Austrian bank shuts down after money laundering allegations

By Christine Duhaime | March 15th, 2020

Revocation of Bank Licence

The Meinl Bank filed for insolvency at the Vienna commercial court after money laundering allegations.

The Bank lost its banking licence from the European Central Bank after a review of its AML compliance found a massive lack of compliance amid allegations that from 2011 to 2015, the Bank was used as a correspondent, willingly, to move approximately €500 million out of Eastern Europe for politically exposed persons, where it was laundered and sent to offshore little islands to be parked in shell companies with obfuscated ownership.

The Meinl Bank was founded in 1923 as part of the food business operated by the Julius Meinl family. Julius Meinl was the chair of the Bank during its lax AML period. When it began to be scrutinized, it went through a name change to Anglo Austrian Bank.

Bank customers caused a run on the bank at the main branch in Vienna and were not able to withdraw their funds. The Bank says it has €245 million in liabilities, €148 million in assets and 9,000 clients. Approximately €60 million is covered by deposit insurance in Austria.

Bank Secrecy

Austria is one of the most secret banking jurisdictions in the world, with centuries long tradition of maintaining secrecy of bank account information. It’s so steeped in secrecy, it’s where Swiss bankers bank. Part of the way the secrecy of Austrian banks is maintained is that it is tied to the culture of the hierarchy of the status of the intelligensia, who are titled, which are notaries, lawyers, professors and doctors and such.

In Austria, notaries are a higher-ranked occupation compared to lawyers, again based on centuries old tradition of the geographical territory of notaries to provide services and the jurisdiction of notaries to practice in certain areas of law that lawyer are prohibited to practice in – notaries are a key entry point to the financial system in Austria.

There is good coverage of the Meinl Bank story here.

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