Latvian central bank governor detained as new crisis sweeps Riga’s financial sector

Latvian central bank governor detained as new crisis sweeps Riga’s financial sector
Ilmars Rimsevics has been Latvian central bank governor since 2001.
By bne IntelliNews February 19, 2018

The governor of Latvijas Banka, the central bank of Latvia, was detained by the Baltic state’s anti corruption police on February 18.

The detention sends a new shock wave across Latvia’s financial system after the US proposed last week to ban one of the largest Latvian banks, ABLV Bank, from the US financial system over allegations of money laundering and indirect support of the North Korea missile programme.

The Latvian anti-corruption force KNAB did not offer details of the detention of the governor Ilmars Rimsevic. The Latvian media hinted that the detention was not linked to the ABLV case. They also reported that Rimsevic’s house as well as his office were searched.

However, the incident spurred the government to plan a crisis meeting for February 19. The presidential security council also intends to meet.

"The performance of tasks entrusted to Latvijas Banka is not affected and the national central bank will resume its activities in the usual routine. This also means that all usual services will be provided to businesses and the general public and also to the Latvian economy in general," the central bank said in a statement.

However, it was clear that the incident will cause questions to re-emerge on the credibility of the Latvian financial system. Latvia has long battled the reputation of being a haven for money launderers and financial crime originating from Russia and the former Soviet republics.

The Baltic state has, however, undertaken a number of measures over the past couple of years in a bid to improve control over money flows through its banking system, especially through the boutique banks specialising in non-resident services. 

“We are facing a crisis of the international reputation of the Latvian financial system,”  Dana Reizniece-Ozola, Latvia’s finance minister, told reporters, according to state broadcaster LSM.