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Sunday 25.08.2019 | Name days: Patrīcija, Ludis, Ludvigs, Ivonna
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Monitoring of problematic banks: Europe has zero tolerance for money laundering

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Baltic news, News from Latvia, BNN.LV, BNN-NEWS.COM, BNN-NEWS.RUEurope has a zero tolerance level towards money laundering. Because of that, banks have to be very careful with their reputation, says chairperson of European Single Resolution Board, which is responsible for supervising problematic banks, Elke König.

«We have to keep in mind that not everything that is possible should be done. My only piece of advice – be careful with your reputation! It is easy to destroy with one reckless move,» says König, whose institution regularly supervises EU banks that have ended up in financial difficulties.

At the same time, she stresses that banking businesses should not end the moment they come under suspicion because Europe needs an active banking market.

König also says the decision to not involve the institution in the liquidation process of ABLV Bank is related to the fact that this bank is not critical for Latvia’s economy and it does not perform critically important functions.

«I’m saying this to make it clear – supervision is applied in exceptional cases. National insolvency procedure is the norm. We are here to protect if something bad happens to important banks,» stresses König.

She also admits that US Department of Treasury FinCEN report regarding ABLV Bank’s involvement in money laundering schemes was a surprise for European banking market supervisors.

«We were all surprised by FinCEN’s report. It told us two things. First – it is unpleasant to receive such news from USA and not know about them beforehand. But what happened – happened. Second – we can drop discussions about charges being real, because no institution can survive such accusations. We have to do our homework to make sure all member states and all banks have a clear understanding that profits gained from shady business practices bring more bad than good. Money laundering is a very serious matter and can cause serious damage for a long period of time,» says König.

She also says that ABLV Bank’s case is also interesting from the point of view that it is being liquidated not because of liquidity problems but because the accusations leave no possibility for the bank’s continued function. «If no one wants to work with you, it’s over,» says König.

«We decided after looking at the bank, its functions and place in Latvia’s economy that it’s not the kind of bank that should be applied with the usual regulations. This is why ABLV Bank is in Latvia’s hands. There is also the deposit guarantee system, which guarantees repayment of deposits up to EUR 100,000. The main challenge for our colleagues and the reputation of Latvia’s banking system altogether is making sure we know who receives the money. Otherwise it is possible even the public sector is involved in money laundering. This is also the reason why the process is so long. We do follow the process on our own to make sure the bank leaves the market,» concludes König.


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