14.03.2018 an informational message that Euro will be the main operational currency of Latvian bank Reitumu Banka due to the difficulties of processing transactions in US dollars was published on the official website of this financial institution.
In this message, “reputational problems of the Latvian banking system” were named as the main reason for making a decision to stop using US dollars in bank operations. At the end of February 2018, one of the leading Latvian banks, ABLV Bank, AS (ABLV) was included in the report of the Financial Crimes Enforcement Network of the US Treasury due to suspicions in money laundering by its non-resident clients with possible assistance of management and employees of ABLV. As a result, a measure in form of prohibition for correspondent banks to conduct ABLV transactions in US dollars has been applied to ABLV, that caused the outflow of capital and made the significant number of clients to choose other banks and consequently forced ABLV management to make a decision to start self-liquidation.
This event may lead many Latvian banks that work with non-resident customers (both natural and legal persons) to enhanced control by the regulator and public authorities of Latvia. In fact, such clients are primarily to be suspected in money laundering, and their service may cause negative consequences for the bank.
So, according to the opinion of Dana Reizniece-Ozola, the Minister of Finance of Latvia, there are at least 10 Latvian banks that are in the “risk zone” (their names have not been mentioned). In the interview after a meeting with representatives of the US Treasury, the Minister of Finance stated that after the incident with ABLV, Latvia’s banking sector is still used for money laundering by some persons, including those who are under US sanctions.
Thus, alongside with Reitumu Banka, some other banks in Latvia may face the problems with client services in US dollars and suspend it.
It should be taken into account that the suspension of operations in US dollars was applied by Reitumu Bank as a temporary measure and such decision was made by the bank itself, not as a result of imposition of restrictive measures by any organization. All amounts in clients’ accounts and deposits in US dollars have been converted into Euro. All subsequent operations will be carried out in Euros.
