Treasury official in Latvia to discuss banking reform

Latvia's Prime minister Maris Kucinskis arrives on the first day of a summit of European Union (EU) leaders at the EU headquarters in Brussels, on March 22, 2018

Riga (AFP) – A senior US Treasury official met Wednesday in Latvia with Prime Minister Maris Kucinskis to discuss the Baltic eurozone member’s bid to reform its banking sector after money laundering allegations felled a top lender.

“We stand with the (Latvian) government as it is moving to clean up a very difficult situation that has been accreted over several decades — poor policies, lax oversight and weak enforcement,” US assistant secretary for terrorist financing Marshall Billingslea said in an interview ahead of his visit.

“The government is coping with a banking sector that was specifically designed to attract non-resident deposits and offshore accounts, and that has led to the situation Latvia finds itself in, which is that it has a banking sector that remains one of the most vulnerable in Europe,” he told public broadcaster LSM.

Shareholders decided to liquidate the country’s third largest bank, ABLV, in February after the European Central Bank froze its payments.

The ECB’s move came after Washington accused ABLV of money laundering with connections to North Korea’s nuclear weapons development programme.

Kucinskis told reporters Wednesday that Latvia is consulting the United States on the liquidation, adding that the measures “will be agreed upon by US authorities”. 

Latvian Finance Minister Dana Reizniece-Ozola added that “the US government wants to ensure that money still held by ABLV is not dirty. We have to take care that this money does not pass back into criminal hands.”

Other Latvian banks are now facing increased scrutiny from authorities as well.  

The banking sector has also been hit by bribery allegations against longtime central bank chief Ilmars Rimsevics by anti-corruption authorities. He denies the claims.

Rimsevics has refused to resign, but has been barred from carrying out his duties at both the Bank of Latvia and the board of the ECB.