Thanks to the Panama Papers, a great deal of focus recently has been on the International Consortium of Investigative Journalists. However, working in a similar field we have the Organized Crime and Corruption Reporting Project which, according to their website, is “a consortium of 25 non-profit investigative centers, scores of journalists and several major regional news organizations [which] teamed up in 2006 to do transnational investigative reporting [and generates] up to 60 cross-border investigations per year”. Their most recent high profile scoop has been into Latvian banks, as documents leaked to the OCCRP suggest that these banks are handing out to their customers instructions on how to use fake offshore companies to evade taxes, launder money, mislead regulators and avoid red flags.
According to the OCCRP, the leaked documents from at least three Riga-based banks “include emails between Latvian-based Ukrainian banks and government officials as well as banking transfers, contracts and other communications”. The handy hints given by the banks to their customers include: “lots of advice on how to fool correspondent banks”; “ways to set up business transactions that look convincing to banking regulators”; and “how to fabricate convincing invoices”. Some of the allegations are very specific: for instance, the OCCRP suggests that an employee of PrivatBank Latvia created a Belize shell company called Bormilla Solutions, which “specializes in fake operations in the areas of construction materials, industrial equipment, and instrumentation”.
The OCCRP has passed on its information to Latvia’s banking supervisor, the Financial and Capital Market Commission, which confirms that it “has requested the banks to submit information about the companies indicated in the documents provided”. Some of these banks’ employees may be feeling rather nervous, given that on 2 June 2016 Latvia adopted amendments to its Credit Institution Law to increase penalties for banks and their employees who breach AML requirements. Under the amendments, the maximum institutional fine for such violations is 10% of the bank’s total annual turnover, with a minimum of 5 million euros. Fines of up to 5 million euros can also be imposed on individual bank employees if they are found to be responsible for the breaches.