Baltic and especially Latvian banks last two decades served as a springboard for cash transit from the former Soviet Union to the EU. According to the Finance Commission on markets and capital (FCMC), the supervisory authority over the banking sector in Latvia, 14 of 19 local banks are working with non-residents, most of them - customers and businessmen from Russia and the CIS.
The Latvian banks have been more active periods for the increase of the Russian customer base - the first of which was associated with a residence permit in Latvia due to investment - deposit placement in the bank (the program was launched in 2010), and the second occurred during the banking crisis in Cyprus in 2013. "After the start of problems in banks in Cyprus Russians in Latvia passing the bill," - says Maria Juice, head of international tax planning "Infinity Group". Remains of success seen so far. At the beginning of the year, according to the FCMC, the share of non-resident deposits in Latvian banks was 53.4%.
Banks adjust to the Russians, for example, introduced services on the riversskom language. Those reciprocated and used Baltic banks to service the offshore companies. With Latvia, according to Forbes estimates, related offshore company in 2941 from the "Panamanian archive» Mossack Fonseca, with Estonia - 881 company, with Lithuania - only 33. Forbes source in one of the banks in the Baltic states that almost every local bank in addition to the classic banking services offering non-standard - for example, banks were engaged in non-core business for the sale of offshore companies.
On the bad bank
But the long phase of warm relations Latvian banks and Russian customers came to an end. Several Russian businessmen have told Forbes that faced with the massive failures in the opening and maintenance of bank accounts in Latvia (rejection letter received from Citadele Bank, have Forbes).
"Latvian banks refuse or limit themselves to work with companies registered in the classic offshore jurisdictions" - says Maria Juice. According to her, the banks refuse to work with some clients, introduced requirements for the maintenance of a minimum balancethe accounts for the company of a number of offshore jurisdictions, there are restrictions on the work with dollars to offshore companies.
"Now open accounts for non-resident clients in the Latvian banks has become more difficult - confirms Alexander Zakharov, a partner at Paragon Advice Group. - It is almost impossible to open an account remotely. Latvia has tightened the requirements for the verification of the beneficiaries. Clients of the former Soviet Union to the Latvian bankers - now it's risk zone. "
Source of Forbes, is familiar with what is happening in Latvia, he says that there are two reasons for the difficulties: firstly, there is a struggle with Russian money of any origin, and secondly, can be seen trying to squeeze the money of non-residents - including offshore - EU banks.
"Expectations pretty bleak. As previously undermined the real estate market in Latvia, increasing the value of the property you want to buy to obtain a residence permit, so today and undermine the banking system ", - said the source.
Another problem for the banks - a complication of administration of customer accounts. Latvia has introduced rules on Auto from January 1 this yearwhom the exchange of tax information (AEOI), which implies the definition of the customer residence. According to the AEOI, banks are required to carry out the analysis of customer accounts and submit reports to the State Revenue Service of Latvia, which will transmit data to the tax authorities of other countries (the EU, Russia and others.). On January 1, 2017 the system will transmit reports on all accounts of $ 1 million or open until 2016. On the introduction of AEOI Latvian banks actively notify its customers since spring, sending them to the appropriate letter (a copy of one of the letters have Forbes).
Forbes source said that most local banks have put their customers a choice: either to provide proof of payment of taxes in the country where the customer is a tax resident and fill in the forms in which it was necessary to explain the origin of the money - or close accounts. "And even for non-residents complete the questionnaire was not a guarantee that the bank will work with this client, - says the source. - Bankers in April, said: "If you live in Latvia, work here, invest, or your business is connected with local companies,s leave you to account. " As a result, we owe nothing left, all accounts are closed. "
Forbes interviewed Baltic bankers say that did not enter an outright ban on the opening of accounts for the Russians. According to Robert Idelson, the Chairman of the Board M2M Europe, in Latvia there is no legal prohibition on working with offshore companies. "Most likely, some banks simply tighten the screws in the part of the compliance procedures: failure due to the fact that the bankers do not understand the origin of money and the fact of client operations," - Idelson said.
Citadele Bank representative said that the bank will adhere to the principle of "zero tolerance for reputational risks", which inevitably leads to a certain number of failures in the work. The bank argued that the number of accounts opened by the Russians, disproportionately greater than the failures. The absence of a selective approach to the Russian clients reported in Rietumu Bank. The FCMC said that statistics is not to judge the reduction in the volume of services provided by Latvian banks to non-residents, but the increased requirements to the customers could lead to an increase in failures in the opening MFthat.
What are the options now have Russian clients of Latvian banks? According Juice, they can try to change the jurisdiction of their off-shore companies, which will meet the requirements of banks, such as the English and Scottish partnerships or Hong Kong. Golubovich, managing director of Arbat Capital, believes that as a result of the current toughening across Europe will move funds ordinary customer-business less dependent on the jurisdiction of the European Regulators' Where the money gone? Today, many recommend to transfer funds in banks in Cyprus, Dubai, the USA, Singapore and Monaco. "
Why Baltic bankers have become so cautious? Focusing on non-resident service, many of them have increased revenues from tranzaktsonnogo business, but instead of the local banking system was involved in a lot of scandals connected with suspicious transactions, - from the case of Sergei Magnitsky Hermitage Capital lawyer to transfer funds between Sergei Roldugina firms, godfather daughter father Vladimir Putin.
Baltic bankers are not includedthe elite of the European banking sector and were often involved in dubious schemes. "In Latvia, a lot of credit institutions to such a small economy - it is clear that part of their banking sector is related to the non-resident service as a" transit "of the banks", - says Anton Gans, a partner of the management company Zenith Capital Management (located in Estonia). According to him, some western banks refuse to work with bankers from Riga. "Our customers have been several incidents with Latvian banks - foreign banks refusing to transfer money to an account or receive documents from them," - says Hans. On specific customer Baltic banks says Alexander Zakharov. According to him, in the Latvian banks to open accounts by those who did not open them even in Cyprus.
Latvian regulator (FCMC) to a certain point indulged growth of any banking business and seriously punish banks for the washout pattern.
For example, in the case of Magnitsky implicated six Latvian banks Operations: underwent $ 63 million from $ 230 million through their accounts stolenGOVERNMENTAL from the Russian budget in 2007. One of the banks (his name not disclosed) was fined a mere € 140 000. The Latvian TV3 channel reported that the funds went through Baltic international Bank (BIB), Trasta kommercbanka, Rietumu Banka, Aizkraukles Banka (now - ABLV Bank), Baltic Trust Bank (became part of the local GE Money Bank) and Privatbank.
Unpleasant discovery for the Baltic banking system has become in the past year, local banks were involved in the "Moldovan scheme." Then in Latvia fell requests from law enforcement agencies of other states. . Thus, in 2014 the three Moldovan banks $ 1 billion Hired Moldovan government detective agency Kroll was launched to find out: the money taken out on account of offshore companies, opened in the Latvian banks Aizkraukles banka, Latvijas Pasta banka and Privatbank. Another local bank Trasta kommercbanka turned party circuit, through which the four years of Russia were put up to $ 46 billion. In the last year on suspicion of organizing the scheme in Moscow Law enforcement agencies had detained shadow banker Alexander Grigoriev. The same Trasta Kommercbanka was associated with the withdrawal of $ 535 million from the Ukrainian Delta Bank Nonekolaya Laguna.
Against the background of Latvia's accession to the Organization for Economic Cooperation and Development (OECD) in October 2015. The organization's experts published a report that criticized the system of banking supervision in the country. Then, in the same Letts problem indicated in the United States. "Despite the fact that a small country, through your financial system takes 1% of all dollar transactions in the world. It's hundreds and hundreds of millions. You must be able to control this flow, "- said Deputy Minister of Finance of the USA to combat terrorism finasirovaniem Daniel Glasser (his quote leads edition Re: Baltica). Risks of a ban on dollar transactions and are a major motivator for change in the Baltic banks, Alexander Zakharov said.
The threat is not vaporware. In 2005, the US Securities and Exchange Commission (SEC) accused of money laundering, two Latvian banks.
US Treasury encouraged American banks to close for the VEF and Multibanka correspondent accounts in dollars and imposed sanctions. VEF as a result lost his license, Multibanka was in 2006 bought by SMP Bank, owned by Boris and Arkady Rotebergam,but it managed to lift sanctions only after the closing of 5000 doubtful accounts.
The first victim was PrivateBank, owned by Ukrainian businessman Igor Kolomoisky and involved in the "Moldovan scheme." In December, the FCMC has replaced the bank's management and fined him for inadequate scrutiny of client operations for € 2 million - a record fine for the Latvian banking system.
Then began the most changes in the FCMC. In late January, the Latvian Seym sacked the head of FCMC Kristaps backstage, who was accused of insufficiently rigid approach to Latvian banks. He was replaced by Peters Putininsh. In February Putininsh announced that the audit of the banking system of Latvia will conduct three US companies (their name and status is not disclosed). "It was about the need to invite the American consultants, so that they share international best practice and experience in the monitoring system, have helped to improve in Latvia that is not well and that we are reproached for," - said Alexander Gafin, a member of Rietumu Board of Directors . According to him, the consultants are working in Riga, and the choice of Amerikantsev due to the fact that the majority of transactions in banks is held in dollars and in the currency is a huge number of commodity contracts. Forbes Source in the Latvian bank said that the local banks are testing servers and client correspondence services: "Everything makes the Latvian police, aided by American experts." Police of Latvia on Forbes request to participate in such checks did not answer.
Scraping the Baltic banking system continued. The most rigid measure showed the European Central Bank - in March of this year, he revoked the license of Trasta kommercbanka (its owners were Igor and Ivan Buimisters Fursin). Local control is limited to fines. At € 3 million has been fined Aizkraukles banka (second bank in Latvia in terms of assets), an additional € 1,1 million was punished BIB former partner Boris Berezovsky Valery Belokon (the bank was the lender Krupa Berezovsky). The BIB note that illegal transactions at the bank have been identified, and the fine imposed for lack of diligence. And in May, BIB has himself appealed to the law enforcement agencies of Latvia. The Bank believes that "certain foreign persons & raquo; We tried to push through the bank illegal transactions, to undermine his reputation. Then in BIB were searched and was detained Director of Development of Eastern Europe markets Eugenia Litovchenko, who was in charge in the credit institution for interaction with the Ukrainian representatives. A few days later she was released without charge.
Around the same time, it was reported that France had been accused of money laundering in the address of Rietumu Bank and its president, Alexander Pankov. Later in the interview he Pankov said that it is a fact, opened five years ago in relation to French nationals and companies France Offshore. To investigate was involved himself of Rietumu, with whom worked for France Offshore: French investigators asked the bank to make a bid security in the amount of € 20 million Since this requirement was contrary to the laws of Latvia, the bank refused.. In response, the French investigators brought charges to the bank. "In France, now being a case involving fiscal matters, to one of our former business introducer (for client attraction managerin - Forbes), -Tell Forbes Alexander Gafin. - To date, it has not been brought to trial. Rietumu has always followed the letter of the law. "