Banks, Financial Services, Latvia, Legislation

The results obtained through the inspection showed that Rietumu Bank as well as several other Latvian banks had been used in transactions that might bear the indications of the circumvention of the international sanctions against the North Korea. 

The mentioned transactions do not constitute a direct non-observance of the sanctions regime, due to the fact that such transactions were not carried by involving persons that are included into sanctions lists. Thereby, without the access to the additional information, which was inaccessible to the bank, the bank did not have a possibility to reveal illegal nature of such transactions. 

The inspection indicated that in the process of carrying out these transactions the bank has neither committed intentional activities related to the circumvention of the sanctions, the bank acknowledges that had no relation to the organization of these transactions and was not interested in their provision. Moreover, the bank had terminated its relations with these clients. 

Despite the indirectness of such detected deficiencies, Rietumu Bank as one of the systemically important banks, comprehends the high priority of the observance of the sanctions and by taking responsibility for a reputation of the whole financial sector, and taking into account the long-standing, fruitful cooperation with the Financial and Capital Market Commission, considered appropriate to use the possibility provided by the law to enter into an administrative agreement. In accordance with the agreement the bank will pay fine in amount of EUR 1 566 604 to the state budget of Latvia, and commits to make additional investments into the development of the internal control system. 

Over the course of the constructive dialogue with the Financial and Capital Market Commission the bank has developed and coordinated the long-lasting plan of additional actions, aiming for further improvements of the internal control system – in order to improve effectiveness of this system and ensuring the compliance with the highest international standards, applicable to the bank as the OECD member state bank.