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FCMC applies fines to three Latvian banks

Finance Capital and Market Commission in cooperation with United States Federal Bureau of Investigation found out that three Latvian banks – Baltikums Bank, Privatbank and Reģionālā investīciju banka – have not complied with requirements for combating money laundering and terrorism funding.

FCMC reports that violations are related to client evaluation, which includes transaction monitoring and insufficient information acquisition about clients’ true beneficiaries and performed transactions. Using different complex schemes and companies registered in offshore areas, certain clients of the aforementioned banks performed multiple money transfers from their accounts throughout 2009 to 2015 to circumvent international sanctions established against North Korea. Inter-state cooperation in uncovering such crime schemes shows that, knowing the risks associated with Latvia’s development as a regional financial centre, the country’s authorities can still provide proper risk management and reduction within NILLTFN and international sanctions.

«FCMC states the fines serve as preventive measures to encourage Latvian commercial banks to pay more attention to possible risks associated with violation or circumvention of international sanctions and avoid repetition of such situations. In a time when geopolitical risks are on the rise and different crime schemes keep becoming more and more complex, banks’ internal control systems have to be on a level that would help prevent the bank being used in suspicious transactions. Cooperation between FCMC and supervisory institutions of other countries offers confidence that Latvia’s banking sector will continue developing as a reliable partner,» says FCMC Chairman Peteris Putnins.

Putnins expressed gratitude to the United States Financial Crimes Enforcement Network for the assistance that was provided to reveal the aforementioned crime.

Also FCMC reports that all three banks cooperated with FCMC and admitted the problems uncovered by authorities. FCMC has signed administrative agreements with those banks. Those agreements will help secure more efficient compliance with preventive measures. Agreements also state banks have to fines worth a total amount of EUR 641,514. Banks are to transfer this amount to the state budget within one month’s time. FCMC will monitor banks’ compliance with commitments as detailed in the agreement.


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