Comments on: Latvia: When the United States scolded the ‘Switzerland of the Baltics’ EU news and policy debates across languages Mon, 15 Apr 2019 12:45:01 +0000 hourly 1 By: Vidvuds Beldavs Wed, 05 Sep 2018 11:58:55 +0000 When Latvia regained its independence in 1991 its strategy was to be a bridge between the West and Russia and other former Soviet Republics. A key building block of the strategy was banking – to become a “Switzerland”. The Soviet Union did not have a modern banking system. Latvia, could become a regional financial center serving the interests of Russia and beyond by developing a modern banking system. Amid the collapse of the Soviet system this generated wealth in Latvia with its growing ties to banks in Europe and the U.S.
The U.S. has unique visibility on money laundering because it can track who sends money, who are the intermediaries and who are the final recipients via the SWIFT system and other tools that every country does not have access to. North Korea has an economy that exports goods and imports others. Even under the maximal sanctions at present some transactions are allowed. Processing payments for sanctioned products is viewed as a crime. The traders involved want to be paid so they use whatever channel is available. If the U.S. with its visibility identifies funds flows from N. Korea or other disallowed sources, by international agreements Latvia has the obligation to stop them. If stopping the funds flow sometimes in the billions puts the bank out of business this creates pressure on local authorities.

Why should a rush of French companies doing business in Latvia after the financial crisis of 2008 have been seen as alarming? All business would have been welcomed in a situation where th science budget of the country had to be cut by 63% to survive the debacle. As time progressed oil prices surged amplifying oligarch wealth in Russia. To avoid paying Russian taxes they funneled their money to the West. Latvia, Cyprus, Malta and other countries were used. Tens of billions flowed through the banks. This does not mean that the bankers that managed the flows in Latvia were corrupt. They were paid to provide a financial service. The UK was the recipient of considerable funds with Russian oligarchs buying castles and soccer teams. The individuals that avoided paying taxes in Russia committed a clear crime. The provider of financial services needs to be informed that a specific transaction may be from illegal activities and treat it accordingly. It is good that entities such as the U.S. watchdogs that have the visibility are informing banks to take action.
Latvia’s initial strategy of being a bridge and reginal financial center clearly needs to be fine tuned.

By: anders Wed, 05 Sep 2018 08:00:39 +0000 Good forbid this is not a systemic issue. Only the lack of rule of law in Poland is worth launching ‘European’ initiatives!!!

What about the Banks in Germany and in France. Is there any ‘collaborative’ GONGO looking at them?

What a circus…..

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