(Bloomberg) -- Latvia is looking into connections between several unnamed local lenders and a Turkish company sanctioned by the U.S. for attempting to supply North Korea with weapons and luxury goods.
Already grappling with the closure of its No. 3 lender and bribery charges against its central bank governor, the latest allegations stem from Oct. 4 action by the Treasury Department against SIA Falcon Group, which has an entity in Latvia. The U.S. froze its American property and interests, and prohibited citizens from dealing with it.
Attempts to reach Falcon’s offices in Riga by phone revealed the lines had been disconnected. No one was able to comment at its Istanbul location.
“We’ll have a strategic analysis and the security police will be involved,” Ilze Znotina, director of the Financial Intelligence Unit, said Monday in an interview, declining to identify the banks that held accounts for Falcon.
The Baltic country is trying to shed a reputation for holding money of questionable origin, a push that’s not been helped by a bribery case against its central bank chief. It’s not the first time links between Latvia’s financial system and North Korea have been revealed: ABLV Bank AS was closed this year after the U.S. accused it of assisting the regime’s ballistic-missile program. Latvia’s neighbor, Estonia, has recently faced pressure over money-laundering at the local unit of Danske Bank A/S.
Znotina said she’d meet with banks to learn how Falcon managed to open accounts and will work on preventative measures for the future. She was appointed as part of government efforts to strengthen oversight. Other measures include banning the riskiest shell companies. The U.S. has said that more must be done to stamp out illicit transactions.
“From my perspective, we’ve improved the relationship with the U.S. government, but we don’t have time to rest,” Znotina said. The U.S. may provide technical assistance and training to fight money laundering, as well as advice on tackling companies that feel “safe” operating in Latvia, she said. “We won’t allow them to feel like this in the future.”
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