MOSCOW (AFP) - Russia suspended on Wednesday the operations of a popular Moscow bank whose board includes a cousin of President Vladimir Putin on suspicion of laundering more than half a billion dollars.

Investigators accused managers at Master Bank -- Russia's 75th-biggest by total assets - of stealing more than $600 million (444 million euros) in clients' money and other illegal transactions.

The unexpected announcements prompted an unscheduled parliament hearing and left long lines of anxious customers waiting outside the shuttered doors of one of Moscow's most prominent banks.

Central bank chief Elvira Nabiullina told a parliament hearing that Master Bank had a long history of suspicious financial behaviour and currently had a negative cash flow of $60 million.

Master Bank "hid its true state of affairs and substantially misstated its accounting," she told Russian lawmakers.

Nabiullina's deputy Mikhail Sukhov later told Russia's state-run rolling news channel that "the reason (for the bank's suspension) is banal."

"At least 20 million rubles ($610 million) have been transferred to companies or individuals linked to the bank's owners," Sukhov said.

The ubiquitous lender has one of the most widespread networks of automated teller machines in Moscow. News reports said that Master Bank's ATMs throughout the vast country 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) owed to the bank's clients.

The sum makes it the biggest insurance event in Russia's banking history and represents one of the most forceful moves by the central bank to date to clean up the murky business activities of the country's poorly-regulated midsized lenders.

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 secretive Ukrainian-born entrepreneur named Boris Bulochkin.

News reports said that Master Bank is owned jointly by Bulochkin and his wife.

But 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.

One of Igor Putin's companies was in 2011 awarded a controversial $50-million federal contract to construct a road in the remote Far Eastern region of Yakutia.

Russian news reports said that Igor Putin briefly left Master Bank before rejoining its board in 2011 after an internal investigation unearthed a group of employees who were alleged to be laundering $15 million from the bank a day.

Television footage showed armed federal interior ministry officers rifling through the files of the bank's Moscow headquarters while anxious-looking office workers stepped away up from their desks.

The U.S.-based credit and debit card system Visa said it was working closely with Russian officials to make sure that the bank's closure did not create financial chaos.

"We have arranged a series of meetings (with central bank officials) for Wednesday afternoon," a Visa representative told the Prime business news agency.

VTB Capital said the closure suggested that Russia's central bank is "refocusing on the system's cleanup before any further enhancement of the deposit insurance system can be discussed."