The Board of the National Bank of Ukraine has decided to revoke the banking license and liquidate Ayboks Bank, the 37th largest bank in terms of assets out of 66 Ukrainian banks, starting from March 7, 2023, due to a number of violations, including assistance in holding a sports poker tournament and insufficient financial monitoring of clients even after the regulator’s warning.
“The share of the financial institution amounted to 0.1% of the assets of solvent banks, so its withdrawal from the market will not affect the stability of the Ukrainian banking sector,” the NBU said in a statement on its website.
In particular, during the on-site supervision, the regulator found that seven legal entities, for which the bank has established a high level of risk, received funds for the provision of services through the payment acceptance point, in particular for organizing and holding esports and sports poker tournaments, in the total amount of more than UAH 3.5 billion from February 21 to December 1, 2022.
The NBU pointed out that the clients were newly established and only started carrying out relevant activities in 2022, their websites were launched a few days later or on the day of establishing relations with the bank, there were no expenses/information on the clients’ advertising activities to attract tournament participants, but the volume of transactions in the first days amounted to millions of hryvnias.
In addition, the clients had signs of being related to each other, but Ayboks Bank did not detect them, and identified the risk criteria only partially, generally failing to take the necessary enhanced due diligence measures.
“According to the information provided by the Commission for Regulation of Gambling and Lotteries, as well as the Federation of Esports of Ukraine, which has the status of a national sports federation in the sport of esports, the clients’ activities include all elements of organizing and conducting gambling, in particular poker, on the Internet and/or bookmaking activities,” the NBU said.
The regulator also reminded that it has already fined Ayboks Bank UAH 10 million for violating the requirements of the legislation in the field of prevention and counteraction to legalization (laundering) of proceeds from crime, terrorist financing and financing of the proliferation of weapons of mass destruction, but these violations continued. In addition, the NBU has twice suspended certain types of transactions conducted by the bank and removed a bank official from office.
The NBU assured that each depositor of the bank will receive compensation from the Deposit Guarantee Fund in the full amount of the deposit, including interest accrued as of the end of the day preceding the day of the start of the bank’s withdrawal from the market.
As reported, in early February, Deputy Chairman of the Verkhovna Rada Committee on Finance, Taxation and Customs Policy Yaroslav Zheleznyak accused nine banks, including Ukrgasbank and Ayboks Bank, of helping the gambling business conceal up to UAH 10 billion in turnover per month. He claimed that these banks provided a service for misdirection (change of payment purpose – IF) and withdrawal of this money: they transferred money from a player to a casino account under the guise of payment for “advertising services” or similar services.
“In other words, it was a fairly open service for the market, when the bank was well aware of what it was doing and the damage it was causing to the budget. And, of course, it charged good fees for this (3-3.5% for acquiring). Plus various offers of withdrawal to cash, USDT, etc.”, Zheleznyak said.
The MP appealed to the National Bank to impose large fines on Ukrgasbank and apply the most severe measures to Ayboks Bank. In early March, the NBU fined state-owned Ukrgasbank UAH 64.6 million.
JSC Ayboks Bank (formerly Agrocombank) was founded in 1993. As of January 31, 2023, the bank’s largest shareholders were Vladimir Drobot (73.93%) and Alena Shevtsova (24.98%).
According to the NBU, as of January 1, 2023, in terms of total assets, Ayboks Bank ranked 44th (UAH 4.467 billion) among 67 banks operating in the country. The bank ended the previous year with a net profit of UAH 598.3 million and planned to allocate 92.6% of it to increase its authorized capital.
