Lat­vian fi­nan­cial watch­dog slaps fines on three banks

The Baltic Times - - BALTICS NEWS - LETA/TBT Staff

The Fi­nance and Cap­i­tal Mar­ket Com­mis­sion has slapped fines to­tal­ing EUR 641,514 on three Lat­vian banks - Re­gion­ala In­ves­ti­ciju Banka, Baltikums Bank and Pri­vat­bank - for non-com­pli­ance with the anti-money laun­der­ing and counter ter­ror­ist fi­nanc­ing (AML/CTF) reg­u­la­tions.

The Lat­vian fi­nan­cial watch­dog said that in col­lab­o­ra­tion with the Fed­eral Bu­reau of In­ves­ti­ga­tion's (FBI) Coun­ter­pro­lif­er­a­tion Cen­ter it had iden­ti­fied three Lat­vian banks which had not com­plied with the pro­vi­sions of the AML/CTF reg­u­la­tory frame­work.

"Vi­o­la­tions re­late to cus­tomer due dili­gence, in­clud­ing also trans­ac­tion mon­i­tor­ing and ob­tain­ing in­suf­fi­cient in­for­ma­tion about the ben­e­fi­cia­ries in­di­cated by the cus­tomers and trans­ac­tions per­formed. In the pe­riod from 2009 to 2015, on sev­eral oc­ca­sions sev­eral cus­tomers of those banks, mak­ing use of off-shore com­pa­nies and com­pli­cated chain trans­ac­tions, trans­ferred the funds from their bank ac­counts, to cir­cum­vent in­ter­na­tional sanc­tions re­quire­ments im­posed against North Korea. Cross-bor­der co­op­er­a­tion in de­tect­ing such weak­nesses in­di­cates that, be­ing aware of the risks as­so­ci­ated with the de­vel­op­ment of Latvia as a grow­ing re­gional fi­nan­cial cen­ter, the na­tional su­per­vi­sory au­thor­i­ties have en­sured man­ag­ing and mit­i­gat­ing above risks both in the AML/ CTF and in­ter­na­tional sanc­tions ar­eas," the watch­dog said.

"These penal­ties are pre­ven­tive mea­sures taken by the reg­u­la­tor, al­low­ing the Lat­vian com­mer­cial banks to se­ri­ously re­assess po­ten­tial risks as­so­ci­ated with vi­o­lat­ing or cir­cum­vent­ing in­ter­na­tional sanc­tions re­quire­ments, to im­prove their AML/ CTF in­ter­nal con­trol sys­tems and avoid any pos­si­bil­ity of re­cur­ring of such sit­u­a­tions in the fu­ture. Un­der the in­creas­ing geopo­lit­i­cal ten­sions and con­stantly evolv­ing of crim­i­nal schemes, in­ter­nal con­trol sys­tems of the banks such as 'know your cus­tomer', aware­ness of eco­nomic ac­tiv­i­ties and as­so­ci­ated risks, must be suf­fi­cient to pre­vent the banks from be­ing used for sus­pi­cious deals," said Peters Put­nins, the head of the Fi­nance and Cap­i­tal Mar­ket Com­mis­sion.

"The com­mis­sion would also like to thank U.S. Depart­ment of Trea­sury’s Fi­nan­cial Crimes En­force­ment (FINCEN) for pro­vid­ing as­sis­tance with the ac­tions taken to­day," he added.

The three banks are co­op­er­at­ing with the watch­dog and have ad­mit­ted the iden­ti­fied weak­nesses. The Fi­nance and Cap­i­tal Mar­ket Com­mis­sion has en­tered into ad­min­is­tra­tive agree­ments with the three banks that most ef­fec­tively en­able the banks to en­sure tak­ing im­me­di­ate mea­sures, to timely iden­tify trans­ac­tions that led to the cir­cum­vent­ing of in­ter­na­tional sanc­tions and to act in line with the pro­ce­dures de­fined in laws and reg­u­la­tions. Con­di­tions of the agree­ments stip­u­late that the banks pay the mone­tary fine in the to­tal amount of EUR 641,514 into the na­tional bud­get within one month.

Re­gion­ala In­ves­ti­ciju Banka will have to pay a fine of EUR 570,364 and is­sue rep­ri­mands to its of­fi­cials re­spon­si­ble for com­pli­ance with the AML/CTF reg­u­la­tions. The bank has also been or­dered to as­sess its AML/CTF in­ter­nal con­trol sys­tem and take the nec­es­sary mea­sures to im­prove its func­tion­ing and ef­fec­tive­ness. The bank has un­der­taken to in­vest around EUR 2.8 mil­lion in the im­prove­ment of its in­ter­nal con­trol sys­tem in 2017 and 2018.

Baltikums Bank and Pri­vat­bank each have been fined EUR 35,575 and told to draw up ac­tion plans that would be en­able them to iden­tify trans­ac­tions that are aimed at cir­cum­vent­ing or breach­ing of the in­ter­na­tional sanc­tions in the fu­ture.

In re­cent years the Fi­nance and Cap­i­tal Mar­ket Com­mis­sion has al­ready pe­nal­ized sev­eral Lat­vian banks for non-com­pli­ance with the AML/CTF reg­u­la­tions.

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