Russian Bank Caught Using Fake Gold Bars - Gainesville Coins News
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Russian Bank Caught Using Fake Gold Bars

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Russian Bank Caught Using Fake Gold Bars

NYfed-vault-Fed-Reserve-PhotoRussia is a country with an unfortunate history of corruption and cronyism—not unlike the majority of its international counterparts, in fact. Yet, in an era of banking fraud and serial financial crises, modern Russia under President/Premier/Prime Minister/Almighty Supreme Leader Vladimir Putin has portrayed itself as the honest dealer amid a sea of greedy scam artists.

Whatever its merits, this perception took a hit when the Russian site reported that a medium-sized Russian bank supposedly going by the name "Admiralty Bank" was attempting to fool auditors with gold-plated metal bars in its reserves. The story was also picked up by a German gold price site.

A Classic Trick

gold-investigationAlthough it sounds like something out of a pulp fiction novel, the so-called "Admiralty" was intent on circumventing its auditors' inevitable conclusion that the bank's reserve assets were insufficient to cover the requisite value of the loans it was granting.

One easy way to resolve this issue? Take some otherwise worthless items and list them as valuable gold bars. Apparently, Admiralty's management assumed this would be enough to dupe the country's regulators.

Upon closer inspection, however, the auditors from the central bank (skeptical of Admiralty's listed assets) found that the "gold bars" totaling some 400 million rubles in value were merely gold-plated (or even gold-painted) bars of a much more common metal. The bank's license was summarily revoked.

There has been no official comment from the Bank of Russia.


It is unclear whether this is an isolated incident with a mid-sized bank in Russia, or whether this is a Russian phenomenon, or if such practices may be uncovered all across the global banking system.

The doomed Admiralty bank was trying to pass off the fake gold bars in order to convince other financial institutions that it had the necessary reserves to issue loans; had the fraud gone undetected, the bank could've lent itself into all sorts of trouble (considering those loans would far outpace the type of assets the bank could put up as collateral in the event of a default). It seems they were smarter than to try and sell the bars on the market, as virtually all gold is smelted and assayed when transferred from one vault to another.

About the Author

Everett Millman

Everett Millman

Analyst, Commodities and Finance
Managing Editor

Everett has been the head content writer and market analyst at Gainesville Coins since 2013. He has a background in History and is deeply interested in how gold and silver have historically fit into the financial system.

In addition to blogging, Everett's work has been featured in CoinWeek, Advisor Perspectives, Wealth Management, Activist Post, and has been referenced by the Washington Post.

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