The Ministry of Finance wants to start a "removal process" of the mentioned document, claiming that its existence prevents the attraction of investment.
Marshall Billingslea, the former Assistant Secretary for Terrorist Financing, who was in office when it was proposed to cut ABLV off from dollar transactions, calls Latvia's actions "concerning".
“I personally would be surprised to see the determination removed. And I am not sure that it is particularly wise for the current Finance Minister to be lobbying the way he is for its removal, given what we know about ABLV, what we know they were doing, what we know was a concerted money laundering effort run at the very top of the bank," Billingslea said in an interview with LTV.
He believes that together with the non-appointment of the head of the Financial Intelligence Unit Ilze Znotiņa for a second term, "those are concerning signs, but that shouldn’t take away from the fact that the Latvian government has done an incredible job in cleaning up the financial system".
It was not possible to find out what, if anything, the U.S. Department of the Treasury plans to do with Latvia's ABLV bank sanctions proposal. The US Treasury declined to be interviewed.
In June, an article appeared on the business newswire "Bloomberg" about Finance Minister Jānis Reirs's (JV) talks in Washington with the U.S. Department of the Treasury regarding the lifting of measures against ABLV. After that, the Ministry of Finance of Latvia released a statement saying that Reirs did not ask to lift the restrictions against the bank, but proposed that the U.S. provide an assessment of the reforms of the Latvian financial sector.
"My request was to start the procedure for the removal of this decision, not about ABLV bank, but for the cancellation of the decision where the problems in the country are pointed out," Reirs told De Facto in an interview a month ago, and said that Latvia had fully corrected the problems highlighted in the original sanctions decision.
Reirs said that starting negotiations with the US was not his invention alone, but that he had the authority of the government. In at least one case, the mentioned Treasury document has prevented an unnamed international financial institution from investing in Latvia.
Reirs met with U.S. officials again last week. In a written response to LTV, the Ministry of Finance of Latvia revealed that the U.S. has been provided with current information on the implemented improvements in the field of prevention of money laundering, but no decisions have been made at the moment.
Welfare Minister Gatis Eglītis also spoke about the "removal" of the document in the U.S. earlier this year.
The liquidator of ABLV banka, lawyer Jānis Rozenbergs replied to the LTV program that ABLV bank's liquidation will proceed and be completed regardless of what final decision FinCEN makes.
Almost five years ago, the U.S. Department of the Treasury and its bureau FinCEN proposed disconnecting ABLV bank from dollar transactions citing serious money laundering concerns. The market reacted instantly and the bank quickly went into a protracted liquidation process.
Billingslea, the former Assistant Secretary at the US Department of the Treasury, said that as far back as the Obama administration, before Billingslea took office, clear warnings were given to Latvia in several visits that the US was concerned about the activities of ABLV and other banks.
"We began very early on in the Trump administration engaging the Latvian government to try to bring this systemic money laundering to an end," Billingslea recalled.
As a result, the the Treasury decided to use a special measures against ABLV bank – authority that was given in Section 311 of the USA PATRIOT Act.
"Ultimately we came to the conclusion for variety of reasons that the Latvian government itself was not structured with the necessary laws and regulations nor was ir politically willing to make the tough decision to shut down the money laundering operation known as ABLV. And that is why ultimately the Treasury was forced to protect our own financial system and financial systems of our NATO allies to use the 311 authority and to identify publicly ABLV as a source of money laundering concern,” said the former official.
The Treasury had reason to believe that ABLV banka's owners and managers made money laundering a pillar of the bank's business, and also accused the bank of bribing Latvian officials.
In its responses, ABLV did not deny transactions with high-risk clients, but denied corruption and noted that the statements made against it lacked clear evidence. Some of the mentioned transactions either did not take place at all or took place before the persons in question were subjected to sanctions, it claimed. ABLV also suggested that the bank was discredited in the U.S. by the former governor of the Central Bank of Latvia, Ilmars Rimševičs, who is himself now accused of corruption, which he denies.
However, De Facto said a "well-informed source" told it that Rimševičs' actions had “zero effect” on the Treasury, because he was already considered to be corrupt. Also there was no trust in the then head of the Financial and Capital Market Commission Pēters Putniņš.
Opinions are mixed as to whether the U.S. report on ABLV was more about one bank or a signal to the entire financial sector.
“This is not a generic statement that this country appears to be high risk for money laundering. This instrument is very specifically focused on particular institutions that Treasury has determined need to be singled out as nodes of money lanudering,” said Jonathan Rush, a professor at the American University, and former Treasury official.
However Kevin Hall, the North America editor of the investigative journalism project OCCRP (Organized Crime and Corruption Reporting Project), notes that the proposal against ABLV bank is a "very blunt instrument". Technically, it targets a specific bank, but in a small jurisdiction like Latvia, it has a chain reaction throughout the system.
OCCRP's investigations into money laundering were among those cited by the Treasury in its report on ABLV Bank. Hall explains that the mechanism is very strong, but historically with very limited opportunities of appeal. Either you work together to fix things or lose access to the global financial system.
"You can safely presume that the Treasury wouldn't use it if it was a single bad actor, and the country was doing a splendid job with its controls," he adds.
ABLV and its co-owner Ernests Bernis hired lobbyists in Washington after the Treasury report was published. According to the lobbyist database, he and the bank paid $1.73 million to firm “Mercury”. The last payments were in 2020. Three years ago, in an interview questioned about lobbyists, Bernis answered that "reputation is the most important thing in the 21st century."
The Latvian Prosecutor's Office has charged Bernis and seven other persons with money laundering. There are no charges for alleged North Korean deals and bribery. It should be noted that Latvia did not receive all the information on the ABLV case from the U.S., as the FinCEN registers on bank investigation cases are not publicly available.