Banque Havilland, a Luxembourg-headquartered private bank controlled by Prince Andrew’s longtime financial adviser David Rowland, has effectively been put out of business in Europe following a coordinated clamp-down by EU regulators amid persistent governance and money laundering issues.
The Luxembourg District Court recently confirmed the suspension of payments by the bank, following the European Central Bank decision to withdraw its banking licence. Luxembourg’s financial regulator CSSF announced the court’s decision last Friday, appointing lawyer Laurent Fisch and big four advisory firm EY as administrators to oversee the bank’s assets. This move effectively halts all payments by Banque Havilland, barring any actions beyond precautionary measures unless authorised by the administrators.
The ECB’s withdrawal of the bank’s licence on 1 August 2024 is a rare and severe measure, reflecting the gravity of the compliance failures at Banque Havilland. The bank has been under scrutiny for repeated lapses in its anti-money laundering systems, which already led to one million euro fine imposed by the CSSF in 2018.
ECB decision ‘irreparable’
The ECB decision to revoke the licence is “irreparable”, Banque Havilland noted in a 2 August statement in which it also said it would challenge the ECB decision while not opposing the application of the regime of suspension of payments.
The ECB never made its decision public and did not respond to press questions asking on which grounds the decision was made. Neither did CSSF, which as national regulator is directly in charge of supervising Banque Havilland as a “lesser entity” in the EU banking supervision system. The official ECB decision eventually was made public by CSSF.
CSSF meanwhile is about to announce a new fine of five million euro for Banque Havilland due to money laundering, Luxembourg news site Reporter.lu added on Tuesday. If confirmed, this would be the biggest AML fine ever issued in the Grand Duchy, beating the previous record of 4.6 million euro set by Banque Internationale à Luxembourg in 2020.
History of controversies
The withdrawal of a banking licence is a rare procedure in the world of regulated finance. However, according to the information that has come to light so far, recurring problems of governance and breaches of anti-money laundering and anti-terrorist financing regulations are at the root of the loss of the licence.
Banque Havilland’s troubles are not new. The bank has been embroiled in several controversies over the years, including allegations of currency manipulation and money laundering. Its British arm was shut down last year following a 10 million pound fine by the Financial Conduct Authority for orchestrating an investment scheme intended to destabilise Qatar’s currency.
Prince Andrew
The bank’s connections to high-profile figures, such as Prince Andrew, have also drawn significant media attention. Owned by David Rowland, a former Conservative Party treasurer and close associate of the Duke of York, Banque Havilland has faced scrutiny over its ties to the British royal and its involvement in various financial scandals.
In recent months, various press reports have appeared raising questions about the bank’s AML governance at its subsidiaries in Monaco and Liechtenstein, and its branches in Zurich and Dubai. Statements on the bank’s website said its Monaco unit was for sale, while its Liechtenstein and Zurich operations were closed down voluntarily per 30 July.
20,000 euro in client deposits guaranteed
The suspension of payments has triggered the intervention of the Fonds de garantie des dépôts Luxembourg, allowing depositors to claim compensation for the unavailability of their deposits up to 20,000 euro. This safety net is crucial for the bank’s clients, who are now facing uncertainty regarding their funds. At the end of 2023, Banque Havilland held approximately 1.1 billion euro in client deposits, according to its annual report.
Banque Havilland, which employs 132 staff in Luxembourg, has stated its commitment to an orderly wind-down of operations, emphasising that the decision is not based on solvency or liquidity issues. The bank, in its statement, said it maintains that it is financially stable and aims to protect the interests of all stakeholders involved.
The bank’s origins can be traced back to the aftermath of the 2008 financial crisis when the Rowland family, led by British property developer David Rowland, acquired the remnants of the collapsed Icelandic bank Kaupthing in 2009. The bank was rebranded as Banque Havilland, named after the Rowland family’s estate, Havilland Hall, in Guernsey, a location synonymous with financial privacy.
Boutique ambitions
Under the new ownership, the bank aimed to establish itself as a boutique private banking institution catering to high-net-worth individuals and the global elite. However, its journey has been fraught with challenges and controversies, including regulatory scrutiny and fines for deficiencies in anti-money laundering controls.
The Rowland family, known for its complex financial dealings and political connections, particularly in the United Kingdom, has been at the centre of Banque Havilland’s operations. David Rowland, a former Conservative Party treasurer, has leveraged his connections, including ties to Prince Andrew, to expand the bank’s reach. Despite its ambitions, Banque Havilland has faced numerous regulatory challenges.
The bank’s British arm was closed in 2023 after facing penalties related to a scheme aimed at destabilising Qatar’s currency. These controversies, coupled with ongoing regulatory scrutiny, now have culminated in the European Central Bank’s decision to revoke its banking licence, marking the beginning of the end to the bank’s 15-year history in Luxembourg.
Further reading on Investment Officer Luxembourg:
- Luxembourg tax authority to get special AML unit
- CSSF fines BNP Paribas €3 mln for laundering lapses
- Banque Havilland sells custody unit in private banking refocus