bnn.lv Latviski   bnn-news.com English   bnn-news.ru По-русски
Tuesday 19.11.2019 | Name days: Liza, Līze, Elizabete, Betija
LatviaLatvia

Programme: Latvian banks desperate to prove they can survive without risky clients

FaceBook
Twitter
Draugiem
print
(No Ratings Yet)

Baltic news, News from Latvia, BNN.LV, BNN-NEWS.COM, BNN-NEWS.RU«The amount of money high risk clients annually sent through Latvia is likely measured in hundreds of billions of euros. Even before the ABLV Bank collapse Latvian banks had ended up in international isolation – no one used them for dollar transactions,» Nekā personīga explains Latvia’s financial situation.

«Now banks have created new business plans in an attempt to prove they can survive and earn money without risky clients,» the programme explains.

Finance and Capital Market Commission’s chairman Pēters Putniņš affirms: «The transaction business as a business model no longer exists in Latvia – that’s a fact. This means banks have to search for new opportunities. The major changes that have occurred apply for volumes and methods our banks had employed in the past. I specifically mentioned transaction business in USD as an especially risky direction because we know USD is a preferred currency in countries located to the east of Latvia.»

USD transactions have dropped from more than 300 billion a year to a couple of billions in the past several years. Deutsche Bank was the last bank that provided Latvian banks with USD transactions. This bank left the local market in 2017. Scandinavian banks continued transactions with USD through parent companies. Citadele bank managed to reach an agreement with Citibank. Banks servicing non-residents were forced to search for partners in eastern countries, the programme explains.

NP also reminds that the global fight against money laundering increased after Russia annexed the Crimean Peninsula: «Sanctions were imposed against Russian companies, politicians and oligarchs close to the ruling power in the country. This measure was actively supported by Latvia. However, unlike North Korea or Iran, Russian business is very closely integrated in the west, making it impossible to isolate – representatives of US Department of Treasury said as much at the US Senate this year. USA aims to close off roads used to hide and move Russian money by closely monitoring the UK, Cyprus and Latvia.»

«Latvia’s finance sector, already mired in scandal, will face serious challenges this year. It is necessary to fulfill Moneyval recommendations to prevent many problems in the industry. It is necessary to ensure ABLV Bank’s self-liquidation helps reveal all the suspicious money. Latvia needs to protect itself in the international court of arbitration from serious accusations in the finance sector. Banks oriented towards the east have to prove that they are able to work and earn money without high-risk clients,» NP explains Latvia’s homework.

«Latvian banks turn over around one billion US dollars per quarter, annual amount reaches four billion. We had a period when USD turnover in Latvia was in tens of billions, even hundred billions in booming seasons,» says Putniņš.

Finance Minister Dana Reizniece-Ozola explains further: «Some years ago there was an estimate that approximately 1% of all global transactions in USD went through Latvia, which is a rather small country. It is a very large share.»

«Last year’s shocks in the industry caused players blame each other. However, it is unlikely banks servicing non-residents will be able to continue turning over hundreds of billions,» the programme notes.

Putniņš comments the situation the following way: «We should avoid automatically mixing turnover with suspicious money. We need control and monitoring mechanisms that would help resolve the problem, but ones that are not as extensive. How would you propose checking those billions – look through every single transaction? This is simply not realistic.»

ABLV shareholders blame Bank of Latvia governor Ilmārs Rimšēvičs for all their troubles. US Department for Treasury’s FinCEN report on serious violations in ABLV Bank was published only a couple of days after Rimšēvičs was detained by Corruption Prevention and Combating Bureau. Now he has been presented with charges – bribery. Now businessman Māris Martinsons has become a suspect, as well, NP reminds.

«ABLV Bank’s management claimed FinCEN report was based on misleading facts mentioned by the Bank of Latvia governor, because the bank had rejected his proposed lobbyists. KNAB has determined as much,» NP adds.

The programme also stresses that Moneyval’s report published in August 2018 mentions many recommendations on sorting the industry, as well as warnings. If the situation does not improve rapidly, Latvia will be added to the global money laundering and terrorism financing risks grey list. Currently the only European country on this list is Serbia.

Reizniece-Ozola says: «We have made rapid steps towards fixing the problems that have existed in the finance industry for twenty years.»

She continues: «Currently in the new Saeima we see that many deputies still have a sentiment towards servicing foreign clients in spite of money origin risks and even support this method. I would say this is a very slippery road.»

NP notes that several of the changes have come to force: the Control Service is an institution controlled by the government – it is supervised by the interior affairs minister. The service has new management, more resources and bigger challenges, such as in finance supervision. It is also necessary to accomplish better investigation and more convicting rulings, as well as train state officials and improve IT systems. It is also necessary to liquidate ABLV Bank and check the origin of the money stored in the bank.


Leave a reply

Latvian government decides to divert hospitals’ profits for infrastructure development

The government has decided to allow capital associations in which Healthcare Ministry is a shareholder to divert clean profits and dividends for 2018 towards improvement of infrastructure, as confirmed by Healthcare Ministry.

57 children receive intestinal infections in one of Smiltene’s secondary schools

According to deputy principal of a secondary school in Smiltene Inese Raiskuma, 57 children have received virus-induced intestinal infections.

Anti-money laundering: SEB says most suspicious clients from Estonia operations

Swedish investigative journalists, who are looking into suspicions of money laundering, have submitted to the pan-Baltic banking group SEB a list with 194 people, the company has announced.

Demanding Saeima’s and Viņķele’s dismissal, doctors announce another strike

Latvian Trade Union of Health and Social Care Workers has plans to organize a new protest act outside the Saeima on 28 November. The protest will demand the parliament’s dismissal, as well as voice distrust towards Healthcare Minister Ilze Viņķele.

«Was never fit for vice-mayor’s post.» Baraņņiks loses post in Riga City Council

With votes from opposition deputies, Riga City Council’s Vice-Chairman Vadims Baraņņiks was removed from his post on Tuesday, 19 November. He was also removed from his post in Riga Freeport board.

Kundziņsala overpass construction splits Riga Freeport authority over cartel case

Last week, Riga Freeport authority decided to sign a contract worth nearly EUR 40 million on the construction of Kundziņsala transport overpass with companies that have ties with people involved in the so-called construction cartel case, as reported by LTV programme De Facto.

Tusk kept reminding EU of Russia being «strategic problem», not partner

European Council’s outgoing chairman Donald Tusk has in a speech devoted to his five years in office revealed that he had to remind member states that Russia was Europe’s «strategic problem», instead of being its strategic partner.

In Hong Kong protests, 400 people arrested

Hong Kong’s pro-democracy protests a standoff between activists and riot police continues at a university, where around 600 protesters have surrendered and 400 have been arrested, local authorities say.

Riga City Council opposition will likely refrain from Baraņņiks’ dismissal vote

On Tuesday, 19 November, the opposition of Riga City Council will likely abstain or not participate at all in the vote regarding the dismissal of the city council’s vice-chairman Vadims Baraņņiks, as told by For Latvia’s Development faction chairman Viesturs Zeps.

Moscow returns seized Ukrainian ships

Russian coast guard has returned three Ukrainian navy ships that Moscow seized in an incident in the Kerch Strait in 2018.

Warm weather in Latvia to become considerably colder this week

In the first half of the week, the sky will be cloudy in Latvia. Some precipitation zones are possible above certain districts. However, generally no considerable precipitation is expected in the country, as reported by Latvia’s State Environment, Geology and Meteorology Centre.

Happy birthday, Latvia!

«Latvia is a wonderful land, but the beautiful must be helped to appear,» as one of Latvia’s greatest poets Imants Ziedonis once said. And with these words we can celebrate Latvia’s 101st birthday – in happiness for Latvia’s beauty and helping others see it. With flag by the home, flowers at the Freedom Monument, a good word about the home entrusted to use, and a smile on our face – all of this helps reflect Latvia’s beauty.

Week in Lithuania: President pardoned two Russian spies, climate action plan approved and bomb defused

Last week, in Lithuania, the key news stories were a presidential pardon to Russian spies, the approval of a climate change action plan getting approved and the start of a mission of the International Monetary Fund.

BNN summary of the week: budget 2020; excellent Latvian filmmakers; doctors’ worries

The patriotic week passed in Latvia not only with the celebration of the 100th anniversary of Latvian army’s victory over Bermondt forces but also with intense discussions for the country’s budget of 2020. The 25-hour-long debates became so heated in the end the opposition left before the final vote. Because of that, the budget project was adopted with votes from only 57 deputies.

October’s inflation in Latvia higher than average in EU and Eurozone

In October 2019, inflation in Latvia was higher than the average in the European Union and Eurozone, according to information published by Eurostat on Friday, 15 November.

Z-Towers examination reports to be evaluated by construction experts

The State Construction Control Bureau of Latvia has commenced an administrative process and plans to assess the work performed by certified construction experts on Z-Towers. This includes assessing reports associated with the project, as confirmed by the office’s representative Elīna Balgalve.

Riga’s Vice-Mayor dismisses the board of Riga Central Market

Vice-chairman of Riga City Council and shareholder Vadims Baraņņiks has dismissed the board of SIA Riga Central Market.

Unemployment in Latvia drops to 6%

Latvia's unemployment rate constituted 6.0 % in Q3 2019. Compared to the previous quarter, unemployment rate fell by 0.4 percentage points, while over the year it reduced by 1.0 percentage points.

Employment rate in Latvia reaches 65.6% of the population

917.8 thousand people or 65.6 % of the population of Latvia aged 15–74 were employed in Q3 2019. Over the year, employment rate grew by 0.3 percentage points, and number of employed persons fell by 2.3 thousand. During the period, population declined faster than the number of employed persons.

SEB share price heavily affected by suspected money laundering in Baltics

Swedish banking giant SEB AB has seen its stock value sinking by 15% as it awaits a programme by the Swedish public broadcaster over suspected money laundering in the Baltics, where the name of the bank would also appear, Bloomberg reports.

State Security Service detains three persons for illegal arms supply to African countries

Latvia’s State Security Service has detained three persons for illegal supplies of arms to African countries under EU and UN sanctions, as mentioned in VDD’s report.

Investigators of MH17 downing point to close Putin ally

Dutch-led investigators of the downing of the 2014 flight MH17 over Ukraine have published a series of phone intercepts, among them one between former senior Kremlin official and pro-Kremlin separatists rebels blamed for the crash.

Harmony halts work in Riga City Council coalition until GKR makes up its mind

Political party Harmony’s faction in Riga City Council has decided to halt its work in the coalition until Honour to Service Riga makes up its mind in regards to cooperation with Independent Deputies Faction, as confirmed by Riga City Council’s vice-chairman Anna Vladova on Thursday, 14 November.

To increase parties’ independence, Saeima decides to boost support for them

In the final reading, Latvia’s Saeima approved controversial amendments to the Law on Financing of Political Organizations, significantly boosting state support for political parties.

Sweden sells off Australian, Canadian bonds over carbon footprint

Sweden’s central bank has stated it had given up bonds in the mining regions of Australia and Canada as Riksbank said the greenhouse gas emissions of both countries were large.

Newest comments

Do NOT follow this link or you will be banned from the site!