Banks, Crime, Financial Services, Latvia, Legislation

The letter, addressed to Justice Minister Janis Bordans, says that back in 2012 Hermitage filed a first money laundering complaint with Latvian authorities after discovering that USD 19 mln originating from the USD 230 mln fraud uncovered by Sergei Magnitsky was laundered through 16 accounts at six Latvian banks.

The letter says that, despite a criminal case being opened, the Latvian prosecutor's office refused to grant victim status to Hermitage as well as share any information regarding the investigation. For a number of years, Hermitage was not aware of any actions being made by the relevant Latvian authorities. Following the complete disregard for their investigation in Latvia, Hermitage continued to investigate with the help of the Lithuanian and Estonian authorities.

In 2016 and 2018 Hermitage filed further complaints with the Latvian authorities where it identified 430 accounts in 14 Latvian banks suspected with money laundering. Namely, Hermitage identified further illicit funds originated from USD 230 mln fraud in amount of USD 46 miln that came to Latvian accounts via Cypriot accounts at FBME bank, controlled by Dmitry Klyuev who had brought about this aforesaid USD 230 mln fraud.

The company emphasizes in the letter to the minister that, during the last 6.5 years, Hermitage has provided all possible assistance to the Latvian authorities aiming to bring to justice those involved in money laundering in Latvia and with the aim of identifying where the illicit proceeds siphoned via Latvian banks went to. However, the Latvian authorities have not complied with their duties in combating the money laundering activities taking place in the Latvian financial system. In the meantime, Hermitage continued the investigation and identified over USD 40 mln of illicit proceeds that were frozen in Switzerland, USA, France, Monaco, Luxembourg and Netherlands. Hermitage also identified further USD 102 mln illicit funds on 85 accounts at ABLV bank accounts including USD 19 mln on five accounts controlled by Klyuev and his associate, Andrei Pavlov, and in June 2018 Hermitage filed a new complaint to Latvian authorities.

In July 2018 Latvian authorities once again denied granting victim status to Hermitage.

In 2018 Hermitage also identified massive money laundering at the Estonian branch of Danske bank and subsequently filed complaints with Estonian and Danish authorities. In both cases, this resulted in criminal cases on money laundering being opened immediately in Estonia and Denmark.

Despite all the effort of Hermitage to assist Latvian authorities, during the last 6.5 years of the investigation, the Latvian authorities failed to conduct any meaningful investigation, failed to freeze any criminal proceeds laundered to Latvia, and failed to carry out other activities they were supposed to do. This conclusion was also confirmed by the independent evaluation of U.S. and French financial and antimony laundering authorities, says the letter.

Hermitage requests in the letter that Latvia conduct the investigation on lack of actions from Latvian financial police and prosecutor's office, evaluate the amount, scope and scale of evidence collected, and consider legislative proposals in order to develop victim/civil party status in criminal cases on money laundering.

As reported, this past April Browder took a criminal complaint against Swedbank to Latvian authorities, alleging it was involved in a Russian money laundering scandal.

Browder had previously taken the complaint against Swedbank to Swedish and Estonian authorities, alleging that the Swedish bank's accounts were used to launder USD 176 mln from 2006 to 2012.

The bulk of this amount, USD 117 mln, went through Swedbank's Estonian branch and Browder's complaint lodged with Latvian authorities, dated April 5, showed some USD 41 miln had passed through Latvia.

Browder has pushed for banks to be held accountable over links to a money laundering and tax fraud exposed by his former lawyer Sergei Magnitsky, who died in a Russian jail in 2009.