PrivatBank Latvia hit with yet another fine for anti-money laundering failures

Latvia's banking regulator, the Financial and Capital Market Commission (FKTK) said November 23 it was hitting AS PrivatBank with a fine of more than three quarters of a million euros "for breaches of regulatory requirements in the field of anti-money laundering and combating terrorism and proliferation financing (AML/CTPF)", plus various other measures.

The sanctions come following inspections carried out in 2020 as a result of which FKTK "has concluded that AS "PrivatBank" needs to strengthen internal governance, improve its internal control system, implement and improve risk management culture corresponding to the nature of Bank's activities and ensure full-scale internal audit functioning."

FKTK also assessed the liability of the responsible officials for infringements identified during the inspection, as a result of which a warning was issued to Inga Rumba, the former acting Chairperson of the Board.

"During the inspections, the FKTK assessed internal governance and compliance with regulatory requirements in the field of the AML/CTPF, as well as compliance with the regulatory requirements regulating international and national sanctions. As it was detected during the inspections, due to an inappropriate risk management culture, AS ”PrivatBank” had not established an internal control system in the field of AML/CTPF commensurate with its operational risk that would ensure effective compliance with the requirements of the AML/CTPF Law and underlying regulatory requirements," the regulator said.

The bank is now obliged to improve its internal control system and "should take further necessary steps to manage these risks avoiding the use of the Bank and Latvian financial system for the ML/TPF purposes".

In 2020, the Bank had 9 branches in Latvia, 4 of them in Riga, and employed 187 people. According to the Finance Latvia Association it had assets of 123 million euros at the end of March 2021.

It is not the first time PrivatBank in Latvia has been hit with a fine by the regulator. As previously reported by LSM, in 2019 it was slapped with a million-euro fine, also for failures in its AML/CTPF systems. Indeed, the FKTK release from back then is extremely similar to the one issued today. The same year it received another fine of €9,585 for failing to post its accounts on time.

Additionally the bank was fined a modest €35,000 in 2017 as part of action against it and two other banks that were revealed to have been used to channel funds to North Korea through offshore companies.

A year earlier in 2016 the bank's Italian branch was shut down over suspicions it was engaged in large-scale money-laundering. And in 2015 – when such fines were still uncommon – PrivatBank was fined €2 million for failing to take proper precautions against massive money-laundering, and FKTK ordered the replacement of its entire board.