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Inspection reveals money laundering problems in some Latvian non-resident banks
November 30, 2016 / 2:31 PM / a year ago

Inspection reveals money laundering problems in some Latvian non-resident banks

STOCKHOLM, Nov 30 (Reuters) - Several Latvian banks that cater mainly to non-residents lack sufficient quality control of clients and have issues with money laundering, an independent investigation by three U.S. consulting companies revealed on Wednesday.

The Baltic country’s financial watchdog commissioned the report earlier this year to tackle money laundering issues mainly in its non-resident banks as the country faced increasing criticism before joining the Organisation for Economic Co-operation and Development (OECD) in July.

“We have to admit the fact that there is a lot of work to do and the situation in some areas ... is rather unstable,” said Peteris Putnins, head of the Financial and Capital Market Commission, adding that the results were better than initially feared.

The report, which examined 12 Latvian non-resident banks and was carried out by Navigant Consulting, Exiger, and Lewis Baach Kaufmann Middlemiss, concluded there was insufficient quality control of clients and that the structure of shareholders prevented independent internal audits in some of the banks.

The report also showed an unreasonably simplified assessment of client risk and irregularities in reporting on suspicious transactions.

The watchdog did not name the banks that were affected but said it expects them to solve the issues and improve their internal controls by the end of 2017.

Almost half of all deposits held in Latvian banks, just under 10 billion euros ($10.60 billion), are from foreigners, mainly from Russia and other former Soviet Union countries. ($1 = 0.9436 euros) (Reporting by Gederts Gelzis; Editing by Johan Ahlander/Jeremy Gaunt)

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