May 25, 2018 / 4:23 PM / 6 months ago

Latvian watchdog fines Meridian Trade Bank over money laundering controls

FILE PHOTO: A woman walks past Meridian Trade Bank in Riga, Latvia May 24, 2018. REUTERS/Ints Kalnins

(Corrects May 25 story’s headline to show fine is for breaches in internal controls, clarifies client base in first paragraph)

RIGA (Reuters) - Latvia’s banking watchdog said on Friday it had fined Meridian Trade Bank, a financial firm serving residents in Latvia and Lithuania as well as some non-European clients, for breaching anti-money laundering rules.

Latvia has moved to clamp down on banks serving non-residents since the United States in February accused its third-biggest bank, ABLV, of money laundering, prompting its closure and triggering the country’s worst financial crisis in a decade.

Latvia’s Financial and Capital Market Commission (FCMC) said in a statement it had fined Meridian almost 456,000 euros after inspections at the bank last year uncovered shortcomings in its internal controls against money laundering.

Meridian, Latvia’s 13th biggest bank, said in a separate statement it had agreed to pay the fine and pledged to invest up to 1 million euros to bolster its anti-money laundering controls this year.

At least nine Latvian non-resident banks have previously been fined in connection with money laundering violations.

In the wake of the Baltic country’s independence from Russia in 1991, more than a dozen Latvian banks began offering services to overseas clients with promises of providing Swiss-style secrecy, creating a large non-resident banking sector.

Following the closure of ABLV, the Latvian government has begun tightening rules to prevent money laundering, for instance making it harder for banks to deal with opaque shell companies.

Earlier this week, Latvia’s prime minister and finance minister urged the European Union also to boost its money laundering curbs as cash previously held in the Baltic country was moving elsewhere to escape tighter controls.

Reporting by Gederts Gelzis; Editing by Gareth Jones and Mike Collett-White

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