Latvian financial regulator updates media on Lembergs sanctions

Latvia's financial regulator, the Financial and Capital Market Commission (FKTK) said December 12 that while it was helping to fully implement U.S, sanctions against Aivars Lembergs, it was also working to ensure any wider damage to the economy was minimised.

Recently appointed FKTK head Santa Purgaile described the move by the U.S. as "unprecedented" as far as Latvia was concerned and therefore "these are sanctions for which our local interpretation and implementation are very important."

"The purpose of the sanctions is to prevent and diminish the economic and political influence of Aivars Lembergs. The aim is not to paralyze any business or the Latvian economy. This means that Latvian financial institutions must be cautious," she said.

FKTK has identified which banks hold accounts linked to Lembergs, but all banks have been told to thoroughly check their client lists, not only for named accounts, but to check who the ultimate beneficiary of any given account might be, FKTK officials told journalists.

Several of those journalists asked whether the asset freeze on Lembergs would be total and therefore prevent payment of his sizeable monthly pension. They were told that under EU law even a sanctioned individual has the right to a "basic account" for day-to-day expenses or "primary needs", though this would be limited to reasonable amount.

Meanwhile the four economic entities linked to Lembergs and also under sanction have a 30-day period, during which the the banks will operate their accounts under close scrutiny. New contracts will not be permitted, but exiting contracts can be honored - subject to approval.

Asked whether the Lembergs affair might increase the chances of Latvia being placed on a money-laundering "gray list" that could have even more serious implications for the Latvian economy, Purgaile argued that in fact it was a good opportunity to demonstrate how Latvian institutions can now work together to effectively clamp down on corruption and illegal activity.

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