On Current Situation in the Financial Sector Within the Context of ABLV Bank 22/02/2018
Recent developments as regards the situation with ABLV Bank differ considerably, as compared to 2008, given the stability of the financial sector and high financial performance indicators. The Ministry of Finance (MoF), the regulator of the financial sector - the Financial and Capital Market Commission (FCMC) and the European Central Bank (ECB), in collaboration with the Bank of Latvia, are professionally working in the 24/7 mode to control the situation, fully respecting the interests of the population and entrepreneurs.
On 13 February 2018, the Financial Crimes Enforcement Network of the US Department of Treasury (FinCEN) has published a notice, stating that the activities of the Latvian commercial bank ABLV Bank create money laundering concern, and proposing to apply a special measure, pursuant to Section 311, including this bank on the relevant list.
Over the period of recent years, the MoF, in collaboration with the Association of Latvian Commercial Banks, the FCMC and other institutions, has considerably strengthened the legal framework of anti-money laundering and counter-terrorism financing, inter alia, ensuring the FCMC mechanisms for effective implementation of the supervisory process. The sanctions for violations set for the credit institutions have been strengthened, as well. The notice of the US Department of Treasury contains new facts, which were forwarded for due action to the law enforcement authorities. The MoF expects urgent and unsparing response as regards the facts referred to in the notice.
The above mentioned notice affects the operation of ABLV Bank, because, following the publication of this notice, the possibilities of the bank to obtain liquid funds within the standard term were encumbered. The supervisor of the bank (the ECB) has given the time for the bank to solve this situation, by setting restrictions on the outgoing payments, and the bank, on its part, is actively working to present the plan for further development to the supervising institutions (the ECB and the FCMC). It should be noted that the restrictions set on the banking operations constitute a normal practice applied for the purposes of stabilising the situation with the availability of funds. Any cooperation taking place between the bank and the Bank of Latvia for solving the short-term liquidity issues is implemented without additional funding from the State budget and it must meet the principles, which would be observed with respect to any other market participant in accordance with the regulation of the European Union and Latvia.
The FCMC maintains constant contacts with the ECB and provides regular information updates to all competent institutions about the situation in the bank. Since the notice of the US Department of Treasury, the activities of ABLV Bank are under elevated control, involving the ECB governors.
The MoF can confirm that the State budget funds will not be invested into ABLV Bank.
In light of that which is stated in the notice of the Financial Crimes Enforcement Network of the US Department of Treasury (FinCEN) regarding possible corruption in public authorities, on 16 February 2018, the MoF has addressed the Corruption Prevention and Combating Bureau and, on the same day, during the meeting with the Ambassador of the USA in Latvia, has acknowledged zero tolerance policy in respect of corruption of any form thereof. We will continue the dialogue with the US Department of Treasury and we are confident of the effective cooperation between the supervisory and law enforcement authorities of the USA and Latvia.
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