Latvia’s business sector has gotten rid of unwanted shell companies
As of 7 July 2018, the ratio of deposits from risky shell companies in Latvia’s banking sector was 0.03%. Most of this amount consists of the remaining balance of funds exiting the country, as reported by Finance and Capital Market Commission.
9 May marked the coming into force of amendments to the Law on the Prevention of Money Laundering and Terrorism Financing, which required participants of Latvia’s finance sector to cease working with businesses that fit two signs of shell formations – perform no actual business activities and have no economic value, or be registered in a country that has no requirement for submission of regular financial accounts.
«Now we can safely say our banks have performed their task to the letter. Only 0.03% or EUR 4.5 million is left – the money blocked on frozen accounts that require additional checks to determine their origin. We can clearly see the work that commenced in 2016 still continues. The proportion of risky clients continues reducing every day, because banks continue terminating ties with shell formations that are not prohibited yet but still carry certain risks for banks. We can conclude that in relation to shell companies, and not just their prohibited types, around EUR 1.5 billion have left Latvia’s banking sector in the first half-year of 2018. Cooperation has been denied to more than 9,000 different kinds of shell companies,» says FCMC chairman Pēters Putniņš.
The ratio of deposits of foreign clients, including European Union deposits, in Latvia’s banks was 21% at the end of July. Geographic structure of deposits shows that domestic deposits dominate Latvia’s banking sector – 79%.