Rietumu Banka Fined €5.85 million Penalty over AML/CTPF Violations

The Financial and Capital Market Commission (FCMC) announced on Thursday that it has decided to impose a fine of EUR 5.85 million to Rietumu Banka, a Latvian commercial bank established in 1992.

According to the regulator, the decision was made due to the bank's violations related to regulatory rulings on anti-money laundering (AML) and counter-terrorism and proliferation financing (AML/CTPF). The commercial bank is required to comply with a series of legal obligations to address identified but publicly undisclosed violations.

The resolution came after the Latvian watchdog carried out an investigation on the company in the period of 2019 and 2020, targeting its AML/CTPF compliance and checking the internal control system to see if the bank could handle the risks properly by preventing any hurt on the domestic financial infrastructure.

FCMC commented, “During the inspections, the FCMC identified irregularities and deficiencies related to insufficiently effective bank’s internal control system and risk management, as well as came to the conclusion that the bank had not adequately assessed the risks associated with the activities of payment service providers (including foreign) and, in some cases,  the level of ML/TPF risk inherent to the customer was determined lower than the actual risk level.” 

Furthermore, the commission pointed out that not enough resources were available in Rietumu Banka to address these issues, causing alleged irregularities during the diligence and transaction monitoring process that affected customers. That said, the FCMC asked the bank to review their customer’s risk assessment scoring system, performing n independent assessment of the effectiveness and compliance of the bank’s internal control system with the AML/CTPF regulatory requirements, among other obligations.

“The FCMC draws attention to the fact that the amount of the fine is set as a percentage taking into account the total annual turnover of the bank,” the watchdog clarified about the fine imposed on Rietumu Banka.