A Zurich-based transaction bank can no longer offer its clients U.S. dollar-based transactions, finews.com has learned. The move is reverberating with other Swiss banks as well as in the cryptocurrency sector.
The notification was sudden: crypto firm Lykke emailed clients on May 13 to say it could no longer take U.S. dollars, effective immediately. The reason is that since this week, Liechtenstein-based bank Alpinum can no longer carry out any transactions in the U.S. currency.
Alpinum appears to be just one of several Swiss and Liechtenstein firms hit by collateral damage from a decision by Deutsche Bank. More than one dozen other clients of Incore besides Alpinum, a tiny Vaduz-based bank with a turbulent history, are also affected, finews.com has learned.
For a bank or crypto firm, being shut out of dollar transactions is severe: the U.S. currency remains the world's most important. Swiss banks, as well as other foreign lenders, generally adhere to U.S. rules on for example sanctioned countries for fear of being shut out of dollar business otherwise.
Collateral Damage
Zurich-based Incore is specialized in information technology and back office, or administrative, services for other Swiss banks. Partly owned by wealth manager Maerki Baumann, Incore has no private clients of its own and makes its money by carrying out tasks for other banks, such as transactions in foreign currencies.
Zurich-based Maerki Baumann told finews.com that it has not experienced any problems with Incore, which currently lists 14 clients on its website. The Incore clients's orders affected by the dollar stop appear to in turn have been routed through Deutsche Bank in New York. The lender has «quit its downstream banking model,» a spokeswoman for Alpinum told finews.com, without elaborating or confirming whether the bank in questions was in fact Deutsche.
«Dicey Matter»
Incore boss Mark Dambacher said the institute uses three correspondent banks for U.S. dollar payments. Dambacher didn't comment on Alpinum, reportedly one of the few banks to still accept Iranian business. The CEO noted that carrying out U.S. dollar-based payments is «a dicey matter,» for which banks should generally have a back-up plan. He didn't comment on whether Deutsche Bank had given notice on dollar transactions.
Deutsche Bank gave its clients roughly two months warning that it would quit offering the services, which appears not to have been ample time for Incore or Alpinum to line up an alternative. Lykke, run by Richard Olsen, also remains unable to take U.S. dollar payments.
Troubled Time
Deutsche Bank dramatically reduced its correspondent bank business, «Reuters» reported in February. The move followed the unfurling of a massive money laundering scandal at Danske Bank, where the Frankfurt-based bank also offered correspondent banking services. Deutsche Bank didn't respond to a request for comment by finews.com.
Alpinum isn't to blame for losing access to U.S. dollar transactions, but the move comes at a sensitive time for the bank. The lender, controlled by Swiss-Iranian businessman Yousef Sherkati, abruptly fired its CEO in February. «We hope to be able to offer our clients this service again very soon,» the bank's board said in an email to finews.com.
