RIGA (Reuters) - Two Latvian banks have been fined more than 2.8 million euros (£2.5 million) for allowing clients to violate sanctions imposed by the European Union and United Nations on North Korea, the country’s banking watchdog said on Friday.
Norvik Banka was fined around 1.3 million euros and Rietumu Banka about 1.5 million euros for not complying with anti-money laundering rules and counter terrorist financing requirements (AML/CTF), the Financial and Capital Market Commission of Latvia said in a statement.
“The measures taken in this case (are) a lesson to all the banks in Latvia not to be used for suspicious deals,” Peteris Putnins, head of the watchdog, said in the announcement.
The banks, which mainly serve non-resident clients, were fined after an investigation by the Federal Bureau of Investigation in the United States.
The banks had allowed their clients to use offshore companies and a complicated chain of transactions to transfer payments to North Korea, thus bypassing international sanctions, between 2009 and 2015, according to the watchdog.
Norvik Banka said in an emailed statement to Reuters that it had reviewed its client portfolio and that it would make sure to comply with all requirements going forward. Rietumu Banka said in a public statement it would increase its internal control.
Three other Latvian banks — Baltikums Bank, Privatbank and Regionala Investiciju Banka — were fined a total 641,000 euros in late June for breaching sanctions on North Korea.
North Korea is a pariah state and its nuclear weapons programme has drawn sanctions from the United Nations, the United States, the European Union, South Korea and Japan.
Reporting by Gederts Gelzis; Editing by Johan Ahlander and Catherine Evans