Latvia’s financial reputation suffered a double blow on Monday, as its central bank chief was accused of bribery and its third-largest lender halted payments to clients amid money-laundering allegations.
Anti-corruption investigators detained Ilmars Rimsevics (52) on Saturday and searched his home and office, before revealing on Monday that he was suspected of "demanding a bribe of no less than €100,000".
No further details of the case were made public, but Mr Rimsevics’s lawyer called his detention illegal and Latvian public media reported that the banker was likely to be released from custody after an unnamed friend lodged bail of €100,000.
Latvian prime minister Maris Kucinskis chaired an emergency cabinet meeting on Monday and said he expected Mr Rimsevics – who is also a member of the governing council of the European Central Bank (ECB) – to step down.
"I can't imagine that a governor of the Bank of Latvia detained over such a serious accusation could work," Mr Kucinskis said.
The Latvian central bank declined to comment on the investigation, but said it had “a zero tolerance policy in respect of corruption and other illicit activities...and will continue to ensure all possible assistance to law enforcement authorities”.
Separate plight
The cabinet also discussed the separate plight of ABLV, Latvia’s third-biggest bank, which the ECB ordered to stop all payments due to the deterioration of its “liquidity position” following money laundering claims and threats of US sanctions.
The Latvian central bank said it would provide €97.5 million to ensure the stability of ABLV, which the US has accused of fraudulent activity and of facilitating transactions with parties connected to North Korea’s missile programme.
The US treasury called last week for ABLV to be banned from holding a US correspondent account, saying it had “institutionalised money laundering” and was exposed to “large-scale illicit activity connected to Azerbaijan, Russia, and Ukraine”.
“Illicit financial activity at the bank includes transactions for parties connected to UN-designated entities, some of which are involved in North Korea’s procurement or export of ballistic missiles,” the US treasury department alleged.
“In addition, ABLV has facilitated transactions for corrupt politically exposed persons and has funnelled billions of dollars in public corruption and asset stripping proceeds through shell company accounts.”
Illegal activity
ABLV insisted that it did not tolerate any illegal activity and would co-operate fully with the treasury department to address allegations that it said were “based on assumptions and information that is currently unavailable to the bank”.
Latvia has sought in recent years to clean up a banking system that attracts large numbers of non-resident clients, many from other former Soviet states. Last July, Latvia's banking watchdog fined two of its banks a total of €2.8 million for allowing clients to avoid sanctions and deal with North Korea.
One of those banks, Rietumu, is 33 per cent owned by Dermot Desmond.
The same month, a French court fined Rietumu €80 million for involvement in tax avoidance and money laundering. The bank said at the time that it would appeal the ruling.
