US Envoy Lauds Latvia’s Bank Cleanup as Treasury Lifts Sanction
(Bloomberg) -- The US ambassador to Latvia lauded the Baltic nation’s efforts to clean up its financial sector in the six years since a banking fallout, saying a US decision to withdraw a sanctions measure this year will help investment.
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The US Treasury withdrew the proposed blacklisting of now-defunct ABLV Bank, which triggered a financial storm in 2018 that engulfed the Baltic nation’s banking system. The government’s measures since then to expel illicit financing and shore up lenders have paid off, US Ambassador Christopher Robinson said.
“Rarely do you get such a sustained institutional reform and change so rapidly, so comprehensively and ultimately so effectively as we saw in Latvia,” Robinson said in an interview in the capital, Riga. Six years on, the action against ABLV still had the potential to stall foreign investment in Latvia, he said.
The US Treasury’s 2018 decision to sanction ABLV — at the time Latvia’s second-largest lender — prompted the failure of the bank and exposed the need for badly needed reforms. It coincided with bribery allegations against the nation’s central bank chief and an execution-style murder of a prominent lawyer working on bank insolvencies.
The US’s heavy hand in Latvia, which became a hub for illicit financial flows to the West in the decades after the collapse of the Soviet Union, played a role in the reforms, including new financial regulation and the replacement of top officials.
“Threatening to impose sanctions is a big deal,” Robinson said. “We don’t tend to do those on NATO allies and close partners like Latvia very often.”
Some in the industry have complained that the measures have overcompensated. The US envoy, who made headlines in Latvia last year by saying he’d given up on opening a local bank account, acknowledged that restrictions had made access difficult for foreigners. Robinson said he pays local bills at the post office.
While Latvia is trying to soften some of the harder edges of its financial overhaul, the events of 2018 are still being resolved. The ex-central bank governor, Ilmars Rimsevics, was convicted in December and sentenced to six years in prison for taking bribes. He’s appealing the ruling.
Last month, a Riga court handed down lengthy prison terms to an ex-bank owner and two other men for the murder of the lawyer, Martins Bunkus. They plan to appeal.
The Baltic nation is also keenly awaiting an evaluation by the Council of Europe’s Moneyval group of its fight against money laundering. A “clear assessment” will give a boost to foreign investment, Prime Minister Evika Silina said in a post on social media platform X on Monday.
The US ambassador said the range of measures will pay off in the form of greater investment and economic growth, which ties into the country’s vulnerable geopolitical position at NATO’s eastern periphery.
“Economic security is just as important as military security,” Robinson said. “When we look at our two primary adversaries, Russia and China, they look for countries that are vulnerable.”
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