Published: 06.12.2023

Latvijas Banka has concluded an administrative agreement with AS LPB Bank specifying that AS LPB Bank shall fulfil several legal obligations related to compliance with the requirements laid down in the laws and regulations governing the prevention of money laundering and terrorism and proliferation financing (ML/TPF) and to the improvement of the internal control system. At the same time, the credit institution has been subject to a fine of 2 016 342 euro for the identified violations of laws and regulations and shortcomings in the internal control system. The agreement has been concluded because AS LPB Bank has acknowledged the violations in the prevention of ML/TPF identified during Latvijas Banka's inspection and has implemented targeted measures for eliminating these violations.

The administrative agreement with AS LPB Bank has been concluded based on the findings of the inspection conducted by the Financial and Capital Market Commission (FCMC) in 2021 and of the inspection conducted by Latvijas Banka in 2023 as well as in relation to the FCMC's decision of 16 October 2018 on imposing a 2.2 million euro fine for the violations of the requirements laid down in the laws and regulations governing the prevention of ML/TPF which was appealed by AS LPB Bank to the Administrative Regional Court.

In 2018, AS LPB Bank failed to ensure the operation of its internal control system in line with its activities and the management of the ML/TPF risk associated with high-risk customers and the capacity to identify and efficiently manage its inherent ML/TPF and sanctions risk. AS LPB Bank did not agree with the FCMC's decision, and, following its application for the annulment of the decision of the FCMC Board, administrative proceedings were initiated before the Administrative Regional Court. AS LPB Bank is currently committed to requesting the court to close the case, acknowledging the violations previously identified by the FCMC. AS LPB Bank has implemented measures for eliminating the violations identified in 2018 and developed an action plan for a further improvement of the internal control system – a precondition for the conclusion of the administrative agreement and the reduction of the fine.

In addition to the above, the FCMC conducted an inspection in 2021 and Latvijas Banka conducted a target inspection in 2023 in AS LPB Bank, identifying violations of the laws and regulations governing the prevention of ML/TPF and shortcomings in the internal control system, including in the risk management process, ensuring of the internal audit function as well as customer due diligence and the transaction monitoring, for instance, the management of the risks related to the provision of safe services and reporting of suspicious financial transactions.

AS LPB Bank acknowledges the identified violations and shortcomings and has started to eliminate them; nevertheless, the administrative agreement establishes the legal obligations of AS LPB Bank aimed at improving the credit institution's internal control system and ensuring operational compliance with the requirements laid down in the laws and regulations governing the ML/TPF prevention. The fulfilment of these obligations shall be supervised by Latvijas Banka.

The objective of Latvijas Banka in its supervision of the financial sector participants is to facilitate constructive cooperation with the participants of Latvia's financial market . Upon identifying violations of laws and regulations or shortcomings in the credit institution's activities, it is essential for the credit institution to understand and acknowledge the violations and shortcomings, to draw up a plan for their immediate elimination and to prevent the identified violations in its future activities.


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