American authorities eliminate ABLV bank from money laundering sanctions list

In a significant development, the European Central Bank (ECB) withdrew the banking license of ABLV, the largest locally-owned bank in Latvia, and ordered the dissolution of ABLV Bank Luxembourg. This move came following FinCEN's announcement in February 2018, designating ABLV as a foreign financial institution of primary money laundering concern.

The collapse of ABLV, which has since been undergoing a lengthy liquidation process, was a turning point in Latvia's efforts to address its reputation as a money laundering hub, particularly for money from Russia and Belarus. Since then, the country has been working tirelessly to strengthen its Anti-Money Laundering/Countering the Financing of Terrorism (AML/CFT) regime.

The U.S. embassy in Latvia has emphasised the improvements made in Latvia's AML/CFT regime, stating that ABLV no longer poses a threat to the U.S. financial system. The embassy further reiterates that FinCEN's announcement is a testament to the progress made by the Government of Latvia in addressing its money laundering concerns.

The reforms in Latvia's financial sector have resulted in strengthened authorities and institutional capacity. Since 2018, Latvia has enacted far-reaching legal and regulatory reforms. These reforms have significantly reduced non-resident deposit activity, a principal source of money laundering concern. The country has implemented enhanced transparency requirements for beneficial ownership, stricter anti-money laundering (AML) regulations, improved supervision of financial institutions, and measures to increase cross-border cooperation to strengthen activities outside the residence and the capacity to combat money laundering and terrorism financing.

The U.S. embassy in Latvia states that FinCEN's announcement is only possible due to the systemic improvements made to Latvia's AML/CFT regime. The embassy also notes that the reforms in Latvia's financial sector have addressed the principal source of FinCEN's money laundering concern at the time the NPRM was issued.

The improvements in Latvia's AML/CFT regime have made its financial system fundamentally more secure. The collapse of ABLV led to a wide-ranging clean-up of the entire Latvian financial sector. The United States and Latvia have worked closely together, sharing technical assistance and knowledge to enhance the security of Latvia's financial system.

FinCEN recognises the substantial strengthening of Latvia's AML/CFT regime through these legal and regulatory reforms of its financial sector. The organisation has determined that ABLV is no longer a financial institution of primary money laundering concern due to its completion of the liquidation process and efforts by Latvian authorities to address past illicit activity.

In conclusion, the improvements made by Latvia in its AML/CFT regime have been instrumental in addressing its money laundering concerns and ensuring the security of its financial system. The full text of the withdrawal can be found online for further reading.