Min­is­ter: it is pos­si­ble for banks to re­duce num­ber of risky clients to5%

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It is not im­pos­si­ble for Lat­vian banks to re­duce the num­ber of risky clients to 5%, says Fi­nance Min­is­ter Dana Reizniece-Ozola.

She says that Fi­nance and Capital Mar­ket Com­mis­sion (FCMC) has met with rep­re­sen­ta­tives of all banks work­ing in Latvia. The reg­u­la­tor gave them two weeks to de­cide what each bank in­tends to do with their busi­ness and how they will per­form re­struc­tur­ing. «FCMC’s pro­posal is pro­hibit­ing so-called shell com­pa­nies to nat­u­rally re­duce the num­ber of risky clients. Banks have to re­duce the num­ber of such clients to 5% in a cou­ple of months,» said the min­is­ter.

Ac­cord­ing to Reizniece-Ozola, such a re­duc­tion will be hard to achieve for banks. Still, it is not im­pos­si­ble. In­for­ma­tion from FCMC shows that among clients of Lat­vian banks are 26,081 shell com­pa­nies. Two of them are lo­cated in Latvia. The pro­por­tion of shell com­pa­nies in all Lat­vian banks is 36.57%. In the for­eign clients seg­ment, shell com­pa­nies’ pro­por­tion is 44.5%.

In to­tal, Lat­vian banks have 2.6 mil­lion clients.

This data in­cludes ABLV Bank, whose share­hold­ers have de­cided to com­mence the bank’s self-liq­ui­da­tion.

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 high­risk op­er­a­tions.

FinCEN also men­tioned that ABLV Bank’s busi­ness prac­tice pro­vided fi­nan­cial ser­vices to clients who wanted to avoid reg­u­la­tor’s at­ten­tion – the bank’s man­age­ment and em­ploy­ees are equally to blame for il­le­gal fi­nan­cial ac­tiv­i­ties of their clients, in­clud­ing money laun­der­ing through shell com­pa­nies.

ABLV Bank de­nies all ac­cu­sa­tions from FinCEN.

Lat­vian Com­mer­cial Banks As­so­ci­a­tion has an­nounced that it fully sup­ports lim­i­ta­tion of shell com­pa­nies’ pres­ence in the bank­ing sec­tor.

Evija Tri­fanova/LETA

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