The closure of Vienna's European American Investment Bank AG (EURAM) sent shockwaves through the Vienna financial world. The Financial Markets Authority (FMA) intervened, stopping the bank's operations completely due to serious shortcomings. With total deposits of €276.3 million, the impact of the move is significant, leaving hundreds of customers uncertain about their funds.
EURAM Bank has long been under scrutiny, particularly for non-compliance with Anti-Money Laundering (AML) and Anti-Terrorist Financing (CTF) regulations. EURAM, founded in 1999, has built a reputation for working with foreign clients, often being involved in international transactions. However, repeated violations of AML rules, discovered back in 2022, have put the bank in the spotlight of regulators. A subsequent inspection in October 2023 found no improvement, prompting the FMA to take drastic action to suspend the bank.
One of the major red flags was EURAM's loan portfolio, which was marked by significant write-downs, indicating high-risk lending practices in recent years. These internal financial problems have only exacerbated legal compliance challenges.
Despite the FMA's growing concerns, EURAM has repeatedly denied the allegations. The situation became untenable by early 2023, when the FMA banned the bank from doing new business and appointed a public administrator to oversee operations in August. Ultimately, the bank's failures were considered too serious to correct.
For 757 EURAM clients, the bank's collapse raised fears for their savings. Although the majority of the bank's customers - often wealthy individuals - had substantial deposits, only €37.6 million of the total €276.3 million was protected by Austria's deposit guarantee scheme. Fortunately, for deposits up to €100,000, Austrian deposit protection organization Einlagensicherung Austria (ESA) has assured customers that compensation will be processed within seven working days.
ESA has promised swift action to provide redress to affected customers. Stefan Tacke, Managing Director of ESA, assured that the process will be carried out online for maximum efficiency. He also noted that the ESA is working closely with the Austrian Financial Intelligence Unit (A-FIU), which reflects the seriousness of the AML deficiencies found in EURAM.
