"The Estonian, Latvian and Lithuanian supervisory authorities, as a result of coordinated effort, consider that Luminor’s anti-money laundering systems and internal rules need improvement," said a statement from the Latvian regulator, the Financial and Capital Market Commission (FKTK) August 24.
"Luminor needs to determine in its procedures how it continuously assesses the need to supplement resources and improve its IT-solutions across the group in various structural units dealing with the prevention of money laundering and terrorist financing. The data quality of the bank also needs to be improved, as does the transaction monitoring system. Luminor needs to ensure timely and high-quality customer due diligence, providing adequate resources for that purpose," FKTK said.
Last year, Finantsinspektsioon, Financial and Capital Market Commission of Latvia and Lietuvos bankas carried out an on-site inspection of Luminor AS at the same time in all three countries. They inspected whether the anti-money laundering and counter-terrorist financing systems and internal rules of Luminor were at that point in compliance with the law. The supervisory proceedings were carried out in cooperation via the AML college established by Finantsinspektsioon as a lead supervisor of Luminor.
In response, Luminor said it is "fully committed to preventing and detecting money laundering and financial crime. We have low risk appetite and our business model is targeted at serving predominantly residents of the Baltic countries, and customers who have a strong personal or business connection to the Baltic countries.
"We review and improve our AML practices on an ongoing basis and are grateful to the supervisors for having carried out such a thorough inspection as such audits provide valuable input for the bank to enhance further its AML processes.
"We acknowledge the findings of the routine on-site inspection. The supervisors have highlighted areas of improvement within our internal processes and solutions, many of which we have already implemented and are committed to executing the remaining actions according to the plans we have submitted to supervisors," Luminor said.