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Ceturtdiena 20.09.2018 | Name days: Marianna, Ginters, Guntra
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Percentage of shell companies’ deposits in Latvia drops to 0.5%

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Baltic news, News from Latvia, BNN.LV, BNN-NEWS.COM, BNN-NEWS.RUSince March/April, the number of shell companies among bank clients in Latvia has declined rapidly. Currently the percentage of shell companies’ deposits in Latvian banks does not exceed 0.5%, as reported by Finance and Capital Market Commission.

FCMC Chairman Pēters Putniņš: «Right now we can say with confidence that Latvian banks have taken this task with a great deal of responsibility. The process is going dynamically and will be completed within the stated term. The situation continues improving with each passing day – risky money along with shell companies are leaving Latvia’s financial sector. It should be added that banks had commenced this self-cleaning process of their own accord some time ago. The percentage of shell formations with which cooperation in not prohibited has declined as well».

To ensure management of necessary changes in Latvia’s financial sector, amendments to Law on the Prevention of Money Laundering and Terrorism Financing came to force on 9 May. Changes order market participants to cease cooperation with shell companies within 60 days. This means the deadline for Latvian banks is 7 July, FCMC stresses.

The majority of Latvian banks have already completely ceased cooperation with shell companies. The process that commences two years ago with high-risk clients and their deposits (not just the ones owned by shell companies) still continues. Latvian banks ensure changes to their clients structure – each bank performs in-depth evaluation of their clients’ risk profiles. If necessary, banks terminate their cooperation with high-risk clients. As of the end of June, the percentage of foreign clients’ deposits in Latvian banks is 28% (22% without ABLV Bank’s share), which is an unusual situation for Latvia’s financial sector, FCMC notes.

Putniņš: «This was a considerable reduction of deposits from other countries our banking sector was able to complete in a professional and controlled manner without any shocks, which is commendable. In addition, a sufficiently high profitability level is maintained, which is proof of the good work FCMC has performed in the past several years, requesting banks to maintain high activity indexes for the foreign bank segment. Requirements have since paid off. The desired 5% level for risky CIS clients’ deposits will have been reached in the next couple of months. Let’s also look at the true beneficiaries’ base for deposits, which is currently classified as ‘other countries’. If we look at this segment, we will see that additional measures and discussions with banks are needed, because we do not want CIS clients to hide behind other countries’ jurisdiction.»


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