The European Central Bank has halted payments by one of Latvia’s largest lenders, ABLV, after allegations from the US Treasury of money laundering and transactions linked to North Korea prompted a “significant deterioration” in its liquidity position.
The ECB said early on Monday morning that it had instructed Latvia’s banking supervisor to impose a moratorium on the country’s third-largest bank, which freezes all payments by the bank on its liabilities.
“In recent days, there has been a sharp deterioration of the bank’s financial position. This follows an announcement on 13 February by the US Department of the Treasury’s Financial Crimes Enforcement Network from February to propose a measure naming ABLV bank an institution of primary money laundering concern pursuant to Section 311 of the USA Patriot Act,” the ECB said in a statement.
“A moratorium was considered necessary given that the bank is working with the Latvian central bank and authorities to address the current situation.”
The US Treasury report accused the bank of “institutionalised money laundering”, including transactions for parties connected to North Korea’s procurement or export of ballistic missiles. The Treasury said the bank had made money laundering a “pillar” of its business practices. The bank denies the allegations.
The moratorium adds to a difficult time for the Latvian banking. Central bank governor and ECB Governing Council member Ilmars Rimsevics was detained by Latvia’s anti-corruption authority on Saturday for questioning. Latvian media suggested the questioning was not connected to ABLV.