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Banking Scandals Rock Latvia

Authorities say arrest of central bank chief is unrelated to suspicions centered on the country’s third biggest lender.

20 February 2018

International attention is again on Latvia’s banking sector. The country’s third largest lender, ABLV, is seeking emergency financial support after the United States accused it of money laundering and enabling transactions to North Korea, while the head of the country’s central bank is being investigated for bribery, Reuters reports.


Ilmars Rimsevics, the head of the central bank, was released on bail Monday, two days after police arrested him as part of an investigation into whether he solicited a bribe of at least  100,000 euros, according to the BBC.


Rimsevics, who has been a member of the European Central Bank’s policymaking council since Latvia joined the eurozone in 2014, denies any wrongdoing.


Ilmars Rimsevics' arrest after an anti-corruption probe is the latest development in a fresh wave of scandals to hit Latvia's banking sector. Screenshot: Ilmars Rimsevics Euronews / Youtube


According to the BBC, Latvia’s anti-corruption agency says the criminal investigation of Rimsevics is not related to the ongoing crisis at ABLV, which sought emergency financial support on Monday after the European Central Bank blocked its payments following accusations of money laundering.


Last week, the U.S. Treasury accused ABLV of making money laundering a “pillar of the bank’s business practices,” of enabling transactions linked to North Korea’s nuclear weapons program – in violation of UN sanctions – and facilitating corruption in Russia, Azerbaijan, and Ukraine.


“We don’t participate in any illegal activities,” ABLV Bank Deputy CEO Vadims Reinfelds told a news conference yesterday, Reuters reports. “There are no violations of sanctions.”


Latvian regulators started cracking down on illicit banking activity after a string of money-laundering allegations related to Russia, Moldova and other ex-communist nations, writes Bloomberg.


Last year, two Latvian banks were fined more than 2.8 million euros ($3.26 million) for allowing clients to violate sanctions on North Korea imposed by the European Union and the United Nations, according to Reuters. Three others received smaller fines.



  • Following the dissolution of the USSR, Latvia quickly styled itself as a bridge between East and West – but the country’s banking sector has faced numerous allegations of suspicious activity related to alleged Russian influence and a reputation prior to the 2008 financial crisis as a lightly-regulated safe banking haven, TOL columnist Martin Ehl wrote in 2012.


  • According to the Financial Times, Latvian banks acted as a conduit for part of the proceeds of the $230 million fraud that was uncovered by Russian tax lawyer Sergei Magnitsky, who later died in a Russian jail in suspicious circumstances.


  • Bloomberg writes that Latvian bank Trasta Komercbanka was shut down in 2016 after being implicated in a money laundering scheme involving Russian shell companies, a Moldovan bank, and Moldovan courts.


Compiled by Kate Syme-Lamont

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