In an expected move, Russia’s Central Bank announced the revocation of Qiwi Bank‘s license, citing the bank’s engagement in “high-risk operations” that catered to the black market. This development unfolds just a month after Qiwi Bank‘s Cyprus-based owner, the payment service provider Qiwi, unveiled its strategy to offload its Russian assets amidst efforts to maintain its listings on both NASDAQ and the Moscow Exchange (MOEX).
The strategic divestiture involved the sale of Qiwi’s Russian assets, grouped under JSC QIWI, to Fusion Factor Fintech Limited—a Hong Kong entity owned by Andrey Protopopov, the then CEO of QIWI plc. The transaction, valued at RUB 23.75 billion, was influenced by considerations of foreign ownership and the volatile business environment marked by temporary restrictions imposed by the Central Bank of Russia (CBR) on Qiwi Bank‘s operations. Following the closure of the sale of the Russian assets, Protopopov resigned as the Director of the Board and the Chief Executive Officer of QIWI plc.
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Founded in 2007 by Sergey Solonin, Boris Kim, and Andrey Romanenko, Qiwi Group‘s journey saw a significant milestone in November 2012 through a global partnership with Visa, transforming QIWI Wallet into a co-branded product, Visa QIWI Wallet. Qiwi‘s ascent continued with its public offering on NASDAQ in 2013, with shares initially trading at $17 each.
However, the CRB’s recent statement paints a grim picture of Qiwi Bank‘s activities, accusing it of systematically flouting anti-money laundering and terrorism financing laws. Described as Russia’s 89th-largest bank with a negligible role in the real economic sector, Qiwi Bank was implicated in facilitating dubious transactions, including fund transfers to crypto exchanges, illegal online casinos, bookmakers, and more, under the guise of individual settlements.
Following the license revocation, the Deposit Insurance Agency of Russia has been tasked with overseeing Qiwi Bank temporarily. The repercussions were swift, with clients reportedly unable to execute fund transfers to and from their Qiwi wallets and the Qiwi-owned Contact money transfer system.
In response to the ensuing chaos, the Deposit Insurance Agency assured Qiwi Bank’s clients of compensation up to 1.4 million rubles ($15,000) within 30 days, contingent on account ownership verification. Meanwhile, Qiwi‘s Moscow-listed depositary receipts witnessed a nearly 50% plunge. In light of the developments, Qiwi announced the closure of its offices in Moscow, St. Petersburg, and Kazan, promising stakeholders that it is assessing the situation and will communicate the next steps soon.
Amidst this turmoil, MOEX has prohibited short-selling of Qiwi stocks, while NASDAQ had previously suspended Qiwi’s American Depositary Shares following Russia’s invasion of Ukraine in February 2022. Notably, Qiwi reported record profits in 2022, a year marred by financial isolation due to the war in Ukraine, raising questions about the implications of the Central Bank’s actions on Qiwi’s future and the broader cybersecurity landscape.
