Latvian regulator says no problem with ABLV "voluntary liquidation"

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Latvia's financial regulator said May 14 he saw no problems with the method chosen to send ABLV bank into liquidation - a process described as "self-liquidation" or "voluntary liquidation".

Last week, a delegation of the Financial and Capital Market Commission (FKTK) administration went on a working visit to the U.S. at the invitation of the Financial Crimes Enforcement Network (FinCEN) of the U.S. Department of the Treasury and held a meeting with FinCEN representatives on May 7 "to discuss recent developments in Latvian banking sector and progress of voluntary liquidation process of ABLV Bank supervised by the FKTK, including the methodology for screening the ABLV Bank customers approved by the Board of the FKTK," according to a statement from the regulator. 

"In the course of the controlled voluntary liquidation of ABLV Bank the FKTK has been cooperating with the U.S. authority of direct liaison - FinCEN, in order to ensure a regular exchange of information on current measures, as well as agree on progress in line with the customer screening methodology," it added.

Notably, the trip to the U.S. took place just one week before the Treasury's Marshall Billingslea is visiting Latvia. Billingslea will meet with Prime Minister Krišjānis Kariņš May 16.  ABLV's collapse came as a direct result of the U.S. Treasury naming it as a major money-launderer.

Under-pressure FKTK chairman Pēters Putniņš explained the trans-Atlantic trip saying: "During this meeting, we discussed in detail the next phase – how exactly the methodology will be applied in the customer screening process.  We have gained confidence that there are no significant obstacles and now we can move forward in the ABLV Bank voluntary liquidation process in line with the model approved by the FKTK.

Our negotiations were very constructive, without reservations from colleagues. Such negotiations were necessary in order to enhance assurance to all the institutions involved that the Latvian party has prepared qualitatively for checking ABLV Bank creditors' funds and launching the pay-out phase," said Putniņš. 

Furthermore, "FinCEN representatives highly appreciated the presentations by the FKTK demonstrating their opinion," according to the release from the regulator.

However, later Tuesday the U.S. embassy in Latvia released a statement of its own on the matter that suggests all may not be quite as rosy as depicted in the FKTK account of the meeting.

"The United States Embassy in Riga would like to clarify recent press reports that suggest the U.S. Treasury Department’s Financial Crimes Enforcement Network (FinCEN) held  “negotiations” with the Finance and Capital Market Commission (FKTK) over the ABLV self-liquidation methodology," the U.S. release said.

"Press reports and statements from the regulator suggesting that FinCEN “approved” the methodology are inaccurate. FinCEN did not negotiate the methodology with FKTK and did not approve the methodology."

Furthermore FinCEN’s public statements on the matter of ABLV's liquidation process "are limited to the following agreed upon press statement" the embassy said before quoting that statement as:

“On May 7, 2019 Latvia’s AML regulator, the Financial Capital and Markets Commission (FCMC) and the U.S. Treasury Department’s Financial Crimes Enforcement Network (FinCEN) held a productive meeting to discuss the status of ABLV Bank’s liquidation. FinCEN found the Latvia-based ABLV Bank to be a primary money laundering concern, pursuant to Section 311 of the USA PATRIOT Act, on February 13, 2018.” 

Inara Mūrniece and ambassador Nancy Bikoff Pettit
Inara Mūrniece and ambassador Nancy Bikoff Pettit

The clarification was issued the same day that U.S. ambassador Nancy Bikoff Pettit visited the Saeima to discuss Latvian-American relations with speaker Inara Mūrniece.

"We want to further develop close parliamentary cooperation between the Saeima and the US Congress. We are glad that the US Congress is a true and trusted friend of Latvia and the Baltic States. We welcome the US Administration and Congress's strong determination to strengthen the Latvian and the entire Baltic region's safety and security," said Mūrniece at the meeting.

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