Latvia’s Bank Rietumu Fined EUR 5.85M Over Money Laundering Failures

Richard Marley
June 18, 2021
3 minutes read
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The Financial and Capital Market Commission has fined Bank Rietumu EUR 5.85 million over failures in its anti-money laundering system.

Latvia’s banking regulator, the Financial and Capital Market Commission (FKTK) stated on June 17 that it is handing out a record fine to local bank “Rietumu Banka” due to failures found in its AML (Anti-money Laundering) systems.

The decision which was taken on June 15 by the FKTK stated,

“We have decided to apply a fine of EUR 5.85 million on AS Rietumu Banka for infringements of the regulatory requirements regarding anti-money laundering and counter-terrorism and proliferation financing (AML/CTPF). The bank is also subject to a number of legal obligations to address identified violations and shortcomings.”

FKTK said that back in 2019, it had carried out an on-site investigation of Rietumu Banka to inspect AML/CTPF compliance and to ensure that internal control systems have the capability of identifying risks related to money laundering and terrorist financing.

The inspection surfaced irregularities and deficiencies related to insufficiently effective internal control system and inadequate risk management. Additionally, the FKTK also came to the conclusion “that the bank had not adequately assessed the risks associated with the activities of payment service providers (including foreign) and, in some cases, the level of ML/TPF risk inherent to the customer was determined lower than the actual risk level,”

Other areas of concern include insufficient resources in the money laundering and terrorist financing risk management team, lack of comprehensive audit services, incomplete regulatory framework, inadequate customer due diligence (CDD) and transaction monitoring measures, lack of appropriate identification of beneficial owners, and timely reporting of suspicious transactions of the financial Intelligence Unit.

Currently, no explanation has been provided by either party as to why the penalties took so long to be implemented.

Nevertheless, FKTK stated it has also ordered the bank to devise an action plan to immediately address the deficiencies identified through the inspections and continue its work on changing the business model. By doing so, Bank Rietumu can reduce risk exposure rates of high-risk jurisdictions, implement effective customer risk assessment measures, and carry out ongoing audits with increased ML/TPF risk.

In 2017, Rietumu Banka was also charged with EUR 1.5 million over similar charges and was advised to reassess its AML/CTF internal control system and take necessary measures.

Numerous news reports reveal that the new fine is the largest fine ever handed out by the regulator.

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ASIC Expands its Team to Enhance Cryptocurrency Regulations
Australia’s financial regulator has enhanced the size of its crypto team. The crypto regulatory measures include their application for financial services licenses and show that specific crypto platforms have particular liquidity in reserve.

After shifting popular blockchain from a proof-of-work (PoW) to a proof-of-stake (PoS) system, ASIC, Australia’s financial regulator, has increased the size of its crypto team.

U.S. Security and Exchange Commission Chairman Gary Gensler stated that PoS-based tokens might be classified as securities.

The decision of ASIC to keep PoS tokens for example Ethereum, Cardano and Solana under its remit will further clarify the situation and enable crypto regulations to be more effective. To cope with the latest regulatory reforms, the crypto exchange must either delist the tokens or start complying with robust crypto laws.

Such moves may force a few crypto firms to manage their operating models. Even the largest stablecoin of the crypto market, Tether, has been caught in a controversy created over the failure of holding enough dollar reserves to back the stablecoin.

The crypto regulatory measures include their application for financial services licenses and show that these platforms have particular liquidity in reserve.

The final decision by the regulator has not been issued yet. Greg Yanco, the executive director for marketers, said that ASIC won’t be a “cheerleader for crypto assets.”

SEC Newgate carried out research the last November. It showed that 44% of Australian retail investors reported holding crypto. Out of these investors, only 20% viewed crypto as high-risk.

The chairperson of ASIC responded and said that the regulators were “concerned that there are limited protections for crypto-asset investments given they have become increasingly mainstream and are heavily advertised and promoted. There is a strong case for regulating crypto-assets to better protect investors.”

According to Yanco, until the last year, cryptocurrency was not such a high priority. Still, due to the decline of cryptocurrency in the previous few years and investors wiped out around the globe, ASIC expanded its team. It made crypto one of its “core strategic projects.”

Suggested Read: Regulatory Authorities to File a New Bill to Secure the Citizens from Cyber Criminal Activities

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Latvia’s Bank Rietumu Fined EUR 5.85M Over Money Laundering Failures

Forensic Document Verification – A New Standard

How Forensic Document Verification is Carried Out?

High-Profile Crime Cases of Document Fraud

Gang Arrested for Printing Fake Documents in Greece

Criminal Network Busted for Distributing Fake Documents

Regulatory Authorities Monitoring Document Fraud

Canada

Australia

Document Forgery Forensic Authentication – Ensuring KYC Compliance

What Shufti Pro Offers?

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Let’s prove your customer’s

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