Latvia’s new anti-money laundering chief pledges to step up fight against financial crime

Latvia’s new anti-money laundering chief pledges to step up fight against financial crime
Latvia has pledged to beef up its fight against financial crime since the country’s third-largest bank, ABLV, was accused in a US report of being a major money-laundering hub.
By bne IntelliNews May 18, 2018

The incoming head of Latvia's anti-money laundering agency said on May 17 she will step up efforts to track and combat financial crime and called on banks to improve cooperation.

Ilze Znotina, a lawyer by profession, will take up the helm of the Control Department, as the Baltic state’s anti-money laundering agency is known, on June 1. 

Latvia has pledged to beef up its fighting against financial crime since the country’s third-largest bank, ABLV, was forced to close earlier this year following a US report it was a major money-laundering hub that handled funds linked to North Korea.

The ABLV case prompted debate in the European Union on control of banks in the Eurozone, which Latvia joined in 2014. It has also put the European Central Bank in the spotlight for allegedly overlooking the trouble brewing at ABLV. The ECB says it does not have such control powers.

Most of the control work will be on Latvia, then. Before accepting the post as Control Department head, Znotina demanded greater independence for the institution.

She further says Latvian banks should improve the quality of reports they submit to the Control Department.

“What we see now is a very large amount of reports which tend to be of very low quality. Either the banks have not understood what they have to report or they are inclined to observe the letter but not the spirit of the law,” Znotina said, according to Reuters.

The Riga government has recently banned the use of shell companies in Latvia in an attempt to further restrict suspicious money flows through the Latvian banking system. The money would typically be deposited only briefly in a Latvian bank before being sent to accounts elsewhere.

As recently as 2016, the share of non-resident deposits in Latvian banks’ total deposits was around 50%. That is now at about 40%, with the government planning to gradually lower it to 20%.

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