Money-Laundering Trouble Spot Says It’s Turned Over a New Leaf
27 Nov 2019

After a string of bank closures and a high-level bribery scandal put it at the heart of Europe’s dirty-money storm last year, Latvia declared efforts to clean up its act a success.

The Baltic nation of 1.9 million people, once seen by clients in the former Soviet Union as a financial gateway to the eurozone, is fighting to stay off a gray list of jurisdictions deemed incapable of tackling money laundering.

Avoiding the list — drawn up by the Paris-based Financial Action Task Force and currently including Syria, Pakistan and Yemen — is vital to maintaining the faith of foreign investors. Latvia’s banking industry is dominated by Nordic heavyweights Swedbank AB, SEB AB and Luminor Bank AS.

With FATF set to decide in February, the key question is whether Latvia’s steps to impose harsher punishments, freeze more suspicious assets and bar risky shell companies are enough. Its chief regulator thinks so.

“If we just look only objectively at what Latvia’s done, we have the full conviction that we shouldn’t be there,” Santa Purgaile, chairwoman of Latvia’s Financial and Capital Market Commission, said in an interview. “At the same time, the risk hasn’t been totally taken away.”

Purgaile was appointed last month after the U.S. took issue with her predecessor, while a new director of the anti-money laundering watchdog was also installed last year. Central bank Governor Ilmars Rimsevics, the subject of the bribery scandal, is on trial after refusing to resign and denying wrongdoing. He’ll leave next month when his term ends.

The revamped institutions have been busy. The European Central Bank declared AS PNB Banka failing or likely to fail, causing its closure in September. Five other lenders are considered high risk because of their products or clients and must transform their operations or merge, according to Purgaile.

By Aaron Eglitis, Bloomberg, 27 November 2019

Read more at Bloomberg

RiskScreen: Eliminating Financial Crime with Smart Technology

Advance your CPD minutes for this content, by signing up and using the CPD Wallet