The Board of Financial and Capital Market Commission (FCMC) decided to apply a fine of 2 016 830 euro to AS “PrivatBank” for violation of the provisions of the Law on the Prevention of Laundering the Proceeds from Criminal Activity (Money Laundering) and of Terrorist Financing (AML/CFT), Credit Institution Law, as well as Regulation on Establishment of the Internal Control Framework and Regulations on Customer Due Diligence. Having assessed responsibility of relevant officials for above infringements, FCMC has suspended Chairman of the Board, Oleksandr Trubakov, and Board member Iveta Ķerpe from their duties, as well as requested to fully replace the Bank’s Board.
This is part of findings of investigation into transactions, conducted from 2012 to 2014, mentioned in the Kroll report released by the Moldovan National Bank. Deficiencies in customer due diligence and documenting information were identified during the probe, as well as monitoring of customer transactions, as the Bank had failed to identify several transactions as potentially suspicious and had not reported them to the Office for Prevention of Laundering of Proceeds Derived from Criminal Activity (Control Service). Therefore FCMC is of the opinion that in view of above there is a eason to consider that the Bank had not taken all the necessary measures to ensure compliance with requirements of the Credit Institution Law, AML/CFT and related laws and regulations. Thus the Bank had been involved in transactions associated with increased reputational, money laundering and terrorist financing risks.
Either a maximum fine in the amount of 2 016 830 euro or cancellation of the Bank’s licence would be imposed on the Bank for identified breaches. In view of the nature of violations the FCMC Board decided to apply the maximum monetary penalty.
Following assessment of activities of the Bank’s management in adopting decisions leading to increased risks, the FCMC finds it necessary to suspend the responsible Board members and instruct to fully replace the Board of the Bank.
Further, the FCMC will decide on individual monetary sanctions on responsible officials. Part of material regarding the identified facts will be submitted to law enforcement institutions to assess whether there are any indications of criminal offences in the action of above responsible officials.
Closely monitored by the FCMC, AS “PrivatBank” has started to implement improvements in its internal control system and AML/CFT policies in accordance with the submitted action plan. Besides, making a new set up of the Board is underway, the FCMC already evaluates potential candidates.
Sanctions applied to the Bank do not affect the Bank’s daily operations, the Bank continues to meet its obligations to customers.
The fine imposed on AS “PrivatBank” will be paid into the State budget. The Bank may appeal the decision to the Administrative District Court.
The FCMC continues probe into other transactions carried out in Latvian banks that allegedly may be connected with the facts mentioned in the Kroll report.
Public Relations Specialist
Financial and Capital Market Commission
Phone: +371 67774860