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According to the Latvian Banking Supervisor (FCMC), Luminor and its predecessor banks took a lot of risks in serving Russian oligarchs or companies subject to sectoral and national sanctions, but this was not illegal.
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Ukraine’s sanctions against Russian billionaires would have had to be complied with if the banks had branches in Ukraine. In turn, sectoral (OFAC) sanctions must be complied with by Latvian banks only since 2019, explains the FCMC representative Kristaps Markovskis. “Until then, this was in terms of each bank’s risk assessment. (..) and it must be said that this is still the case in Europe, ”says Markovskis.
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For the Latvian banking regulator, the dubious cash flow of non-residents to Nordea and DNB had passed. There has been only one inspection – in 2014, DNB ordered the elimination of deficiencies in the field of prevention of money laundering, but did not impose a fine. Nordea was not inspected in person, as a branch of a bank registered in Estonia operated in Latvia. Consequently, the neighboring regulator was responsible for the bank’s operations, the FCMC pointed out. Re: Baltica rejects Estonian banking supervisor. Nordea’s supervisors were Finnish or Swedish banks, depending on where the bank’s parent company was established during the relevant period.
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Luminor responded to OCCRP’s and partners’ questions about the reasons for abandoning high-risk customers with general phrases. “We can’t comment on specific customers or transfers, but we can confirm that no systematic issues were found in our approach to assessing risk customers.”
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Rozuke, Luminor’s first manager, who is currently working for another company, is more open. Re: Baltica explained to Rāzuke’s Estonian partners that the goal of the 2019 audit was to find as many potential risks as possible so that something would not be regretted afterwards. “We were very careful. We saw that once you hang up the big bell, you will never be able to wash yourself white again, ”said Rāzuke.
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He claims that for double security, the audit results have also been submitted to the supervisors of the respective Baltic banks, which in Latvia would be the FCMC and the Financial Intelligence Service (FID). The FID denied having received them, while the FCMC replied that they probably did, and it was used for analysis and follow-up.
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In 2020, banking regulators in all Baltic countries performed simultaneous inspections of all Luminor Baltic banks, which ended with order improve the anti-money laundering system, but without fines.
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Latvian companies are also cut
The major Latvian IT product manufacturers and traders, Mikrotīkls and Elko Grupa, which were customers of both Nordea and DNB banks, also experienced general cleaning of their skin. Given that the two companies’ bank transfers amounted to billions and some of their high-risk partners, Luminor hired consulting firm Alvarez & Marsal (A&M) for an in-depth study of the two.
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Re: Baltica has an long opinion of the external auditors on the Micro Network. The auditors found it risky that the Microgrid, which transferred € 4.7 billion over ten years through the bank, operates in high-risk countries such as Malaysia, Cyprus, Belize and Russia, and has so-called shell companies among its customers. Almost a fifth of all microgrid transfers were analyzed in detail by the auditors, and six percent of them were reported as suspicious. For example, 606 thousand US dollars received by the Microgrid from the Moldovan bank Moldindconbank, which was involved in the so-called Russian laundromat. The microgrid received nearly $ 38,000 from a UK company registered at the same address as a number of companies used in both Russian and Azerbaijani laundromats.
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