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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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Danish Gambling Operator Reports Tipwin to the Police for AML Failings
Then danish gambling operator Spillemyndigheden has reported Tipwin to the police for violating the Danish Money Laundering act

According to the sources, Spillemyndigheden, the government office based in Odense, Denmark, has reported to the police that the business has failed to create risk assessments of retail bets with a lack of written policies on its retail offerings.

It is also worth mentioning that the operator also lacks complete business procedures and controls for the offerings based on land or in regards to money laundering until 25 May 2022.

In the official statement of the regulator to the police, it stated all the shortcomings of Tipwin in compliance with the anti-money laundering standards. It stated: “Spillemyndigheden notes that the rules on risk assessment, policies and business procedures are absolutely fundamental in the Money Laundering Act. By failing to prepare a risk assessment, Tipwin has not had a useful tool that has provided an overview and understanding of where and to what extent Tipwin is exposed to money laundering or terrorist financing, and what measures are in place are necessary to mitigate the risks involved.”

This clearly states that the german based gambling operator, Tipwin is exposed to the illicit crimes of money laundering and terrorist financing and has failed to comply with the AML regulations. The Danish regulator also focused on the lack of preparation from the operator on assessments of risks which are fundamental components of the anti-money laundering act.

Spillemyndigheden also added: “Preparing a risk assessment of the company’s business model is a very fundamental means of limiting the risk of money laundering. Tipwin has thus also not had policies and operational procedures that stem from the risk assessment. By failing to prepare a risk assessment, the Gambling Authority has therefore handed over the case to the police investigation.”

The authority also launched an injunction on the breach of rules and procedures in regard to the online casino and betting operations. With the main emphasis on money laundering, the regulator released a statement last month which reminded businesses in the industry of the obligations. It mentioned the regulations most firms are complied with, which are in order to prohibit the financial interactions with individuals, groups, legal bodies or countries.

In addition, Spillemyndigheden issued a 3 months deadline to Tipwin to sort out the situation.

Suggested Read: Danish Gaming Regulator Sanctions Unibet Over AML Violations

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While Australia’s vulnerability to money laundering and organized crime is obvious, firms that incorporate a robust AML Screening solution can steer clear of both money laundering and regulatory penalties. AML/CFT regulations oblige businesses to identify the ultimate beneficial owners and individuals who perform transactions for corporate customers. The FATF advises businesses to verify the identities of their customers through document verification checks and analyse the risk associated with them.

Shufti Pro’s AI-backed identity verification and Anti-Money Laundering (AML) screening solutions allow financial firms to adopt a risk-based approach. The globally acclaimed company offers services in 230+ countries and territories that ultimately overcomes the data transparency issues identified by FATF. In less than a second, financial organizations can get 98.67% accurate identity verification results.

To learn more about Shufti Pro’s AML Screening solution, get in touch with experts.

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

Crown and Star Casinos – A Stain on Australia’s Reputation

Australia’s Anti-Money Laundering Regime

How Casinos and Businesses Can Secure their Operations

What Shufti Pro Offers

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