The Arab Bank in Geneva apparently has a client relationship with a family of entrepreneurs who were recently sanctioned by OFAC. The bank declined to comment.

The SDN list of the American Office for Foreign Asset Control (OFAC) always bodes ill for those affected. The abbreviation SDN stands for «Specially Designated Nationals and Blocked Persons».

Last February 24, three members of a German business family, Diegelmann, were added to this list in connection with Russia sanctions. Among other things, they are active in the gold trade in the Principality of Liechtenstein with their company Rheingold Edelmetall.

There, the case is causing discussion. A former employee of the Office of Economic Affairs has taken over mandates from the family in the environment of Rheingold Edelmetall, as finews.ch reported.

Due to Banking Secrecy

Members sanctioned by OFAC are also said to be private banking clients of Arab Bank in Geneva, finews.com further learned.

The house in question does not want to comment on the suspicion to finews.com and only stated that «due to banking secrecy» it could not answer questions in this regard, «as well as not on other specific cases».

No Finma Denial

The bank further emphasized that it «adheres to Swiss laws and takes appropriate account of foreign sanctions, including OFAC sanctions, as expected by Finma».

For its part, the Financial Market Supervisory Authority (Finma) did not deny to finews.com that Swiss banks were also affected by the Liechtenstein gold trader case. However, she did not want to provide any information on the number and the institutions concerned. «As usual, we do not comment on details of our supervisory activities» and «in principle do not comment on individual cases».

Liechtenstein in the Spotlight

Two weeks ago, the Zurich-based financial blog «Inside Paradeplatz» reported that the three Liechtenstein banks Havilland, Neue Bank and Alpha Rheintal Bank are assumed to be doing business with the gold trader in Liechtenstein. Reportedly, they extended credit to Rheingold customers backed by their precious metal deposits.

At irregular intervals, the U.S. updates OFAC's notorious SDN sanctions list. This list is respected by almost all financial institutions worldwide.

Russia Link

Most banks avoid a customer relationship with people on this list at all costs. This is because such a business relationship makes a financial institution liable to prosecution in the USA.

According to OFAC, Liechtenstein-based Rheingold Edelmetall «collaborated with Russian metal companies to conceal the origin of Russian precious metals».

Selling Precious Metals for Cash

Further according to the US agency, the firm also «helped Russian clients launder money by buying and selling precious metals for cash, deliberately circumventing international sanctions». In the United Arab Emirates (UAE), the «Diegelmann Network» orchestrated the sale of Russian gemstones.

It is unclear whether the allegations are true. However, it is very difficult for those affected by sanctions, especially from abroad, to defend themselves with the means of the rule of law. There are no formal appeals against OFAC decisions, and courts typically protect the agency's discretion.

Lobbying efforts in the USA are more promising, albeit costly.