Latvian regulator fines Meridian Trade Bank 455,000 euros

Latvia's financial regulator, the Financial and Capital Market Commission (FKTK) said May 25 it had "entered into an administrative agreement" with Meridian Trade Bank, imposing legal obligations and a fine of 455,822 euros for anti- money laundering failures. 

The deal between bank and regulator "was concluded in order to put an end to the administrative case, which was proposed by the FKTK after an on-site inspection of Meridian Trade Bank from March 27, 2017 until 22.06.2017," FKTK said in a Friday afternoon press release. 

"During the inspection, the bank detected deficiencies in the operation of the internal control system and thus violations of the Law on the Prevention of Money Laundering and Terrorist Financing (NILLTFN) and its subordinate regulatory acts," the regulator said. 

"The fine was appropriate because FKTK found that AS Meridian Trade Bank had not set up a NILLTFN internal control system that would meet its operational risk, and which would ensure effective compliance with the requirements of the NILLTFN Law and its regulatory acts," it added.

By signing the agreement, the bank had committed to "elaborating an action plan for improving the internal control system" it added.

As previously reported by LSM, Meridian Trade Bank (MTB) is one of Latvia's boutique banks that has historically catered to foreign clients in Russia and the former CIS countries.

As recently as November 2017, FKTK announced a fine of 900,000 euros against MTB for slightly different reasons relating to risk management.

In a statement posted on its website, the bank said it had already done a lot to address the concerns of FKTK and that its anti- money laundering internal control system would be improved "by autumn 2019."

It also said in 2016 and 2017 it had spent 1.5 million euros on improving its anti- money laundering capability and was focusing more on domestic customers than non-resident clients. It claimed 98.5% of its 40,000 clients were domestic (including Latvia and Lithuania).

Nevertheless it continues to advertise its appeal to non-residents of the European Union and the attractions of an EU residence permit on its website saying it "offers special "GUEST SET" for customers of the Bank - individuals, non-residents, who have a residence permit in Latvia. AS "Meridian Trade Bank" is ready to advise Clients and support in obtaining the EU residence permit," it promises.

SMP Bank changed its name to Meridian Trade Bank in 2014 after Russia's SMP sold its stake in the company to a group of Latvia-resident individuals when SMP was added to the US' sanctions list. The largest shareholder is Mihail Ganev, owner of the Strek stevedoring company that operates in Riga port, who has a 27% stake in Meridian.

The head office is located in the historic center of Riga directly opposite the Latvian cabinet building. In 2011 the Bank opened a branch in Vilnius and customer service centers in Kaunas and Klaipeda. The Bank has also a representative office in Moscow.

You can read our round-up of such banks HERE.

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