FCMC urges financial market players not to provide services to Lembergs and organizations subject to U.S. sanctions

RIGA - The Financial and Capital Market Commission (FCMC) is urging financial market players not to provide services to Ventspils Mayor Aivars Lembergs (For Latvia and Ventspils) and organizations that are subject to U.S. sanctions, the commission told LETA.

"The FCMC is asking Latvian financial market players to promptly identify whether the persons and entities subject to the sanctions - Aivars Lembergs, Ventspils Freeport Authority, Ventspils Development Agency, Business Development Association, Latvian Transit Business Association, as well as other persons directly or indirectly controlled by the said persons and organizations, are among customers of a given financial institution, and not provide any type of financial services to the said persons and organizations," said the FCMC.

The FCMC is carefully assessing the current situation and is in contact with other authorities in order to in the near future provide Latvian financial market participants with information regarding further steps to be taken.

The FCMC regulations on sanction risk management provide that financial institutions must not provide services to a client subject to sanctions imposed by a member country of the European Union or NATO, or execute transactions if either party is subject to sanctions imposed by a member country of the EU or NATO.

In the meantime, the Treasury notes that U.S. authorities have warned that anyone making financial transfers to persons and organizations subject to the sanctions may also be subject to sanctions by the U.S. Department of Treasury's Office of Foreign Assets Control (OFAC).

Therefore the Treasury points out that this risk has to be taken into account before making payments.

The Treasury also points out that it may be difficult or impossible to enforce contracts signed with persons subject to the U.S. sanctions while the sanctions are in effect.

As reported, the OFAC on December 9 imposed sanctions on a number of people and legal entities in Europe, Asia and Latin America, including on Latvia's Ventspils mayor Aivars Lembergs, based on the so-called Magnitsky act.

OFAC has listed four organizations that belong to or are controlled by Lembergs - Vetspils Freeport Administration, Ventspils Development Agency, Business Development Agency, and the Latvian Transport Business Association.

In connection with these designations, OFAC simultaneously issued Global Magnitsky General License No. 1, which authorizes certain transactions and activities that are ordinarily incident and necessary to the wind down of transactions involving Ventspils Freeport Administration, Ventspils Development Agency, Business Development Agency, or the Latvian Transport Business Association, or any entity in which one or more of the designated entities owns, directly or indirectly, a 50 percent or greater interest, for a 30-day period.