Dermot Desmond’s controversial Baltic bank lost more than a third of its deposits in the first quarter of this year as Latvia cracks down on Scottish and other international shell firms.
Rietumu banka, in which the Celtic shareholder has a one-third stake, has run in to a series of grave money-laundering scandals in recent years as it focused on often anonymous customers from the rest of the former Soviet Union.
However, this year it said it would no longer service accounts for shell companies, such Scotland’s notorious limited partnerships (SLPs), and their secret owners. Such customers between January and March withdrew some 900 million euros, 37.5 per cent of total deposits, Rietumu said this week.
READ MORE: Backlash from owners of Scottish firms told they are shells by Desmond bank
The bank’s moves come as Latvia effectively bans shell firms such as SLPs under pressure from authorities in the EU and US. Another Latvian bank, ABLV, was put in to liquidation earlier this year after America's Treasury Department accused it of using “institutionalised money laundering as a pillar of the bank’s business”.
Rietumu, on whose supervisory board Mr Desmond serves, was given a record criminal fine for money-laundering last year by a French court.
It has also been sanctioned by its own regulator after its accounts were used to launder North Korean money.
Mr Desmond has never commented on controversies at the bank, which has two other major shareholders, but there is no evidence he was aware of any wrongdoing.
Riga, Latvia
Independent auditors, The Irish Times reported this week, say Latvian reforms on shell firms and non-resident banking raise “material uncertainty” over the future of Rietumu. The bank says it is refocusing its business and that is still trading in profit. Latvian media said the bank had more than enough liquidity to stay afloat, 10 times the country’s minimum requirement.
READ MORE: Backlash from owners of Scottish firms told they are shells by Desmond bank
As The Herald has already revealed, SLPs and other shell firms were openly marketed in the former Soviet Union along with accounts at banks such as ABLV or Rietumu.
The Financial and Capital Market Commission, Latvia’s financial regulator, said nearly a third of all shell companies with accounts at Latvian banks were British. It did not say how many were SLPs or other Scottish vehicles.
Why are you making commenting on The Herald only available to subscribers?
It should have been a safe space for informed debate, somewhere for readers to discuss issues around the biggest stories of the day, but all too often the below the line comments on most websites have become bogged down by off-topic discussions and abuse.
heraldscotland.com is tackling this problem by allowing only subscribers to comment.
We are doing this to improve the experience for our loyal readers and we believe it will reduce the ability of trolls and troublemakers, who occasionally find their way onto our site, to abuse our journalists and readers. We also hope it will help the comments section fulfil its promise as a part of Scotland's conversation with itself.
We are lucky at The Herald. We are read by an informed, educated readership who can add their knowledge and insights to our stories.
That is invaluable.
We are making the subscriber-only change to support our valued readers, who tell us they don't want the site cluttered up with irrelevant comments, untruths and abuse.
In the past, the journalist’s job was to collect and distribute information to the audience. Technology means that readers can shape a discussion. We look forward to hearing from you on heraldscotland.com
Comments & Moderation
Readers’ comments: You are personally liable for the content of any comments you upload to this website, so please act responsibly. We do not pre-moderate or monitor readers’ comments appearing on our websites, but we do post-moderate in response to complaints we receive or otherwise when a potential problem comes to our attention. You can make a complaint by using the ‘report this post’ link . We may then apply our discretion under the user terms to amend or delete comments.
Post moderation is undertaken full-time 9am-6pm on weekdays, and on a part-time basis outwith those hours.
Read the rules hereLast Updated:
Report this comment Cancel