ABLV Bank, the third largest financial institution in Latvia in assets, faces the prospect of being prohibited from opening or maintaining a correspondent account in the US.
“FinCEN will continue to take action against foreign banks that disregard anti-money laundering safeguards and become conduits for widespread illicit activity,” said Steven Mnuchin, the U.S. Treasury Secretary, in a statement on FinCEN’s website.
Washington rarely uses the sanction, which can make banks inoperable, but its likely application is seen as part of a broader campaign of pressure against North Korea and Russia.
The bank said in a statement on its website that it was familiar with FinCEN’s proposal but that the institution “uses false information” and has not taken into account the bank’s past efforts regarding money laundering and prevention of terrorist financing.
“The Bank will make every effort to refute the allegations made,” the statement said, adding that it was observing the laws and requirements of international law and that it has carried out several audits, some in cooperation with US advisers.
However, money laundering is a pillar of ABLV’s business practices and because of its failure to implement effective anti-money laundering and counter terrorist financing measures, the bank enabled its clients to violate sanctions imposed by the United Nations on North Korea in relation to its nuclear weapons program, according to the FinCEN.
“Deficient practices at banks foster a wide array of illicit conduct,” said Mnuchin. “Including activity linked to North Korea’s weapons program and corruption connected to Russia and Ukraine. FinCEN is committed to protecting the U.S. financial system from these types of risks.”
ABLV facilitated various transactions for corrupt politically exposed persons and funneled billions of dollars in public corruption and asset stripping proceeds through shell company accounts, the agency said.
“ABLV failed to mitigate the risk stemming from these accounts, which involved large-scale illicit activity connected to Azerbaijan, Russia, and Ukraine,” the statement said.
“The Financial and Capital Market Commission [of Latvia] can confirm the release of such statement by the US authority today,” the Latvian banking watchdog said on its website. “The commission has taken relevant supervisory actions.”
After a prior FBI investigation, the Latvian banking watchdog imposed financial penalties of more than €3 million (US$ 3,7 million) on five other Latvian banks, which mainly serve non-resident clients, in 2017, for failing to comply with rules in connection with breaching North Korea sanctions.
