Latvia's Rietumu bank charged in French money laundering case

By bne IntelliNews April 18, 2016

Rietumu, one of Latvia's largest banks, is facing charges from French prosecutors over an alleged €100mn scam by a French company, Latvian media reported on April 18.

Latvia’s fourth largest bank by assets is accused of having failed to pay a €20mn security bond demanded by the French authorities during investigation of a €100mn tax evasion scam by a company named French Offshore. The French authorities also suspect that the bank’s vice-president Aleksandrs Pankovs helped with the scam.

The case will do little for Latvia's poor reputation as a haven for money laundering. With around half of deposits in the system from outside the country, and mostly from CIS, Latvian lenders have regularly been named as playing a role in high profile corruption in the region.

Riga says it has stepped up efforts recently to bring shady deals in the country’s banking system under control. Financial market watchdog FKTK has set up a special unit to fight money laundering since a new chief was appointed in February. The regulator also shuttered Trasta Komercbanka over money laundering charges in March.

"The first [charge] is that the bank didn't pay the bail of €20mn," a French deputy prosecutor Ulrika Delaunay-Weiss for the national crime unit told Latvian public television LTV on April 17. "That's the first offence. And the second is [that the]vice-president of the bank ... helped in the money laundering."

FKTK is yet to issue any statement regarding Rietumu. For its part, the bank said on April 15 it was willing to cooperate with French investigators but denied the €20mn bail was applicable under Latvian law.

It is not the first time Rietumu’s name surfaced in connection to violating the law. In 2014 the bank was warned by FKTK over its risk assessment practices and last year it was fined €35,000 for violating anti-money laundering regulations.

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