Everything changed as soon as the United States and the European Union declared a crusade against money laundering and tax evasion. In June 2014, Latvia signed an agreement on the exchange of tax information with the United States under the Foreign Account Tax Compliance Act (FATCA). Later I had to join a similar agreement on the automatic exchange of information within the OECD. After this, problems fell on Latvian banks, like a horn of plenty. The Financial and Capital Market Commission (FCMC), a financial regulator that reports to the Latvian Ministry of Finance, routinely punished banks for violating the law on the prevention of money laundering and terrorist financing, as well as for weak client checks.
In March 2016, the FCMC fined Baltic International Bank € 1.1 million, and in July 2017 Norvik Banka and Rietumu fined € 1.3 million and € 1.56 million respectively. The last two banks were also accused of a weak transaction control system, which allowed them to be used to circumvent US sanctions against North Korea. Three more banks received fines totaling € 640,000 in the summer of 2017. Against this background, non-resident deposits in Latvian banks dropped to 43% by the beginning of 2017, amounting to € 9.2 billion, which is € 800 million less than in 2012.
Founded in 1993, ABLV has avoided trouble throughout its history. Claims of the regulator regarding transactions with North Korea did not affect him, and this could provoke an attack by the American Ministry of Finance, Bernice says: “Perhaps when the US authorities saw that their prescriptions were ignored on the ground, they decided to deliver a death blow.”
The destruction of ABLV could be desired by people from the country's highest financial circles, Bernis believes. For example, the former head of the Bank of Latvia Ilmar Rimshevich, who is now under investigation due to suspicions of “trading in influence”. “I stopped communicating with the former head of the Central Bank in early 2015, since communication with him, from my point of view, became ethically unacceptable. I did not want to aggravate the situation and began to ignore it, ”says the banker.
ABLV liquidation is not yet complete. In March 2018, the bank transferred € 480 million to the Deposit Guarantee Fund for payments on insured deposits. Of the 22,000 clients of the bank, more than half have already received guaranteed amounts of € 100,000. Payments over the guaranteed amount have not yet begun, since the liquidation team decided to verify the origin of these funds.
Under the ABLV brand, there were also seven bond funds and four equity funds that invested in international markets. Their aggregate portfolio amounted to approximately € 120 million. The funds were available to all bank customers, but now these funds are blocked by the European Euroclear settlement depository, its representatives complain that they cannot identify investors, says a banker close to ABLV.