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Latvian bank RIB fined for ‘irregularities’ and inadequate AML measures

By Vish Gain for AMLi

Latvian bank RIB has been fined almost half a million euros for ‘irregularities in detecting the source of funds’, state public broadcaster LSM reported Sunday.

Regional Investment Bank was fined ‎€473,076 by the state’s financial watchdog Financial and Capital Market Commission (FKTK) based on a decision made on November 3. 

The ‘irregularities’ were detected in 2019 during an inspection in large value cash transactions carried out by the RIB’s high-risk clients from high-risk jurisdictions according to the FKTK, which said the bank “failed to ensure adequate risk management and was exposed to disproportionate reputational risk.”

The state’s broadcaster reported that the FKTK has not explained why it took so long to make this decision.

“The Bank, on certain occasions, had failed to comply with the regulatory obligation to verify the origin of financial resources. The Bank had not obtained documents verifying the origin of the cash paid into its customer accounts,” FKTK said.

“According to regulatory requirements, if a client from a high-risk jurisdiction performs a large value cash transaction, it is considered to be a high-risk exposure. Such transactions should be subject to an enhanced customer due diligence.”

The FKTK also said that the bank took “substantial measures to improve the internal control system” which may explain the relatively modest fine value.

The broadcaster quoted the bank’s website which said: “We have the time and willingness to study the needs of every customer in detail, not being afraid of any complex or complicated cases and, thus, being able to offer the most suitable solution to every customer.”

This is not the first time the bank has been fined by state authorities, having been mired in financial controversy for the past two decades. In 2017, RIB was one of three Latvian banks to be found guilty of breaches in anti-money laundering law and weakness in customer due diligence and transaction monitoring.

It was found that the bank had been used to circumvent interventional sanctions on North Korea and was fined €570,364 along with a warning.

In 2014, the RIB was fined €70,000 for violations of the law on the prevention of money laundering and terrorist financing along with deficiencies in non-resident customers’ due diligence and monitoring of exposures.

The bank, founded in 2001, has strong links to Ukraine according to the state broadcaster, with substantial shareholding investments from Ukrainian businessmen and a strong presence in the bank’s council.

The state broadcaster reports that RIB recorded a profit of €143,415 in the first quarter of 2020 and had assets of €285.54 million at the time.

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