"Our people will have talks in July, so of course our time is until July to demonstrate some sort of results," Kučinskis said on LTV's Morning Panorama show, outlining a three month window during which new laws banning offshore "shell companies" as clients of Latvian banks is being introduced at express speed.
The July deadline comes from the fact that when the Council of Europe's anti-financial crime Moneyval wing is due to start compiling a report on Latvia for release in the autumn. As previously reported by LSM, a negative assessment could have drastic consequences on the banking sector as a whole.
"We cannot allow our reputation to fall any further, because, in truth, we have been to blame [for that]," he admitted.
It was "no secret" that the non-resident banking sector has until now been operating on the basis of business models that can not be allowed in future, the premier said, but said that the government was now engaged on "real homework that we can do and show" to Moneyval in July.
"Shell companies come with very high risks, so the sooner we can address that, the sooner we can get onto a normal path and start a new life for those banks," he added.
Kučinskis added that at the beginning of May he would be meeting with the heads of the main Scandinavian banks operating in Latvia to discuss the situation. Though these are not regarded as money-laundering banks, they are the main players in the retail sector and have been concerned by the reputational damage being done to the banking sector as a whole by the long-term toleration of dubious activities by the smaller boutique banks.
On a related matter - the appointment of a new head of the Office for Prevention of Laundering of Proceeds Derived from Criminal Activity (FIU) - Kučinskis said the process continued and was now in the hands of Prosecutor General Eriks Kalnmeiers, with a decision likely next week.
Despite describing the progress made over a period of years in fighting money-laundering as "extremely minimal", the current head of the FIU, Viesturs Burkans, was among the four remaining candidates for the job.
"It's a clear fact that there must be changes," Kučinskis said, outlining an often-overlooked fact: that despite its relatively low profile, the FIU is the conduit through which a huge amount of sensitive information about the financial sector flows, involving law enforcement, banks, regulators, security services and the legal service.
As previously reported by LSM, Burkans has been in his current position for 20 years.
Meanwhile the financial regulator is continuing talks with non-resident banks on changing their business models and cleaning up their client lists with "very great progress" made already, the premier claimed.
Latvia is scrambling to show it is serious about cleaning up its banks after the United States announced swingeing sanctions against ABLV bank in mid-February that forced the bank into liquidation.
A series of money-laundering scandals involving boutique banks over more than a decade produced only a limited response from the Latvian authorities, but the action taken by the U.S. has kick-started a shakeup and what amounts to a race against the clock to sort out the sector or see Latvian banks given pariah status, with serious knock-on effects for the economy as a whole.