FCMC Fines Rietumu Banka for Violations Related to AML Compliance

The Financial and Capital Market Commission (FCMC) has announced on Thursday that it imposed a fine of EUR 5.85 million to Rietumu Banka for violations related to regulatory rulings on Anti-Money Laundering (AML) Anti-Money Laundering (AML) Anti-money laundering (AML) is a term that describes laws, processes, and regulations that are intended to prevent illegally obtained funds from being disguised as income gained through legitimate means. The fundamental purpose of the AML laws is to help safeguard, detect, and report suspicious activity including the predicate offenses to money laundering and terrorist financing, such as securities fraud and market manipulation.Most exchanges have AML measures that include identity verification Anti-money laundering (AML) is a term that describes laws, processes, and regulations that are intended to prevent illegally obtained funds from being disguised as income gained through legitimate means. The fundamental purpose of the AML laws is to help safeguard, detect, and report suspicious activity including the predicate offenses to money laundering and terrorist financing, such as securities fraud and market manipulation.Most exchanges have AML measures that include identity verification Read this Term), counter-terrorism and proliferation financing (AML/CTPF). According to the press release, the financial institution will have 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 for 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 damage to the domestic financial infrastructure.

“During the inspections, the FCMC identified irregularities and deficiencies related to insufficiently effective bank’s internal control system and Risk Management Risk Management One of the most common terms utilized by brokers, risk management refers to the practice of identifying potential risks in advance. Most commonly, this also involves the analysis of risk and the undertaking of precautionary steps to both mitigate and prevent for such risk.Such efforts are essential for brokers and venues in the finance industry, given the potential for fallout in the face of unforeseen events or crises. Given a more tightly regulated environment across nearly every asset class, One of the most common terms utilized by brokers, risk management refers to the practice of identifying potential risks in advance. Most commonly, this also involves the analysis of risk and the undertaking of precautionary steps to both mitigate and prevent for such risk.Such efforts are essential for brokers and venues in the finance industry, given the potential for fallout in the face of unforeseen events or crises. Given a more tightly regulated environment across nearly every asset class, Read this Term, 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,” the FCMC commented.

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.

Fine Imposed to the Bank

“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.

This week, the FCMC fined Renesource Capital with an amount of EUR 34,000 as part of an administrative agreement reached for infringements of the Financial Instruments Market Law (FIML).