AML Risk Management & Compliance
Controlled liquidation of ABLV Bank
The controlled liquidation of ABLV Bank, overseen by the FCMC, has ensured the protection of ABLV Bank’s creditors' interests, the payment of their funds, and the independent inspection of the bank’s deposits to identify and report suspicious transactions to the Latvian Financial Intelligence Unit (FIU Latvia).
A team from EY has developed a customer verification methodology, which has been submitted to the FCMC and FIU Latvia for final approval. The methodology provides for the verification of all creditors who are not covered by state guaranteed compensation. The verification includes three main stages of the creditors' research:
- Determining and checking creditor and beneficial owner (verification);
- Checking historical transactions of the creditor and related parties;
- Checking creditor and related parties in relation to international sanctions.
EY will also carry out the creditor verification process under the supervision of the FCMC. Based on the results of the review, the Bank's Liquidators will create a list of payments to be made, and submit it to the FCMC which will monitor future developments.
After the FCMC board approves the methodology, it will take about two months to set up a payment mechanism according to the methodology. After that, the process of covering creditors’ claims will commence, starting with depositors whose guaranteed compensation did not cover entire amount of their deposit (over EUR 100,000). This is expected to happen in the first half of 2019.
The whole process of creditors' inspections and payments of funds is expected to last for several years, as ABLV Bank currently has more than 3,300 creditors in total.
See steps of ABLV Bank’s controlled liquidation
FCMC sanctions BlueOrange Bank
On 21 December, 2018, the Financial and Capital Market Commission (FCMC) imposed a fine of EUR 1 246 798 to BlueOrange Bank, a joint stock company. The FCMC’s inspections into 2016 and 2017 found that the Bank had failed to comply with the provisions of the AML law and FCMC regulatory requirements. The bank had not paid sufficient and special attention to inter-related transactions with no apparent economic purpose, and had not ensured timely and high-quality customer due diligence and the documentation of results thereof. The FCMC had also concluded that BlueOrange Bank had failed to provide for suspicious transaction detection and timely reporting of such transactions to the FIU Latvia.
Currently, both parties have entered into an administrative agreement to set legal obligations under the scope of the Law on the Prevention of Money Laundering and Terrorism Financing (AML law) in order to improve the functioning of the Bank's internal control system.
Pursuant to the agreement, the parties have agreed to the follow-up measures for enhancing the AML/CFT internal control system that the bank undertakes to meet fully within the set time-limits under supervision of the FCMC.
The FCMC has applied EUR 16 million in fines for violations of anti-money laundering standards by financial sector entities over the last four years, almost 8 times the amount applied in the previous 11 years.
FIU organized workshops confiscation and prevention of terrorism financing
On 14 and 15 January, the Latvian Financial Intelligence Unit (FIU) organized workshops on confiscation of laundered assets and money used to finance terrorism, focusing on its importance, FATF standards, knowhow of USA, Italy and Israel, confiscation case analysis.
On 16 January, FIU Latvia together with the Finance Latvia Association ran a workshop on prevention of terrorism financing for industry professionals who are responsible for identifying suspicious activity in their own companies.
The aim of the workshop was for those professionals to gain a more thorough understanding of the recommendations of Moneyval’s report on Latvia and to offer official expertise in identifying alerting mechanisms that financial institutions can use to discover and pinpoint risks of terrorist financing. The workshop was also intended to help participants analyze vulnerabilities of financial institutions and other entities regarding financing of terrorism.
Guest lecturers included Mr. Yehuda Shaffer, former head of Israel’s FIU and head of Israel’s MONEYVAL delegation until 2018, currently expert on AML/CFT issues, and Mr. Stefan Cassella, self-employed consultant with extensive experience with providing training and legal advice on asset recovery and anti-money laundering matters.