Latvia’s central bank governor has been detained by the country’s anti-corruption agency, prompting further questions about the financial system of the eurozone member.
Latvia’s cabinet will hold an emergency meeting on Monday to discuss the affair while the president’s national security council will also debate financial matters next week.
Latvian authorities sought to reassure the public after Ilmars Rimsevics, a member of the European Central Bank’s governing council and governor of the Bank of Latvia for the past 16 years, was questioned for eight hours on Saturday.
“There are no signs of a threat to the Latvian financial system,” said Maris Kucinskis, prime minister, on Sunday.
The governor’s detention follows a damning report last week by the US Treasury into what it called “institutionalised money laundering” at Latvia’s third-largest bank, including transactions related to North Korea.
The report by the financial crimes enforcement network said that ABLV executives, shareholders and workers had made money laundering into “a pillar of the bank’s business practices” and proposed that the lender be banned from the US financial system. ABLV denied the allegations, saying the report contained “outrageous defamatory information”.
The allegations were made public in a speech by Sigal Mandelker, US undersecretary for terrorism and financial intelligence, who said: “We are resolved to use our economic authorities to take action against foreign banks that disregard anti-money-laundering safeguards and become conduits for widespread illegal activity.”
There have long been concerns about Latvia’s financial system. Worries about the level and source of deposits from non-residents, mostly from Russia and other former Soviet states, caused some countries such as France to press for a delay in Latvia joining the euro. It joined on schedule in 2014.
Latvian authorities declined to comment on what lay behind the detention of Mr Rimsevics. Latvia’s state broadcaster said his house and office had been searched.
The deputy prime minister and speaker of Latvia’s parliament both called for Mr Rimsevics to resign as governor.
Latvia’s financial regulator has taken action over the past few years to try to shake off the Baltic country’s reputation for having a problem with foreign customers bringing in money of dubious origin into the EU. It has issued a number of fines to local banks and toughened rules.
The ECB declined to comment on Sunday. The Bank of Latvia said it was continuing with “business as usual”. It said it would be able to perform its tasks as usual at the reopening of business on Monday.
It also declined to comment on the investigation by anti-corruption authorities. But it added: “We would like to stress that in our work we follow a zero-tolerance policy in respect of corruption and other illicit activities”.