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Opinion: decline of high-risk clients in Latvia’s banking sector will speed up soon

Guntis Beļavskis/linkedin.com.
Considering recent developments in Latvia’s financial sector, the decline of high-risk clients in the country’s banking sector will become more rapid soon, said chairman of Citadele Bank’s board and Association of Latvian Commercial Banks Guntis Beļavskis.

«The proportion of high-risk clients in Latvia’s banking sector had declined considerably even before this scandal. It came as a result of our cooperation with the regulator. I think these events will serve as catalysts for the process and force banks to sort their operations more actively. We expect the proportion of high-risk clients in Latvia to continue reducing in the future,» said Beļavskis.

At the same time, he mentioned that it is vital to separate non-residents’ business from high-risk clients’ businesses. «We always put everything in the same basket. However, there are some [non-resident] businesses that could remain – companies and private persons with high income. That is the sweet piece all the world’s banks want to have. Proxys and dead-end businesses are the ones that should go. The question is the speed of this process,» said Beļavskis.

As it is known, European Central Bank made the decision to commence the liquidation process, which is to be realized in accordance with Latvia’s laws.

Following ECB’s instructions, FCMC applied payment restrictions on ABLV Bank on 19 February. Because ECB gave no instructions to lift restrictions, FCMC decided on the night to 24 February that unavailability of deposits took place in ABLV Bank.

ABLV Bank admits the decision made by FCMC means liquidation process will soon commence. ABLV Bank links the commission’s decision with political reasons.

Problems for ABLV Bank started when Financial Crimes Enforcement Network (FinCEN) of US Department of Treasury announced in the middle of February that it plans to establish sanctions against ABLV Bank for money laundering activities that had assisted with North Korea’s nuclear arms programme, as well as illegal activities in Azerbaijan, Russia and Ukraine.

The report published by FinCEN details that until 2017 the management of ABLV Bank had been using bribery to influence officials in Latvia in an attempt to avoid legal action and threats to its high-risk operations.


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