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Monday 25.09.2017 | Name days: Rauls, Rodrigo

Norvik Bank Chairman: Latvia’s involvement in money-laundering schemes will not go away

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Baltic news, News from Latvia, BNN.LV, BNN-NEWS.COM, BNN-NEWS.RUMore and more information keeps surfacing in the media about the involvement of Latvian banks in massive money-laundering schemes. Oliver Ronald Bramwell, chairman of the board of Norvik Bank, said in an interview to BNN that this situation is largely associated with the fact that the country is small, but its scandals are large. Because of that, those scandals remain in people’s memories a long time.

Money-laundering schemes – why does this problem remain so topical in Latvia?

I think it’s been a historical problem.  If you look back to 2015 it was recognized as big problem by the government, by the regulators and the people. I think everyone saw the scandals, historical scandals. And we can add the Magnitsky case and Moldova case to all that. Everyone was aware of this stuff.

Why has this topic become big again? Because, I believe, it is related to issues present with banks in the UK, where the some of the money laundered in Latvia ended up. The topic of money-laundering schemes has always been a focus of journalist investigations, so it popped up again in May 2017 as a big problem.  But if you look even further, this problem was already talked about a lot back in 2015.

There were very significant changes added to the law in 2016. Banks were fined considerable amounts in 2015 and 2016.

And through last year, not just Norvik, but lot of banks began working with new emblems in e-mails systems. Truth be told, analysis of America’s practice and example provided us with very good solutions to help avoid such schemes. So we trained bank employees, adapted to new changes, and I think 2016 has brought a big change to the way banks have worked in the past.

Why do EU and other organizations continue criticizing Latvia for its negligence when it comes to money laundering?

I think if you look at most of the issues raised in relation to Moldova, Ukraine and Magņinsky case, I think it becomes clear that most of them appeared in 2010, 2011 and 2012.

And if you look at 2014-2017 period, it becomes clear that lot less issues have been raised in this period of time.  What’s on people’s tongues now is that UK is blamed for being part of the Moldova case, laundering that money. What feels like happened today had actually happened five years ago.

I believe one of the banking industry’s problems is that it has always been split in two worlds – between East and West.  I think the pressure that appeared in 2014 and 2015 has changed things for the better. Some of the initial requirements have become stricter.

Fighting against money-laundering schemes, Latvian government wishes to establish even stricter rules. How will that influence your bank?

There is already influence. If we look back to last year, the majority of laws proposed then and approved this year were aimed at combating money-laundering schemes. This means the law will have changed a lot over the course of the year. Changes to the law were the key to receive approval from OECD and become a member.

It was necessary to organize training to help prevent money-laundering schemes on a domestic and international level. Everything was very open. Names of banks that were involved in money-laundering schemes were published for all to see. Many were closed down. And this is important because many banks were taught a lesson. This also applies to governments and regulators. Following the changes to the law in 2016, banks have experienced growth.

There are two ways to punish banks, and, I think, American regulators have been very aggressive in this matter lately. The first way is when regulators uncover violations in a bank, as it happened, say, with American banks or Deutsche Bank.

Unfortunately, it comes as major strike for banks – their reputation suffers because of major scandals and enormous fines, especially if those are large institutions and their value is present on stock markets. It seems to me that the fact that USA, UK, Germany and even Latvia have been involved in money-laundering schemes will not be forgotten even in spite of all the efforts put into sorting this problem by different institutions. It is part of history now, and there is no way for us to change that. People will always remember that Latvia was involved in money-laundering schemes.

UK and USA – their banks have been involved in money-laundering schemes for 20 years and more. Banks have even been involved in laundering Mexican drug money. But people forget that quickly because those are major corporations with marketing and news volumes far exceeding those in Latvia.

And this is where the issue of reputation of Latvian banks surfaces. It will be much harder for Latvian residents to forget their country’s involvement in money-laundering schemes because those scandals were large but marketing – small. Even if a bank changes its direction, this does not change the fact that the scandal remains in people’s memories for a very long time.

This autumn European Council’s Anti-Money Laundering Measures and the Financing of Terrorism Service Moneyval will arrive in Latvia. How do you think they will assess the situation of Latvian banks in relation to the money-laundering problem?

I think they will be more positive than they would have been two and a half or three years ago. The reason is that banks have performed many changes these past several years to help prevent and avoid fraudulent schemes. I think they will be more satisfied to see Latvian regulators going in the right direction and making the current system stricter than it was before. Of course, light will be shed on other problems, such as grey economy.

I would personally describe the country’s current situation more positively. As I’ve said – 2016 changed the way many banks function. Even if the government decides banks need even stricter supervision, I think it will be for the best. At the very least, Norvik Bank is not worried about that.


Leave a reply

  1. Walter Burke says:

    Nonsense… This ML scare is only a pretext to control each and every move of the law abiding citizens. Just like Global Warming, it’s fraud.

    Yes, there are some bad actors. Deutsche Bank was happily laundering money for their clients. Many banks did. So what? Are we going to say that all German banks are now corrupt or criminal.

    Latvia should finally stop taking orders from Berlin/Brussels and develop some spine, do something that’s good for its citizens. Just like our President just did by pulling out of the Paris Agreement.

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