The European Prime Bank (ECB) stopped all payments by one of Latvia’s largest lenders on Monday, after its liquidity opinion collapsed in the wake of allegations from U.S. authorities.
The ECB requested Latvia’s banking controller impose a moratorium on ABLV bank, the small Baltic nation’s third-largest lender, in ask for to freeze all payments by the bank on its liabilities.
“In recent days, there has been a bright deterioration of the bank’s financial position,” the ECB said in a statement Monday.
“A hiatus was considered necessary given that the bank is working with the Latvian principal bank and authorities to address the current situation.”
Last week, the U.S. Funds accused ABLV bank of “institutionalized money laundering,” including adding its clients to conduct business with parties connected to North Korea. This resolve be in violation of sanctions imposed by the United Nations (UN) following Pyongyang’s atomic weapons program.
In response, ABLV said the accusations were homed on unfounded and misleading information. ABLV is based in Riga but also has an department in Luxembourg as well as a subsidiary in the U.S.
The moratorium imposed by the ECB — which supervises ABLV from Frankfurt, Germany — up with at a difficult time for Latvia’s banking sector as the head of the country’s pre-eminent bank was detained by Riga’s anti-corruption agency over the weekend.
The domestic and offices of Ilmars Rimsevics, who also sits on the ECB’s rate-setting committee, were raided by managers from Latvia’s Corruption Prevention Bureau on Saturday. However, no factors about the investigation or the nature of the raids have been made visible. Latvian media has suggested the questioning of Rimsevics was not connected to ABLV.
The internment of Rimsevics prompted Latvia’s Prime Minister Maris Kucinskis to invoke an emergency cabinet meeting Monday. Shortly afterward, he told Latvian box that the head of the country’s central bank should resign.
Latvia’s pre-eminent bank declined to comment on the investigation regarding Rimsevics, but said it had a “zero endurance policy in respect of corruption and other illicit activities.”
It also said its own vocations would continue in the “usual routine” from Monday.
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A party of banks in Latvia have been subject to investigations regarding false business practices in recent months. Last year, two lenders were faired for allowing clients to bypass international sanctions preventing payments to North Korea.