Poland's Top Court Upholds Fine on Raiffeisen Bank for Deposit-Custody Failures

Key Takeaways:

• Court Upholds Fine: Poland’s Supreme Administrative Court dismissed Raiffeisen Bank’s appeal, affirming a PLN 5,000,000 fine imposed by the Polish Financial Supervision Authority (KNF) for failing to comply with depositary regulations.
• Deposit-Custody Role: The NSA emphasized that the depositary function goes beyond formal checks; it involves active supervision and monitoring to prevent irregularities, highlighting the critical role of depositaries in maintaining financial market trust.
• Regulatory Approach: The Court backed the KNF’s decision, noting that factors like the duration of the violations, frequency of infractions, and the bank’s prior conduct played a key role in determining the penalty.

Deep Dive

Poland’s Supreme Administrative Court (NSA) has ruled in favor of the Polish Financial Supervision Authority (KNF), rejecting an appeal from Raiffeisen Bank International (RBI) over a hefty fine for failing to properly fulfill its role as a depositary. This ruling, which dates back to February 13, 2025, strengthens the KNF’s oversight powers and sets a critical precedent for financial market supervision in the country.

The case began in October 2023 when the Provincial Administrative Court in Warsaw (WSA) backed the KNF’s decision to impose a PLN 5,000,000 ($1,295,203) fine on Raiffeisen Bank Polska. The bank had repeatedly breached regulations governing its depositary duties, most notably in violation of Article 10 of Poland’s Act on Investment Funds.

At the heart of the ruling, the NSA underscored the essential role that the Polish Financial Supervision Authority plays in overseeing the financial sector. The Court reaffirmed that the KNF, as an independent body tasked with safeguarding the integrity and stability of the financial market, holds considerable discretion in choosing the measures it deems necessary to achieve these goals.

The NSA pointed out that the KNF is entrusted with significant freedom to decide how to supervise and regulate institutions like Raiffeisen Bank. In this case, the fine was imposed after carefully considering the nature and frequency of the violations, the length of time the issues persisted, and the bank’s prior conduct.

The Court didn’t shy away from explaining why this oversight matters. When it comes to depositaries, it’s not enough to simply check the paperwork. These institutions hold a vital role in the financial system, far beyond keeping track of assets. They are expected to actively monitor transactions, prevent irregularities, and help maintain the overall integrity of the market. The NSA emphasized that the depositary’s duties extend into the realm of supervision—almost akin to an auditing role—and that’s something Raiffeisen Bank failed to meet.

For banks and financial institutions, this case is about diligence and an ongoing commitment to regulatory standards that ensure market stability and protect the interests of all players involved. The Court’s ruling backs the KNF’s stance that regulatory oversight should be taken seriously, not just as a formality but as a necessary component for building trust and transparency within the financial system.

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