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Russia's central bank withdrew on Wednesday the licence of a popular Moscow bank where a cousin of President Vladimir Putin sits on the board.
Investigators said they suspected managers at Master Bank -- Russia's 75th biggest by total assets -- of money laundering and other illegal cash transactions.
Russia central bank chief Elvira Nabiullina told a parliament hearing that the bank "hid its true state of affairs and substantially misstated its accounting."
The lender has one of the most widespread networks of automated teller machines in Moscow. News reports said that all of its ATMs had stopped dispensing cash by Wednesday afternoon.
"This is a major player in cash collection services, particularly in Moscow and Saint Petersburg," the VTB Capital investment house said in a note to clients.
"In addition, the bank is self-ranked as having the third-largest network of ATMs in Russia and providing fee-based cash and ATM-related services to other Russian banks," VTB Capital observed.
Russia's Deposit Insurance Agency said it will have to cover a record 30 billion rubles ($900 million / 675 million euros) owed to the bank's clients.
The sum makes it the largest insurance event in Russia's banking history.
Master Bank has faced at least one prior money laundering investigation but has never been penalised.
The bank was founded in 1992 and has been headed for most of its history by a Ukrainian-born entrepreneur named Boris Bulochkin.
Its list of directors also includes Igor Putin -- a 60-year-old cousin of the Russian leader who sits on several other bank boards and also heads a Siberian-based oil pipeline manufacturer.
Russian news reports said Igor Putin briefly left Master Bank before rejoining its board in 2011 after an internal investigation unearthed a group of employees who were laundering $15 million from the bank a day.
A federal interior ministry team searched the bank's Moscow headquarters on Wednesday but provided few initial details.
VTB Capital said the closure suggests that Russia's central bank is "refocusing on the system's cleanup before any further enhancement of the deposit insurance system can be discussed."