Latvia pressured in US over money laundering by banks

Take note – story published 8 years and 4 months ago

Latvian officials have been given a clear warning to clean up the country's non-resident banking sector or face the wrath of a US administration concerned by money laundering on a massive scale, claims a new investigation by the Baltic Center for Investigative Journalism, Re:Baltica.

The investigation titled The Land That Still Launders is currently only available in Latvian, but reveals two senior Latvian politicians, Ainars Latkovskis (head of the Saeima's Defense, Internal Affairs and Anti-Corruption Committee) and Solvita Aboltina (head of the National Security Committee) were summoned to the US last fall and told in no uncertain terms by officials at the State Department and Treasury that Latvia needed to clean up its act.

"Even though the country is small and the administration is small, the amount of dollars going through your financial system is one percent of all US dollar transactions in the world. It is measured in hundreds and hundreds of millions. You must be able to control it. How you do it is up to you," Latkovskis told Re:Baltica was the clear message from Daniel Glaser, Assistant Secretary for the Department of the Treasury of the United States.

A second meeting with State Department officials delivered a similarly uncompromising message.

Nor is there any sign that the heat is being turned down. On January 5 Latvia's boutique banks were being discussed in the hallowed halls of the US Congress where Congresswoman Sheila Jackson Lee alleged three of them were involved in "plundering" one billion dollars from Moldova and moreover had links to the political elite in Russia.

"I call upon the Administration and the Congress to investigate whether assets of the national banks of countries of the former Soviet Union are not being plundered and used, knowingly or unknowingly, to benefit terrorist organizations," Jackson Lee said. 

But the pressure from the US does seem to be having an effect. As well as the possibility that the US could easily impede Latvia's yearned-for accession to the Organization for Economic Cooperation and Development (OECD) there is also the fact that the US is currently stationing dozens of troops and a considerable amount of military hardware in Latvia to protect it from the threat of Russia. If dirty money from the east continues to flow through Latvia's boutique banks, it's not a very nice way of saying thank you.

According to Re:Baltica, another weapon in the US arsenal is the possible withdrawal of dollar settlements via Deutsche Bank, a move that would make Latvian boutique banks far less attractive to non-resident clients and far less profitable into the bargain.

Coincidentally Re:Baltica released its report on the same day that Saeima approved the resignation of Kristaps Zakulis, head of the Financial and Capital Markets Commission (FKTK).

Whoever replaces him will have a clear task - prove to the White House that Latvia's boutique banks are now whiter than white.

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