Latvia in turmoil amid US probe into bank

Latvia’s government has increased pressure on central bank governor Ilmars Rimsevics to quit.Latvia’s government is meeting in emergency session after one of the Baltic country’s biggest banks reeled under accusations of busting sanctions on North Korea and the central bank governor was held by the anti-corruption agency.

ABLV Bank, the country’s third biggest lender, was ordered to stop all payments as its liquidity position had deteriorated sharply since the US Treasury accused it of money laundering, forcing it to seek central bank funding.

“This means that temporarily, and until further notice, a prohibition of all payments by ABLV Bank on its financial liabilities has been imposed, and is now in effect,” the European Central Bank, its supervisor, said.

The US Treasury sought sanctions against ABLV last week, accusing it of allowing clients to conduct business with North Korea, with bank executives and management bribing Latvian officials to cover up the activities.

“ABLV has institutionalised money laundering as a pillar of the bank’s business practices,” the Financial Crimes Enforcement Network, a bureau of the US Treasury, said in a statement linking some of the alleged activities to North Korea’s ballistic missiles program.

The bank has said the US accusations were based on unfounded and misleading information.

There was no immediate comment from the Latvian government on either ABLV or the detention of central bank chief Ilmars Rimsevics.

In a separate development, Latvia’s government increased pressure on central bank boss Rimsevics, an ECB policymaker, to quit after he was detained by police over the weekend in an anti-corruption probe.

“I can’t imagine that a governor of the Bank of Latvia detained over such a serious accusation could work,” Prime Minister Maris Kucinskis said.

Rimsevics’ lawyer declined to comment on what he was being investigated for but said the detention was unlawful.

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