HOW LATVIA BUILT ITS POST-SOVIET MONEY PIPELINE

On 9th March, Bloomberg carried an article saying that the scandal at Latvian bank ABLV is part of a bigger picture.  It reports that the Latvian central bank has banned its governor, Ilmars Rimsevics, from working on its premises, and that what is termed “Latvian-type correspondent banking” is a system which has facilitated the flight of tens of billions of dollars from the former Soviet Union to offshore jurisdictions.  The US has been concerned about the Latvian goings-on since at least 2006, when FinCEN issued a report on the use of US shell companies that had received $18 billion in suspicious transfers, mostly from Russian and Latvian accounts.  Changes and pressure since then meant Latvian non-resident banking lost much of its attractiveness, and banks stopped working with shell companies opened in most tax havens. Compliance procedures became onerous for post-Soviet businesspeople, so that opening an account was no longer easier than in most other European countries, and Cyprus and Malta began to look attractive by comparison.  But the gradual rundown came too slow for the US Treasury, hence the ABLV case.  Still a senior US official had just warned the finance minister about Latvian banks’ continuing sanctions-busting activity.  The article notes that Russia’s net capital outflow increased in 2017 to $31.3 billion from $19.8 billion the previous year – much of that is above board, of course, but very likely there is still plenty of murky business to be found.

https://www.bloomberg.com/view/articles/2018-03-09/latvia-s-post-soviet-money-pipeline-is-closing?src=ilaw

Author: raytodd2017

Chartered Legal Executive and former senior manager with Isle of Man Customs and Excise, where I was (amongst other things) Sanctions Officer (for UN/EU sanctions), Export Licensing Officer and Manager of the Legal-Library & Collectorate Support Section

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