Latvian banks serve as transit for Russian money

  • 2004-11-01
  • From wire reports
RIGA - Offshore Russian funds could make up some 30 percent of Latvian banking assets, according to Latvian and Russian financial experts who say the Baltic state's banks serve as a transit area for the money.

At this year's Banking and Finances in the Baltics conference, Latvijas Tirdzniecibas Banka Vice President Andrejs Surmans said that offshore funds passing through Latvian banks are of "Russian origin."

The funds would be equal to some 2.1 billion lats (3 billion euros), considering that Latvia's total banking assets as of late August stood at 7.02 billion lats.

The Russian Institute for Social and Economic Projects' main partner, Leonid Baron, said that his estimate was close to Surmans'.

Although the use of offshore funds could be related to money laundering, Baron thinks that ill-considered tax policies are a more likely cause.

Surmans said that no such cases of money laundering or terrorist funding have been discovered in his bank, therefore "there's nothing to discover."

Bankers supported his claim as they had no information on a single case of money laundering having been detected in Latvia.

After the Sept. 11, 2001, terrorist attacks on U.S. soil, Baltic and Russian banks have started paying special attention to the prevention of legalizing criminal proceeds and the flow of terrorist money.

This focus on security comes at a time when Russia's banks are considering international expansion, including branches in Europe and possibly Latvia, said Anatoly Milukov, vice president of Russia's bank association.

He added that the stronger Russia's banking system becomes, the more interest it finds in representation abroad.

"Business will find its way," said Milukov.

Of Latvia's 23 operating banks, only a couple are Russian-owned, among them Latvijas Biznesa Banka and Latvijas Tirdzniecibas Banka. Russia's Eastbridge Bank also has a branch in the Baltic country, while several of Latvia's banks have representation in Russia.