Bank Regulation

Meridian Trade Bank Fined For Breaching AML Laws

rbs money laundering probe

Meridian Trade Bank, which serves residents in Latvia and Lithuania as well as some non-European clients, has been fined for breaching anti-money laundering rules.

According to Reuters, Latvia’s Financial and Capital Market Commission (FCMC) announced it had fined Meridian almost 456,000 euros after inspections last year revealed that its internal controls against money laundering were not up to par.

This is the latest scandal for the country’s financial system. Last year, two Latvian banks were fined more than 2.8 million euros ($3.26 million) for allowing clients to violate sanctions imposed by the European Union and United Nations on North Korea. Three others received smaller fines.

And earlier this year, the United States accused Latvia’s third-biggest bank, ABLV, of money laundering and aiding North Korea in breaching sanctions by the U.S. and other Western nations. The U.S. contended that some of the alleged activities were related to North Korea’s ballistic missiles program, and also accused bank executives and management of bribing Latvian officials to hide their activities.

The accusations prompted the bank’s closure and caused the country’s worst financial crisis in a decade.

But the Latvian Defense Ministry contended that the ABLV allegations could be part of a smear campaign ahead of the country’s October elections: “There is a high possibility that this is a wide information operation from outside, and its aim is to show Latvia as [an] untrustworthy ally and to promote the decline of trust in the government.”

Still, the government has begun tightening rules to prevent money laundering, as well as keeping a closer eye on financial institutions that service non-residents.

Latvia’s prime minister and finance minister also urged the European Union to boost its money laundering rules as a way to keep cash from moving out of the Baltic country to escape tighter controls.

Meridian, Latvia’s 13th biggest bank, said in a statement that it had agreed to pay the fine and pledged to invest up to 1 million euros to improve its anti-money laundering controls this year.

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