The move, if confirmed, would cripple the ability of banks specializing in large-scale money transfers from east to west - the so-called Non-Resident Deposit (NRD) market - to pursue their business models.
Citing anonymous sources, Bloomberg did not reveal the names of the banks to have direct dollar clearing services withdrawn by Deutsche Bank (the last remaining provider of dollar clearing in Latvia) but did say that Rietumu bank, Baltic International Bank and Citadele bank would be unaffected.
The services of Nordic retail banks such as Swedbank, DNB and SEB that do not specialize in NRDs would also be unaffected.
“In line with the bank’s strategy 2020, the bank is reviewing client relationships,” Deutsche Bank spokesman Frank Hartmann confirmed to Bloomberg.
If dollar clearing services are withdrawn, the affected banks would face the prospect of having to use third-party intermediaries to process dollar transfers, which would incur significant fees and drive up their operating costs as well as affecting their already-battered reputations for propriety.
A slew of Latvian NRD banks have been implicated in a variety of money-laundering scandals involving questionable cash from Russia, Moldova, Ukraine and elsewhere.
Half a dozen such banks have been hit by fines related to money-laundering by Latvia's financial regulator in the last 18 months.
"Access to correspondent banking has become tougher in many parts of the world as global banks close accounts or reduce access amid higher capital standards," Bloomberg said, citing the International Monetary Fund.