tol.org 26 April 2018
Latvia will receive technical assistance from the U.S. Treasury Department in its efforts to improve the reputation of its banks.
“We know our homework, we know what needs to be done,” Latvian Finance Minister Dana Reizniece-Ozola was quoted as saying by Bloomberg, after meeting with U.S. Treasury officials in Washington.
The latest wave of scandal in the country’s banking sector hit in February, when the U.S. Treasury accused Latvia’s third-largest lender ABLV Bank of making money laundering a “pillar of the bank’s business practices” and enabling transactions to North Korea in violation of sanctions. The bank denied being involved in illegal activities.
At the same time, Ilmars Rimsevics (pictured), head of Latvia’s central bank, was arrested on suspicion of taking bribes. He denied any wrongdoing. Rimsevics was soon released on bail but is not allowed to leave Latvia, according to The New York Times.
The cases of ABLV Bank and Rimsevics are unrelated, according to Latvia’s anti-corruption agency.
ABLV and other Latvian banks have focused primarily on foreign, non-resident clients, many of whom operate through opaque shell companies. According to The New York Times, just 6 percent of ABLV’s deposits came from Latvians, while 43 percent came from Russians.
Foreign cash deposits in Latvian banks have plunged from about 12 billion euros in 2015 to less than 6 billion now, with much of the outflow attributed to sanctions-hit Russian business people, Bloomberg says.
Latvian banks operating this business model have been caught transferring billions of dollars of crime-tainted money from countries as Russia and Moldova, the Times says.
In a bid to clean up the banking sector, Latvia is now preparing laws to ban offshore shell companies, Latvian public broadcaster LSM reports.
Latvia has until July to show real progress on cleaning up its banking sector, Prime Minister Maris Kucinskis said Tuesday. In the fall the Council of Europe’s monitoring body for the financial world, Moneyval, will release its report on Latvian banks. A negative assessment could have serious consequences for Latvia’s banking sector, according to LSM.
• ABLV Bank’s shareholders decided in February to start liquidating it to protect the interests of its clients and creditors, according to the Baltic Times.
• Rimsevics claims he was set up by bankers who want to see him behind bars because he endangered their money laundering business. However, Reizniece-Ozola rejected this theory, saying, “He is not a victim. He is a suspect,” the Times reports.
• Latvia calls for a pan-European approach to fighting money laundering, arguing that small European countries lack the resources to effectively do this on their own. Some smaller countries support Latvia’s position, but Germany is of the opinion that law enforcement should be kept at the national level, Bloomberg writes.
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(Compiled by Wasse Jonkhans)
