European Troubles As Latvia Faces Fresh Crisis
Latvia sees itself as cement between Europe’s West and East when it comes to the financial sector and their current monetary problems do not bode well for the former Soviet state and the entire continent. On Monday, the country received a severe blow when the US Treasury accused its third largest financial institution of breaking the Western sanctions and committing money laundering.
As if that was not only embarrassing and devastating enough, the State was further slammed by the revelation that its Central bank leader was apprehended during the weekend for crimes regarding solicitation of payoffs: an investigation which got implemented by Riga’s anti-corruption agency.
Latvia Was Known As Financial Support Of West And East Side Of Europe
Despite the damaging capacity of both events, some analyst and the authorities of Latvian has tried to play down the effect of the issues. They claim that no matter the seeming reality that both cases merge in their timeline, they are totally separate from each other.
Though these assertions made by analyst and the authorities may be true, it does not take away the shock and the negative potential these events have on the country which got known for quite a while as the financial support for both sides of Europe.
Recently, following the current problems emerging in the former Soviet state, the European Central Bank (ECB) has taken a move that can negatively impact the situation of the country. It has moved to discontinue payments by AVLB bank. This resolution made by the Central bank will take effect at the start of the week based on the fall in liquidity position of the financial institution.
AVLB Went Against The United Nations’ Sanction
Now, AVLB is the monetary establishment that was accused of money laundering and permitting its customers to have dealings with North Korea contacts, thereby, going against the United Nations’ sanction.
However, the bank has stated its concerns over the recent issues and stressed that the allegation and draconian steps that were taken so far against it were unnecessary as the US claims were factored on misleading and baseless information. It further stressed that though the company is founded in Riga, it also has establishments in Luxembourg and subsidiary in the US.
AVLB was raised to play the basic role of moving fiscal currencies throughout the world as a non-residential bank.
Now Latvia has two system of bank operation; this is a parallel system of banking that has remained in effect in the country for quite a while. There are the Residential banking and non-residential bank.
Some Financial Establishments Also Underwent Investigation
Analysts claim that the occurrence of a ban on a non-residential bank is not much to worry about as this has been a norm due to its bank nature of running. They expressed that before these new events, few months past, several financial establishments had undergone investigation regarding unlawful practices, and some were banned.
Concerning the Central Bank of Latvia, the leader of the economic institution experienced a raid on Saturday by the country’s Latvia Corruption Prevention Bureau.
During a press conference, the Central bank leader, Rimsevics, denied the accusation deposited on his person. He expressed that it was a foul play by some commercial banks in the country to defame his reputation and that of the nation as a whole.
In regards to evidence, despite the claims made by the Bureau against the head of Latvian Central Bank, both the police and the authority for corruption are yet to present to the world evidence that validates their position on the development. For the above reasons, the Prime Minister of the region, Maris Kucinskis, expressed that it was very much likely that the idea behind this allegation was only to destroy the country.
Problems With Latvian Banking System Represents Big Worry For The Continent
As a bridge between the West and East Europe in regards to finance, the dirt on Latvia’s banking system remains an object of worry for the continent. This assertion can be illustrated in the 2014 issues found by France concerning the country’s bank system. The effect was a delay by Europe in allowing the State to adopt the one currency, though currently, it has obtained it.
Analysts believe with the right pressure coming from the US, the country’s election preparation, and the authorities that the lawmakers of Latvia we take efficient and time conscious steps to turn things around to the positive light.
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