Investigators from the State Committee of National Security (GKNB) at the city of Osh uncovered a money laundering scheme in which a total of 4.4b Kyrgystani Som (about $58m at the current exchange rate) were laundered from January to October 2014, according to an announcement at the GKNB website.
While the announcement doesn't specify the source of the money, it says the money was laundered by two Amanbank (Аманбанк) employees who created a fictitious company for which they opened accounts in Amanbank and Rosinbank (Росинбанк).
The company struck up fictitious agreements with Chinese and Latvian companies and wired money in exchange for non-existent building materials. The Kyrgyz authorities have started criminal proceedings over the case.
Kloop.kg reported that the GKNB denied comment over which foreign banks were involved in the scheme.
After years of rumors and denials about the role Latvia's many boutique banks specializing in providing services for non-resident clients might play in laundering huge sums of money from Russia and elsewhere, the Riga authorities are finally getting serious as they see OECD membership slipping from their grasp.
The Organization for Economic Cooperation and Development has expressed concern about the activities of the banks and the large number of money laundering allegations with which they are linked.
That has led to a policy shift in Riga. After years of denying there was a problem at all, regulators have belatedly started handing out serious fines, and police are intensifying their work to expose scams and schemes - but it might all be too late to keep the OECD bid on track with the likelihood that Latvia will have to stand on the sidelines until it can prove its banking system is not a back door into Europe for proceeds of crime.