Saturday

22nd Sep 2018

Latvia fines bank over Magnitsky money laundering

  • Riga is going after banks laundering money from Russian criminals (Photo: PnP!)

Latvia's Financial and Capital Market Commission on Tuesday (18 June) said it has imposed a fine of 100,000 lats (€142,543) - the maximum fine under Latvian law - on a bank involved in laundering over €170 million stolen from the Russian government.

The name of the bank was not made public.

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The money laundering scheme was revealed by Sergei Magnitsky, a lawyer who worked for Hermitage Capital Management, an investment fund specialising in Russian assets.

He died in a Russian jail in 2009 after being beaten and denied medical care.

Hermitage filed a complaint in July 2012 to Latvian authorities naming six Latvian banks that allegedly laundered funds from the illegal tax refund exposed by Magnitsky.

The Magnitsky case has caused international uproar, with the US in April imposing a travel ban on 18 Russian officials linked to the affair.

Latvia is due to adopt the euro in January 2014 and is under increased pressure from the EU to clean up its act on money laundering, especially as Russian capital may have moved from bailed-out Cyprus to the former Soviet republic.

Around half of the €17 billion deposited in Latvian banks is owned by foreigners.

The International Monetary Fund estimates that up to 90 percent of those funds come from former Soviet states.

The Magnitsky money laundering trail also involves banks in Austria, Cyprus, Estonia, Finland and Lithuania, shelf firms registered in the UK and in its overseas protectorates and banks in Moldova and Switzerland.

EU officials are helping the six EU countries involved to share information in the European Commission's Financial Intelligence Unit.

A commission source said preliminary results from the joint work are expected in late June or in July.

But Austria and Finland have already said their banks did nothing wrong.

Meanwhile, Moldova - a central transit point for the stolen funds - is dragging its heels on the case.

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