Regulator fines Regional Investment Bank for "irregularities"

Latvia's financial regulator, the Financial and Capital Market Commission (FKTK) said November 6 it had decided on November 3 to impose a fine of EUR 473,076 on Reģionālā investīciju banka (Regional Investment Bank, RIB) for "irregularities in detecting the source of funds, which were identified during a FKTK inspection in large value cash transactions carried out by the Bank's high-risk clients from high-risk jurisdictions." 

RIB "failed to ensure adequate risk management and was exposed to disproportionate reputational risk" FKTK said.

The inspection in question took place way back in 2019, with FKTK offering no explanation as to why it had taken so long to reach the point of issuing a penalty.

"The Bank, on certain occasions, had failed to comply with the regulatory obligation to verify the origin of financial resources. The Bank had not obtained documents verifying the origin of the cash paid into its customer accounts," FKTK said, before adding that the Bank took "substantial measures to improve the internal control system" which therefore make the relatively modest amount of the fine appropriate.

"As part of the FKTK's inspection, it was concluded that the Bank had not ensured an effective internal control system for the transactions examined during the inspection. According to regulatory requirements, if a client from a high-risk jurisdiction performs a large value cash transaction, it is considered to be a high-risk exposure. Such transactions should be subject to an enhanced customer due diligence and requirements include the package of measures to be taken by banks to ascertain the legal origin of financial assets," the regulator said.

Nevertheless on its website RIB continues to boast that it takes special care to know its customers, saying: "We have the time and willingness to study the needs of every customer in detail, not being afraid of any complex or complicated cases and, thus, being able to offer the most suitable solution to every customer."

It is not the first time the bank has been fined by the regulator. In 2017 it was one of three banks guilty of breaches of anti- money laundering law and weaknesses in customer due diligence and transaction monitoring that led to the situation that the bank had been used to circumvent international sanctions imposed against North Korea. On that occasion it was fined EUR 570,364 and issued with a warning.

In 2014 it was fined EUR 70,000 for violations of the provisions of the Law on the Prevention of Laundering the Proceeds from Criminal Activity (Money Laundering) and of Terrorist Financing plus deficiencies in customer-non-resident due diligence and monitoring of exposures.

RIB was founded in 2001. It has strong links to Ukraine. The largest shareholder of RIB is currently SIA SKY Investment Holding owning 44.004% of shares. More than 10% of shares is owned by Ukrainian businessman Iurii Rodin (19.998%), Ukrainian Bank Pyvdennyi (13.761%), and Pyvdennyi's deputy chairman Mark Bekker (10.573%). Other Pyvdennyi executives and board members also serve on the council of RIB. 

RIB closed the first quarter of 2020 with a profit of EUR 143,415, with assets of EUR 285.54 million. 

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