Latvian investment firm Renesource Capital has entered into an administrative agreement with the country’s Financial and Capital Market Commission (FCMC), agreeing to address the deficiencies that the Commission has identified during inspections. The firm will also have to pay a fine of 34,000 euros ($40,364) for violating the Financial Instruments Market Law (FIML) and another fine of the same amount for violating Latvia’s AML/CFT law. Additionally, the FCMC has imposed a fine of 2900 euros ($3443) on Mārtiņš Priede, the Chairman of the firm’s Board.
The FCMC in its inspections of Renesource Capital noted several violations of regulatory requirements. The firm applied hidden commissions, withheld information related to costs before and after a transaction, failed to convey to the customers their expenses before providing investment services, among other deficiencies. Renesource Capital also lacked an adequate AML/CFT internal control system designed to specifically handle the risks in the firm. As a result, the firm failed to conduct adequate customer due diligence and transaction monitoring.
The FCMC’s inspection further revealed that Priede, who was in charge of AML/CFT monitoring at Renesource Capital, did not ensure that the firm took steps to improve the internal AML/CFT control system and risk management. This made Renesource Capital vulnerable to ML and reputational risks.
To prevent any future irregularities, the FCMC has directed Renesource Capital to create an adequate compliance monitoring and risk management system designed specifically for the activities of the firm. The firm must also improve its internal AML/CFT control system and sanctions risk management as required by the FIML.