Banks, Financial Services, Latvia, Legislation

FKTK discovered in its probes that Baltic International Bank has repeatedly violated requirements of the Law on the Prevention of Laundering the Proceeds from Criminal Activity (Money Laundering) and of Terrorist Financing, and regulations on assessment of clients’ reputation, getting involved in transactions that subject the bank to serious money laundering and reputation risks.

The bank had not paid attention to complicated and related transactions of its customers, had not identified the origin of funding and had not uncovered rolling spot forex transactions in due time, FKTK reported.

Assessing responsibility of the bank’s board chairwoman Ilona Gulcaka, FKTK concluded that she had been responsible for the prevention of money laundering in the time period between 2003 and 2015, and had not acted in due time to prevent the bank’s involvement in suspicious transactions.

Also, FKTK considered that the bank currently is meeting all regulatory requirements, and has resolved to improve the internal control system, therefore the financial watchdog decided not to impose the maximum possible fine, but a fine worth EUR 1.1 million. The maximum fine could reach up to 10% of the bank’s net revenues of the previous financial year.

The FKTK’s decision can be appealed at FKTK or the Administrative Regional Court within a month.

Baltic International Bank respects the decision of the financial watchdog. The bank's stable financial indicators and profit of the previous years allows the bank to pay the imposed fine, LETA learned from the bank.

The bank noted that FKTK’s decision of the financial watchdog does not affect the bank's customers and everyday work in any way.

The bank also said that the watchdog's decision refers to deficiencies in assessment and documentation of customers' past transactions, considering it as insufficient customers' assessment from today's perspective. The decision has been made in respect to a probe conducted a year ago. No violations were discovered during this probe. The bank has already corrected all discovered deficiencies, the bank representatives said.

The bank continues to improve its internal control system and continues constructive cooperation with FKTK in order to strengthen competitiveness of the Latvian banking sector.

Baltic International Bank last year earned EUR 716,000 in profit, while the concern’s profit was EUR 648,000, according to the bank’s unaudited report.

The bank's key owners are Valerijs Belokons (69.89%) and Vilorijs Belokons (30%).

At the end of 2015, Baltic International Bank was the 12th largest bank in Latvia in terms of assets, according to the data of the Latvian Association of Commercial Banks.