AS “PrivatBank” has signed an Administrative Agreement with the Latvian Financial Capital and Market Commission (FKTK) under which the Bank has undertaken to further improve its internal control systems.
The FKTK has established during a recent inspection that back in 2013 and 2014 the bank had certain shortcomings related to some of its clients’ enhanced due diligence procedures and as a result the bank has been used by a few clients to circumvent international sanctions requirements imposed against North Korea.
The FKTK has concluded that there was no deliberate and intentional violation of the regulations and that the bank was not directly involved in the circumvention of the sanctions. The Commission has furthermore concluded that the amount of the alleged violations as well as the number of customers involved is insignificant and, in general, that the bank’s violations can be assessed as insignificant.
The above mentioned issues identified during the inspection occurred in 2013 and 2014. Since then, the Bank has changed its management team and appointed the new Board in 2016, and has made significant steps to further develop its policies and procedures in order to avoid similar issues. As part of these measures, PrivatBank has changed the policy of evaluating clients and relevant business risks on a strategic level, having completely renounced from transactions and clients with potentially high risks.
It is important to stress out that the bank has exited, not only the relationships with the counterparts mentioned above, but the whole segment of the similar type of clients prior to the above mentioned inspection. This undoubtedly proves the Bank’s management determination to clean up and de-risk the bank’s portfolio of clients, which would have allowed the bank to avoid such a problem in the current environment.
The Bank continues to invest heavily in the internal control functions and systems and is strongly committed to fight against the perpetrators which occasionally attack banks in order to circumvent the rules and regulations defined by the Latvian and international laws.
About AS “PrivatBank”:
AS “PrivatBank” is the 14th largest credit institution in Latvia by asset value. The Bank provides financial services to individuals and enterprises in 13 Branches throughout Latvia – 7 Branches in Riga and one Branch in each of the following cities: Valmiera, Daugavpils, Rezekne, Ventspils, Liepaja and Jelgava. AS “PrivatBank” offers a wide range of financial services, ensuring personalized attitude, quick adoption of decisions and competitive prices.