Latvia’s busi­ness sec­tor has got­ten rid of un­wanted shell com­pa­nies

Baltic News Network - - Front Page -

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%.

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