Latvia's financial watchdog chief resigns

RIGA, July 5 (Reuters) - The head of Latvia’s bank watchdog is to step down following a move by the country’s parliament to reform the finance industry regulator as part of efforts to combat money laundering.

Latvia is under pressure to clean up its banking sector after series of scandals. Moneyval, the money laundering and terrorism financing monitoring body of the Council of Europe, is due to review the country’s efforts early next year.

Finance Minister Janis Reirs told a news conference on Friday that Peters Putnins, chairman of the Financial and Capital Market Commission, had handed in his resignation on Thursday.

Reirs said he regarded Putnins’ resignation as positive, and said it would allow “more productive” talks with Moneyval.

Latvia’s parliament in June passed a bill to tighten its control over the financial watchdog. The legislation set out duties for the regulator in combating money laundering and terrorism financing. Lawmakers also called for the appointment of a new chairman of the watchdog by October.

If Moneyval labels Latvia as a high risk country in terms of money-laundering, foreign banks might consider moving. Swedbank , the market leader, has said repeatedly it considers the Baltic country one of its home markets.

An FCMC spokeswoman said Putnins declined to comment on the resignation. Putnins has earlier criticised the reform of the watchdog, saying that it affected the supervisor’s independence and that it was a veiled attempt to oust him before his term expired in 2022.

U.S. authorities last year accused Latvia’s third-largest bank ABLV of money laundering and U.S. sanction breaches, leading to the closure of the bank.

Reirs said Putnins would step down by July 15 and that parliament would appoint an interim chairman after approving the resignation.

Reporting by Gederts Gelzis; editing by Anna Ringstrom and Jane Merriman