russian Billionaire Loses Lawsuit Against Nordic Banks
(Bloomberg) -- A group of Nordic banks sued by a Russian oligarch aren’t required to accept his business, according to what may prove to be a landmark ruling by a court in Finland.
Russian billionaire Boris Rotenberg, an associate of President Vladimir Putin, lost his lawsuit against four Nordic banks and was ordered to pay more than 500,000 euros ($556,000) to cover their legal fees, the Helsinki District Court ruled on Monday.
The court said that forcing the banks to accept business from Rotenberg, who is on the U.S. sanctions list, would have subjected them to significant financial risk which they, by law, are prohibited from taking.
The lawsuit targeted Svenska Handelsbanken AB (ST: SHBa ) for refusing to accept cross-border deposits from Rotenberg, and Nordea Bank Abp (SIX: NDB ), OP Group and Danske Bank A/S (CSE: DANSKE ) for not processing payments to vendors for basics including Rotenberg’s electricity bills.
Jakob Dedenroth Bernhoft, a Copenhagen-based lawyer who specializes in compliance and money laundering issues, said the decision would 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 by phone before the verdict was delivered.
At stake was the banks’ access to the U.S. dollar market, which is crucial to their ability to operate.
The case comes against a backdrop of money-laundering scandals in the region, with regulators ratcheting up compliance requirements. Banks are also under increasing pressure to identify dodgy customers. According to documents provided to the court, Rotenberg has a current account at Handelsbanken, which the bank has supplied on the recommendation of the Finnish Financial Ombudsman Bureau.
Rotenberg had argued that his status as a dual citizen of both Russia and Finland meant that banks based in Europe must process his transactions. But the court said Rotenberg failed to prove he resides in a European Economic Area country, and thus has no such rights to basic banking services as mandated by law.
The court’s panel of judges ruled unanimously, but the verdict can be appealed. Rotenberg has seven days to express his dissatisfaction with the ruling, the court said.
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