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Europe’s anti-money laundering chief defends his record in wake of FinCEN Files

Latvia was viewed as a hub for criminals to launder billions while Valdis Dombrovskis was the country’s prime minister.

Valdis Dombrovskis, executive vice-president of the European Commission and the former prime minister of Latvia, has defended his record on combating money laundering after the FinCEN Files detailed how, for years, global banks secretly believed his home country was a magnet for tens of billions of dollars in dirty money.

In a statement to the International Consortium of Investigative Journalists, Dombrovskis said, “During my time as prime minister of Latvia between 2008 and 2014, in the midst of an unprecedented economic crisis, my governments oversaw important reforms … to tackle money laundering and close loopholes.”

He added, “Progress made was acknowledged by [European Union] institutions at the time,” noting that Latvia’s financial system had been closely scrutinized before the country was allowed to adopt the euro as its currency in 2014.

But the FinCEN Files make it clear that many of the world’s biggest banks had long known that Latvia offered sophisticated international criminals one of the easiest avenues into the global financial system, through which vast amounts of dirty money could be laundered. This was the case throughout Dombrovskis’ term as prime minister, the documents show.

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One bank alone, Bank of New York Mellon, filed suspicious activity reports to the U.S. Treasury Department that flagged $7.1 billion in suspicious transactions that had flowed through Latvia’s Regional Investment Bank between 2006 and 2015.

Bank of New York Mellon separately reported $1 billion in suspect funds running through accounts at Meridian Trade Bank, now known as Industra Bank, between 2000 and 2014. For much of that time, Meridian Trade Bank had been the local offshoot of Russia’s SMP Bank, a group owned by Arkady and Boris Rotenberg, billionaire brothers and lifelong friends of president Vladimir Putin.

In 2014, shares in the Lativan branch were hurriedly offloaded to local investors after the Rotenberg’s wider SMP Bank empire, and the brothers themselves, became the subject of U.S. sanctions targeted at Putin’s inner circle.

Of even greater concern to Bank of New York Mellon was a third Latvian bank called Expobank, formerly LTB Bank, owned by a publicity-shy Russian banking tycoon called Igor Kim. According to Bank of New York Mellon, a staggering $29.2 billion in suspicious funds flowed through Expobank in just under a decade, between 2006 and early 2016.

Two other Latvian banks that featured prominently in FinCEN Files were Trasta Komercbanka and ABLV Bank, both of which collapsed amid money laundering scandals.

ICIJ asked Dombrovskis whether these and other revelations from the FinCEN Files, damaged his reputation in the European Union as a champion of tougher anti-money laundering rules. He said, “As these latest revelations have again shown, this is a global and complex problem that requires substantial resources and coordination both within the EU and with international parties such as the United States.”

By Simon Bowers, October 1, 2020, published on ICIJ

Image by Gerd Altmann from Pixabay


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