ABLV is a big deal

Next time a bank tells you how clever it is, how it uses all the latest technology, how its accounts are super secure and how slick and smart and highly-trained its employees are, you might choose to disbelieve the claim.

One result of this week's major story - the extraordinary accusations of criminal activity made against Latvia's ABLV bank by the U.S. Treasury - is a clear picture of bankers not as wealthy, omnipotent masters of the universe but hapless goofs who apparently could quite easily be relieved of their wallets by a game involving three shells and a peanut.

For the defense offered by ABLV at their press briefing this week (Pro tip: inviting the press then telling them they can't ask any questions does not endear them to you) is essentially: "We had no idea any of this was happening. Our bank is totally in order, but obviously if people choose to misuse their accounts, it's not our fault."

Maybe if the frauds that are alleged to have been perpetrated via the bank were small-scale, that might even seem a credible claim. Who is going to notice a few euros here, a few dollars there when the super-slick types are all concentrating on High Net Worth Individuals and facilitating international trade?

But the phrase that leaps out from the U.S. Financial Crimes Enforcement Network report is "tens of billions of dollars". Not tens of millions, tens of BILLIONS.  

Latvia's annual GDP in 2016 was around 27 billion dollars.

ABLV may be a large bank in Latvian terms but it is small by European standards. The idea that illicit sums greater than the entire GDP of the country in which it is based can be pumped through such a small outfit between accounts in offshore jurisdictions and no-one - not the regulator, not the super-slick bank experts with all their hi-tech tools - no-one notices, is simply staggering. 

The seriousness of these allegations - laying aside for a moment the alleged links to the North Korean missile program, the alleged links to Kremlin-friendly oligarchs, the alleged attempts to bribery of state officials - does not seem to have registered fully with Latvia's senior politicians and officials, though judging by the croaky-voiced demeanor of the ABLV board member wheeled briefly in front of the press then wheeled out again, the bank itself does seen to realise this is not just another case of "a slap on the wrist, a million-euro fine and carry on."

Tens of BILLIONS of dollars. 

It's as if someone receives a speeding penalty through the post and offers this as a defense: "I wasn't driving the Ferrari that day. It's all taxed and tested and insured, in perfect technical condition, in fact. A really great car. A pleasure to drive, particularly at high speed. But if someone else chooses to make a copy of the ignition key, drive it around the village at 200 km/h and then park it back in my garage, and they do this several times a week, it's not my fault. After all I do lock it."

ABLV denies the allegations made against it in a very public manner by one of the Treasury's top anti-money-laundering experts and says it will supply information to change the Treasury's mind.  

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