Banks, Corruption, Financial Services, Latvia, Legislation

When delivering his annual report about the government's performance, he spoke about the recent developments in the banking sector. He said those events had overshadowed many other issues vital for Latvia but not for long because the government was determined to implement its action plan.

With the general elections to be held in fall this year, many have become excited therefore “we hear suggestions about removing this or that minister or the whole Cabinet every day,” and even very experienced lawmakers were known to have suffered a panic attack, the prime minister said.

"But I will disappoint them - despite all the troubles, Latvia is growing, and there is no reason to expect discontinuation of our development,” Kucinskis said.

He agreed that the recent problems in the finance sector had had a negative effect on Latvia's reputation but stressed that there was no threat to the stability of the banking system. Although it appears from the public statements of certain officials that nobody in Latvia knows how to make a risk assessment, it is a wrong impression, and the Bank of Latvia and the financial watchdog do their job, the prime minister said.

"There are problems that need to be solved and the government is prepared to discuss the solutions but it cannot be done overnight,” he said.

As reported, the Latvian finance sector has been shaken by several developments within the past week.

The Corruption Prevention Bureau has started a criminal proceeding against Bank of Latvia Governor Ilmars Rimsevics on suspicions of bribery. Rimsevics insists he is innocent and therefore will not step down as the head of the Latvian central bank. He said that the accusations against him was a retaliatory action from ABLV Bank and other banks serving non-residents.

The Financial Crimes Enforcement Network (FinCEN) of the U.S. Department of Treasury has proposed sanctions against ABLV Bank for its role in money laundering schemes that have been facilitating transactions for parties connected to North Korea's nuclear program and illegal activities in Azerbaijan, Russia and Ukraine. FinCEN also said in its report that the management of ABLV Bank used bribery to influence Latvian officials when challenging enforcement actions and perceived threats to their high-risk business.

ABLV Bank said it will make every effort to disprove the allegations and will ask the law enforcement agencies to investigate possible slander.