Latvian regulator fines Ukrainian bank implicated in Moldova fraud case
Latvia's financial regulator on Friday handed down its biggest-ever fine to the local subsidiary of Ukrainian-owned PrivatBank for its role in an alleged billion-dollar fraud in Moldova.
In a statement, the Financial and Capital Markets Commission (FKTK) said it was fining PrivatBank a record ?2 million ($2.2 million) and demanding the replacement of its board for ?irregularities in line with the Money Laundering and Terrorism Financing Prevention Act? and other rule breaches.
"FKTK has reason to believe that the bank had not taken all the necessary (precautionary) measures... Thus, the bank was involved in transactions that put its reputation at risk and at riosk of money laundering and terrorism financing," FKTK said.
FKTK chairman Kristaps Zakulis said the fine should act as a deterrent.
?I invite all bank officials to consider that their work will be individually assessed and breaches of regulations will be appropriately punished,? he warned.
The action came after an independent report into the role of Latvian banks in transferring money from the Moldovan Central Bank to offshore destinations as part of an alleged billion-dollar fraud perpetrated in 2014.
Latvia's large number of boutique banks specializing in non-resident clients from Russia, Ukraine and central Asia have long been linked to cases of alleged money-laundering.
FKTK's previous biggest fine, for possible breach of money laundering legislation, totaled 140,000 euros in 2013 and did not even name the bank involved.
Latvian banks have also been linked to the notorious Magnitsky case and and as recently as December 10 Russian anti-corruption campaigner Aleksey Navalny alleged an unnamed Latvian bank was involved in the 'Chaika' scandal currently causing headlines in Moscow.
The scale of the losses to the Moldovan state has prompted widescale public protests and helped to undermine the local currency as well as fuel inflation in Europe's poorest state.
The FKTK fine is a blow to Ukrainian oligarch Igor Kolomoisky, whose Privat Group has a majority stake in the Latvian subsidiary.