Latvia’s Board of the Financial and Capital Market Commission (FCMC) recently levied a fine of 473,076 euros ($559k) on the bank AS “Reģionālā investīciju banka” (RIB). The step comes after FCMC detected irregularities in identifying the source of customer funds during its investigation of the high-value cash transactions conducted by RIB’s high-risk clients from high-risk jurisdictions. Overall, RIB did not undertake appropriate risk management steps which increased its vulnerability.
A 2019 onsite investigation by the FCMC revealed that RIB had failed to comply with its legal obligation to verify the source of funds in its clients’ bank accounts. The FCMC has recognized that RIB took the necessary steps to improve its internal controls but only after customers had conducted the transactions. The Board took these factors into account when deciding upon the financial penalty.
The FCMC has reiterated that Latvia’s AML/CFT law requires that banks’ internal control system ensure compliance with legal obligations. A bank can adequately implement an internal control system only when measures are not only written but also followed effectively. Additionally, banks must undertake enhanced due diligence for customers conducting high-value transactions from high-risk jurisdictions.
Source name: Financial and Capital Market Commission, Latvia