In Brief

Latvia jolted by US probe and arrest of central bank chief

US Treasury accuses Baltic nation’s third-largest bank of money laundering

Latvia’s financial system has been shaken by the arrest of its central bank chief over bribery allegations amid separate claims that one of the country’s biggest banks may have helped breach North Korean sanctions.

Bloomberg describes the developments as a deepening “crisis” engulfing the Baltic nation’s banking system. The Financial Times says the “dramatic” developments are the latest in a series of crises in Latvia dating back more than a decade.

Ilmars Rimsevics, the Bank of Latvia’s governor and European Central Bank (ECB) representative, was detained over the weekend and then released on bail, the BBC says. Rimsevics denies taking a €100,000 (£88,000) bribe. He has not been formally charged and refused to resign yesterday, claiming that two of the country’s lenders were conspiring against him.

Separately, the US Treasury accused ABLV, Latvia’s third-largest bank, of “institutionalised money laundering”. Investigators say this included allowing clients to conduct business with North Korea-linked parties, some of whom were companies connected to the North’s banned ballistic-missile programme, The Wall Street Journal reports. ABLV denies the accusations.

The ECB froze all payments by ABLV on its liabilities yesterday, after the bank’s liquidity position collapsed in the wake of the US allegations, CNBC reports.

Latvia - a republic of around two million that joined the EU in 2004 - has built itself into a banking centre for citizens from other former Soviet states. The latest scandals will come as a “surprise” to many, as Latvia has seen a regulatory crackdown involving tougher fines and enforcement against the country’s sizeable non-resident banking sector, the FT says.

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