Recent high-profile incidents have called into question the viability of the business model in large parts of Latvia’s banking sector. In February, the US Treasury accused ABLV Bank of laundering money for North Korea. Separately, Ilmars Rimsevics, governor of the Bank of Latvia (the central bank), was accused by a Latvian commercial bank of demanding bribes and taken into custody by the Bureau for Preventing and Combating Corruption (KNAB).
Latvia’s reputation has suffered from the latest revelations and accusations of money laundering and corruption.
There will be greater pressure on the Latvian authorities to be stricter on commercial banks whose main business is with non-residents.
When this source of revenue dries up, some banks’ business models may have to change, also sparking some consolidation in the sector.
