Latvia’s ABLV Bank on Monday was ordered by the European Central Bank (ECB) to stop all payments as its liquidity position had deteriorated sharply since the US Treasury accused it of allowing clients to conduct business with North Korea.
The ECB said it had agreed to lend ABLV €97.5 million ($121 million) to help it with liquidity, with high-quality assets as collateral. Beyond depositors not being able to access their funds, imposing a stay on payments is controversial because of the potential damage to a bank’s counterparties.
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The support to be paid out through Latvia’s central bank became necessary after the US Treasury’s Financial Crimes Enforcement Network (FCEN) said it had launched a probe investigating whether ABLV executives and management had bribed Latvian officials to cover up their activities.
“ABLV has institutionalized money laundering as a pillar of the bank’s business practices,” the FCEN said in a statement linking some of the alleged activities to North Korea’s ballistic missiles program.
In its document detailing the allegations, FCEN said the reliance of the Latvian banking system on non-resident deposits for capital exposed it to increased illicit finance risk totalling roughly $13 billion (€10.5 billion).
The bank has claimed the US accusations are based on unfounded and misleading information. In a statement, ABLV Chairman Ernests Bernis said the bank was the target of a “deliberate defamation campaign” and emphasized that “there is not and never has been any bribery regarding state authorities.”
In an effort to shake off accusations that its banks hold wealth with questionable origins, Latvia’s financial regulator has fined three banks for handling accounts that were involved in a $1 billion Moldovan fraud in 2014. Five Latvian banks, including ABLV, agreed last year to record fines for failing to perform adequate due diligence and gather sufficient information on transactions and beneficiaries of deals linked to North Korea.
For more read the full of article at The DW
