ABLV, like many other banks in Latvia, had large deposits of foreign customers, including from Russian and Ukrainian clients
Photo: ABLV Bank
Latvian bank ABLV plans to sue the European Central Bank (ECB) for precipitating its bankruptcy after money laundering charges were brought against it.
The ECB declared the third largest Latvian bank bankrupt over two months ago after it was accused of money laundering and violation of sanctions against North Korea.
In a statement released on Monday, ABLV said that it wishes to find out if “organisations such as the central bank have acted appropriately in their public statements and shares”, following the publication of a damning report by US authorities on the bank’s balance sheet.
According to the bank's lawyers, “one of the problems is that the ECB did not react quickly and adequately when the governor of Latvijas Banka (member of the Governing Council of the ECB, Ed.) asserted that no one was allowed to deal with ABLV after the release of the FinCEN (US Treasury Department’s Anti-Terrorist Financing and Financial Crimes) draft measures. Nobody contested that the statement was entirely wrong.”
40% of deposits from non-residents
In addition to the impact on the Latvian economy due to the status of ABLV’s systemic bank, the case has damaged the ECB, accused in particular by MEPs of failure in its mission of monitoring banks active on the periphery of the eurozone. The decision of the European banking authority to freeze ABLV’s payments and the announcement of its bankruptcy risk sealed the fate of the Latvian bank.
Okko Hendrik Behrends, ABLV’s lawyer, said that such a decision should not have triggered the closure of ABLV, since ABLV was financially sound and could have survived. ABLV, like many other banks in Latvia, had large deposits of foreign customers, including from Russian and Ukrainian clients. About 40% of all bank deposits in Latvia come from non-residents, and international agencies have long warned about the risk of illegal activity. To combat money laundering and restore its reputation, Latvia announced in February its intention to halve the proportion of deposits held by non-residents.
At the beginning of March, the commercial court of Luxembourg rejected the request to liquidate the Luxembourg subsidiary of the Latvian group and placed the entity in suspension of payment for a period of six months, pending a buyer. Attorney Alain Rukavina of the Rukavina cabinet and Deloitte's partner Éric Collard were then appointed “court administrators for the suspension of payment.