Central Bank of Russia is about to round up “clearing” the financial field from a large number of small banks that are instrumental in bypassing the ban on online casinos. Fintech Bank was the first victim of the effort. In doing so, a platform for a new regulator is being prepared on the market.
Fintech Bank, or the Vietnamese-Russian Bank, lost its license. It was expected and predicted by both anonymous Telegram-channels and quite legitimate media. What caused the increased attention to the lending institution which ranked only 241st by the size of assets? In a press release issued on the occasion of license revocation, the Central Bank explained its resolution by regular violations of restrictions imposed by the regulator on certain types of operations. These "certain types" turned out to be the services provided to the organizers of illegal gambling on the Internet.
Name is Changed
In other words, Fintech, a small bank by assets, happened to be a large center of financial transactions with online casino clients. These casinos were banned in Russia more than a decade ago but did not take the ban too seriously. Neither did Fintech, which got its current name in May 2020. Before that, it was mysteriously called Vietnamese-Russian Bank. However, the name was changed after an extremely successful year. In 2019, it began reporting record sums of money received as fees for transfers made between legal entities without opening an account. According to this indicator, the bank became one of the leaders on the Russian market.
This kind of tremendous success looked very suspicious for the bank which operations had been frozen for many years after that incredible start. The bank was created in 2006 in order to develop the economic relations between Russia and Vietnam. It happened after the visit of then Prime Minister Mikhail Fradkov to Vietnam. Actually, it was the launching pad for joint projects of the Russian VTB bank and the Vietnam Investment and Development Bank. As usual, something went wrong. Relations with Vietnam developed in other ways.
In 2015, the Russian-Vietnamese friendship that was almost inactive by that moment got replaced by an entire “football team.” That is how banksters call the situation when the capital of the bank is divided among a group of formal "owners," each of whom has a share of less than 10%, which makes it possible to avoid coordinating the changes with the Central Bank.
Accordingly, the emergence of such a group among the shareholders of a bank bodes no good for the latter. Previously, reshuffles of this kind meant "setting the bank on fire." This is, turning it into a sort of ATM engaged exclusively in cash withdrawal. It continued until the Central Bank got tired of observing this outrage, and revoked the license. It happened pretty quickly.
It happened with the Vietnamese-Russian Bank as well but with the help of modern technologies. The volume of transfers and the commissions received for them began to grow rapidly in the second half of 2018. As one can see, it was stopped in December 2020. A year and a half of activities instead of a decade of stagnation under the mythical flag of Russian-Vietnamese friendship.
Organized Group of Comrades
VRB came to the market after the collapse of Voronezh Bank, another lending institution with a troubled history. At one time, it was an ordinary Voronezhkreditprombank established back in November 1990. Then it was headed by Alexander Lebedev, a banker from Moscow. Under his management, only the name of the bank pointed at its roots linked to the city of Voronezh, some 650 km to the southeast of Moscow. All other connections were with Moscow. However, Lebedev quit Voronezh Bank in 2012 amid problems with his main business asset, NRB Bank. As a result, the bank had new shareholders. Or, to be more precise, a whole group of them. The story is similar to football. It is believed that Voronezh Bank and Fintech were part of the same unofficial group of "banksters," whose names are not always found on the list of owners and managers.
For example, Oleg Kislyak and Andrei Sukharev are among the shareholders of Bank Voronezh. Before 2013, they served as advisors to the chairman of the board of Project Finance Bank (BPF).
BPF became the notorious victim of an even earlier stage of the “mop-up” on the market of classic money laundering. Continuity of its top managers suggests that despite the change of technologies the operations conducted with the participation of this group of people remains the same. By closing one or more banks the regulators try to get rid of shady financiers on the market. Nevertheless, the latter can always find new methods. In doing so, they are one step ahead of the regulator. The "bankers" themselves might not know the names of the people behind these operations.
This time, in addition to closing the banks themselves, the regulator has another mission. That is, to reform the betting industry. Now, the market with a turnover of 1.25 trln rubles ($16.98 bln) is under full control of payment systems. Through them legal bookmakers, among other activities, take money from customers.
However, Umar Lutfulloev has other ideas in this regard. In May this year, Umar Kremlev (Lutfulloev’s current surnamef) sent Prime Minister Mikhail Mishustin a proposal ...to transfer control over the bookmakers' market to a single regulator in the form of a state-established non-profit organization. This would be made purely to rehabilitate the market and to increase the allowances for sports.
It is clear that all key stakeholders of the industry disagree with this shift. For them, this reform means their death. The fighters' position was complicated by Kremlev's status. Besides his dominant last name and alleged ties with one of the people in power, Kremlev has one more significant advantage. He is the general secretary of the Russian Boxing Federation and, as of recently, the President of the International Boxing Association. Not only does boxing have a serious force of penetration in the literal sense of the word but in Russia, boxing is more than a sport. For example, Boris Ivanyuzhenkov, the former sports minister and honorary citizen of Podolsk, a city in the Moscow region, was Kremlev's predecessor at the post of President of the Russian Boxing Federation. In 1990s, he, let’s put it this way, took part in activities different from sports tournaments.
Actually, Kremlev-Lutfulloev didn't spend time only in gyms in the 1990s either. In 2004, he received a suspended sentence for extortion and for battery in 2007.
These punishments are akin to wound stripes on military uniforms.
Nevertheless, in such a specific area as the transfer of money to overseas jurisdictions, boxing skills are not enough. More subtle and, at the same time, effective methods are needed. For example, the blocking of any possibility to conduct any financial activity. That is when the Bank of Russia comes into view in terms of decision-making. As a result, banks which play the role of a blood circulatory system in the shadow online gambling industry have to leave the stage.