In a legal twist that promises to shed light on the intricacies of money laundering reports, Russian oligarch Alisher Usmanov has filed a lawsuit against UBS Europe SE in Frankfurt. This high-profile case, represented by the prominent German law firm Gauweiler & Sauter, accuses UBS of making unlawful reports to the Financial Intelligence Unit (FIU), which led to criminal investigations and significant reputational damage for Usmanov.
The Allegations
According to the press release from Gauweiler & Sauter, UBS allegedly submitted over a dozen Suspicious Activity Reports (SARs) to the FIU between 2018 and 2022. These reports were based on transactions deemed routine by Usmanov, such as regular rental payments and personal cash withdrawals. Usmanov’s legal team claims these reports were not only unfounded but also made with gross negligence or intentional falsehoods, violating both contractual obligations and German legal standards.
Download the Gauweiler & Sauter press release here.
Legal Framework for Money Laundering Reports
Under German law, specifically §§ 43 and 48 of the Gesetz über das Aufspüren von Gewinnen aus schweren Straftaten/Law on the tracing of assets derived from serious crimes (GWG), banks are required to file an SAR if there are facts indicating that a financial transaction is linked to money laundering activities. These reports must be based on concrete evidence that the assets involved originate from criminal activities. However, banks are prohibited from making SARs negligently or with intentional falsehoods.
In Usmanov’s case, his lawyers argue that UBS ignored contrary evidence and filed reports without sufficient grounds. This led to investigations by the General Prosecutor’s Office in Frankfurt, which included high-profile searches and public disclosures that significantly tarnished Usmanov’s reputation.
Consequences of Misreporting
The Frankfurt Regional Court ruled on May 13, 2023, that the investigative measures against Usmanov were unlawful. The court found that the initial suspicion against Usmanov was not substantiated and that the sources used by the prosecution were unreliable. This ruling underscores the potential legal ramifications for banks that fail to adhere to the stringent requirements for filing SARs.
Furthermore, on October 26, 2023, the court granted Usmanov’s request to prohibit the prosecution from using the seized documents and assets, ordering their return. Despite this, the prosecution did not comply, leading to further legal actions against the responsible officials for alleged legal violations and wrongful prosecution.
Implications for Banks
This case highlights the critical importance of adhering to legal standards when filing money laundering reports. Banks must ensure that their SARs are based on factual and verifiable evidence to avoid legal repercussions and the potential for substantial damages. The allegations against UBS suggest that improper reporting can lead to severe consequences, including legal liabilities and significant damage to the bank’s reputation.
Conclusion
As the case of Alisher Usmanov vs. UBS unfolds, it will likely provide crucial insights into financial institutions’ legal responsibilities regarding money laundering reports. The outcome may also influence future regulatory policies and enforcement practices, emphasizing the need for accuracy, integrity, and due diligence in reporting processes to uphold the integrity of the financial system.
