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ABLV Bank urges FinCEN to withdraw «exaggerated accusations»

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Baltic news, News from Latvia, BNN.LV, BNN-NEWS.COM, BNN-NEWS.RULawyers of ABLV Bank, which is currently in the process of self-liquidating, urge US Department of Treasury’s Financial Crimes Enforcement Network to withdraw its published proposal, which details how ABLV Bank’s management had allegedly used bribes to influence Latvian officials and breach sanctions against North Korea.

The bank’s lawyers say FinCEN has presented ABLV Bank with ‘exaggerated accusations’ with either no tangible proof or no proof at all. FinCEN also seems to have forgotten about ABLV Bank’s accomplishments in the field of financial crimes prevention. Considering these arguments and the fact that the bank has commenced the process of self-liquidation, FinCEN’s 13 February proposal about the bank should be called off.

ABLV Bank’s attracted lawyers from international company’s WilmerHale US office have prepared a 34-page response with more than 170 references to US legislative acts, court rulings, US Congress materials, the bank’s internal documents, policies, regulations, procedures and strategies, as well as Finance and Capital Market Commission’s regulations and other documents. The response letter was signed by sworn attorney David Cohen.

In this letter Cohen wrote that FinCEN has not only failed to provide sufficient proof for its accusations, but has also decided to not use full information regarding ABLV Bank’s money laundering prevention and sanction compliance acts. «The institution chooses to ignore the major improvements the bank has introduced over the course of the past several years, including the major reduction of the proportion of non-residents in the client portfolio. FinCEN also chooses to ignore the positive changes that have been accomplished in the field of Latvia’s money laundering and sanction compliance,» as noted in the letter.

The letter does not deny that ABLV Bank’s business model has some history with high-risk clients from high-risk jurisdictions. Nevertheless, it is noted that at the moment of publication of FinCEN’s report the bank had already finished a great deal of work on reducing risks. This includes dropping high-risk clients and adopting lower-risk services, as well as improving internal control system.

Lawyers say that the aforementioned changes, which are especially significant when looking at the bank’s possible risk of allowing financial crimes, as detailed in the US Patriot Act’s Section 311, are not even mentioned in FinCEN’s report.

«Whether or not this information is absent from the report because FinCEN had published in without informing ABLV Bank or because the institution relied on information from untrustworthy sources, FinCEN has failed to take into account the changes ABLV Bank has performed for its financial crimes prevention system. Thereby FinCEN fails to justify the exaggerated claim about ABLV Bank ‘institutionalizing’ laundering of illegally obtained funds as one of its main operational pillars,» lawyers write.

The bank’s representatives also mention that they believe FinCEN has breached principles of the US Administrative Procedure Act. Lawyers also mention that FinCEN has failed to secure sufficient and evidence-based information, which prevents ABLV Bank from answering to accusations.

The bank’s representatives also mention multiple contradictions in FinCEN’s report. For example, the institution’s claims contradict the fact that the bank had plans to enter the American financial market by opening an office in New Jersey. ABLV Bank was well aware that by opening an office of representation in January 2017 would subject the bank to US regulatory supervision. In its application for opening an office in New Jersey, the bank mentioned that «foundation of an office of representation is intended to contribute to information exchange to ensure the best possible practice for money laundering prevention».

The bank performed the necessary activities to prepare applications to be issued with permits from US Central Bank and the state of New Jersey. Applications for the opening of an office of representation included a wide range of definitions about activities ABLV Bank had already performed and had planned to perform in order to secure effective money laundering prevention measures.

«The application for the opening of an office and readiness to comply with US money laundering prevention regulations reflect the bank’s choice to submit to US legislation and sanction compliance norms. […] This choice is odd to say the least if the bank’s management, shareholders and employees had supposedly institutionalized money laundering as one of the bank’s main operational pillars, as FinCEN suggests in its report,» Cohen mentions the contradictions in the institution’s report.

In the bank’s response letter, lawyers also mention FinCEN’s claims regarding the 2017 administrative case regarding violations of sanctions imposed against North Korea, as well as Moldova’s bank, Ukrainian businessman Sergei Kurchenko and other matters detailed in the report. In certain cases, lawyers say, FinCEN failed to clearly define the cases in regards to which the institution has made assumptions. On top of that, FinCEN has failed to provide any answers about several accusations, because, according to lawyers, no proof was provided and it remains unclear which cases and which period of time the accusations apply to.

One especially negative surprise for ABLV Bank was FinCEN’s «completely unjustified claim» about ABLV Bank’s management allegedly using bribes to influence Latvian officials in exchange for no measures against its high-risk activities. The letter emphasizes that ABLV Bank categorically denies any of its employees offering bribers to Latvian officials, adding that accusations are completely unjustified. Because the bribery episode is especially worrying for the bank’s management, a request has been submitted to State Police and Corruption Prevention and Combating Bureau to perform a full investigation of FinCEN’s claims and secure full cooperation for the investigation of this case.

Lawyers add that FinCEN’s published proposal caused the process the led to European Central Bank’s decision to declare ABLV Bank a failing or likely to fail financial institution. This, in turn, has resulted in the irreversible decision to commence self-liquidation.

«Currently ABLV Bank only performs activities to finish the self-liquidation process. There is no way the bank can create risks for any US financial institution. This is why FinCEN should call off its report and legislative project, as well as cease the legislative draft’s progress,» the lawyer writes that progression of the proposal has no practical or legal justification.


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