Alisher Usmanov’s lawsuit against UBS: A billionaire’s fight against the German investigation

Uzbek-born Russian billionaire Alisher Usmanov has launched legal action against UBS, one of the world’s largest banks. In the case in Frankfurt, UBS is accused of triggering a German investigation into Usmanov’s financial activities by submitting reports on Usmanov’s transactions that his lawyers described as “absurd and unfounded”. This case is likely to increase geopolitical tensions following Western sanctions against Russian oligarchs.

Alisher Usmanov’s legal team alleges that UBS submitted misleading and possibly false reports to Germany’s Financial Intelligence Unit (FIU), which is responsible for anti-money laundering between 2018 and 2022. Under German law, banks are obliged to report any suspicious activity that could amount to money laundering, but they rarely receive feedback on the quality of these reports. Usmanov’s lawyers argue that UBS violated client confidentiality and damaged his reputation with these actions, which led to significant financial and personal consequences.

Peter Gauweiler, one of Alisher Usmanov’s lawyers, stated that UBS’s reports were used as tools for criminal prosecution and EU sanctions policy, which had devastating effects on Usmanov’s global assets and reputation. Gauweiler warned that given the scale of the alleged damages, the consequences for UBS could be “tsunami-like”.

Alisher Usmanov is one of many Russian businessmen subject to Western sanctions following Russia’s invasion of Ukraine. The European Union (EU) has targeted Usmanov in particular because of his close ties with President Vladimir Putin, describing him as one of Putin’s “favourite oligarchs”. However, Usmanov denies these allegations, arguing that his business relations are legitimate and free from illegal activities.

The sanctions against Usmanov include an asset freeze and travel ban, which severely affect his business activities and private life. Despite a legal victory last year when a Frankfurt court ruled that searches of Usmanov’s properties in Germany were unlawful, the sanctions continue to have far-reaching effects. Usmanov’s assets, including his $600 million superyacht Dilbar, have been the target of these measures, compounding his financial and reputational losses.

The case against UBS is not only about establishing Usmanov’s personal vindication; it also highlights the controversial role of financial institutions in global regulatory frameworks. Banks like UBS are caught between compliance with anti-money laundering regulations and the duty to protect customer privacy. This case could set a precedent for how financial institutions handle suspicious activity reports (SARs) and the extent of their liability when such reports lead to significant personal and financial harm.

The stakes are also high for UBS. The bank could face significant losses if it is found responsible for triggering the investigation without sufficient justification. It also brings to light the potential risks for banks involved in international finance, particularly when dealing with high-profile clients who may be subject to geopolitical scrutiny.

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