Latvia to phase out shell company accounts in banking sector

The Finance Sector Development Council on March 21 decided to forbid Latvian banks to do business with dubious foreign companies, reported LSM's Latvian language service

The council, chaired by Latvia's Prime Minister Māris Kučinskis, is a high-level body comprised of the highest-ranking Latvian officials and finance industry representatives. 

First of all, Latvia is banning doing business with shell companies. The ban will be reviewed by the cabinet on April 3 and sent to the parliament April 8, said Prime Minister Māris Kučinskis, in a signal of how pressing the matter is regarded as being. 

The prohibition against banks to do business with shell companies could come into force in May. Banks have already been tasked to draw up plans to implement the law. 

When the proposals become law, it will be impossible for new shell companies to set up accounts, and there'll be an interim of several months when it will be impossible to transfer money to shell company accounts. During the last stage of the clean-up any remaining companies of less than impeccable provenance will have remove their assets from Latvian bank accounts, said Pēteris Putniņš, head of the Financial and Capital Markets Commission. 

The Finance and Capital Market Commission said previously that there were 26,081 shell companies among clients of Latvian banks, including two companies of Latvian origin. Shell companies account for 36.57 percent of the Latvian banks’ aggregate loan turnover, while their share in the non-resident segment is 44.5 percent.

Putniņš previously said non-resident deposits in Latvian banks could shrink about €4 to €5 billion if they stop doing business with shell companies. 

There are now ten banks in Latvia that specialize in doing business with foreign clients. 

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Economy
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