International Internet Magazine. Baltic States news & analytics Friday, 07.08.2020, 04:37

Banking watchdog fines Rigensis Bank EUR 1.03 million

BC, Riga, 15.07.2019.Print version
The Financial and Capital Market Commission (FCMC) has imposed a fine of EUR 1,028,850 on Rigensis Bank for violations of requirements of the laws and regulations on the prevention of money laundering and financing of terrorism and proliferation, the FCMC informed LETA

The bank's board member responsible for measures against financial crime, Renars Degro has been issued a warning.

According to the FCMC, a number of legal obligations have been imposed on Rigensis Bank: the bank will have to submit to the FCMC a plan of measures for the elimination of violations and deficiencies identified by the FCMC, and have its internal control system and customer base assessed by independent experts.

"The FCMC has carried out on-site inspections at the bank during which customer transactions were reviewed going back to February 2019. The FCMC has identified a number of violations related to the internal control system, customer base risks and their management. The violations suggest that there are major problems in the bank's internal control system as they were ascertained in the key elements of customer study and transaction monitoring. The bank had not set up an internal control system for combating financial crime in line with its operational risks, which would have ensured effective compliance with regulatory requirements," the FCMC explained.

The banking watchdog has found that Rigensis Bank did not take sufficient steps to ensure whether the beneficial owner indicated in transactions was the true beneficiary of the customer, and on several occasions the bank did not clarify the origin of the funds in the customer's accounts and documented the conclusions. The bank has also failed to ensure timely quality customer research and documentation of the results, and the findings in customer cases were incomplete.

The FCMC has also found that the bank has not adequately assessed risks associated with customers and their transactions, and has not paid attention to atypical, complex, interconnected transactions that seemed to have no economic or legitimate purpose.

"In view of the above, it can be concluded that the bank has not ensured effective functioning of the internal control system for combating financial crimes so it would comply with the legal requirements, besides, the FCMC takes into account the bank's shortcomings to date."

The FCMC has also issued a warning to Rigensis Bank board member Degro who was in charge of the bank's measures against financial crime.

The fine on Rigensis Bank is equal to 80% of the maximum fine amount provided in the law - 10% of Rigensis Bank's total annual turnover. The bank has to transfer the amount to the state budget in one month. This is the first time the FCMC fines the bank for failing to observe legal requirements on measures for the prevention of money laundering.

Rigensis Bank posted EUR 993,000 in profit in the first quarter of this year, which is 56.6% more than in the first quarter of 2018.

Rigensis Bank's assets stood at EUR 266.032 as of March 1, 2019, a 41.5% or EUR 188.83 million decrease from the end of 2018.

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