Latvia banking sector rocked after US probe

riga — Latvia’s third-biggest bank sought emergency financial support on Monday after US officials accused it of helping breach North Korean sanctions, hours after the central bank governor was arrested over separate bribery allegations.

The financial sector in Latvia, a small eurozone state that shares a border with Russia, has come under wider scrutiny for being a conduit for illicit financial activities.

ABLV Bank was ordered by the European Central Bank to stop all payments as its liquidity position had deteriorated sharply since the US Treasury accused it of allowing clients to conduct business with North Korea.

The Treasury’s Financial Crimes Enforcement Network (FCEN) said bank executives and management had bribed Latvian officials to cover up their activities.

“ABLV has institutionalised money laundering as a pillar of the bank’s business practices,” the FCEN said in a statement linking some of the alleged activities to North Korea’s ballistic missiles programme.

In a separate development, Latvia’s anti-corruption authority said it had detained central bank governor Ilmars Rimsevics, an ECB policymaker, over the weekend for demanding a bribe. It said its investigation was not connected to the probe into ABLV. “(Rimsevics’ arrest)... is about demanding a bribe of no less than €100,000,” Jekabs Straume, the head of Latvia’s Corruption Prevention and Combating Bureau told reporters at a news conference.

Rimsevics’ lawyer said the central bank governor rejected the allegations made by the anticorruption authority. — Reuters