RIGA - Latvia’s Financial and Capital Market Commission (FCMC) will investigate the recent news reports on the possible involvement of Latvian banks in servicing Russian and Ukrainian arms deals, and will inspect whether the banks in question have operated in accordance with anti-money laundering regulations, reports Nozare.lv.
The FCMC adds that the authors of the report also point out that the mentioning of specific banks in Latvia does not mean they have been involved in illegal activities. According to them, their activities may, in fact, be completely legal.
The report says that these arms deals may be deemed illegal only if they have breached international regulations. The FCMC points out that it must still be verified whether any of the Latvian banks mentioned in the report have breached any international regulations.
Latvian banks have a considerable role in servicing Russian and Ukrainian arms deals and money laundering, according to a report by C4ADS, a Washington-based nonprofit group. This report is the culmination of a 10-month investigation into Ukrainian and Russian state arms transfers. Key findings include: previously unknown or under-reported arms transfers; specific companies and individuals facilitating these arms transfers; familial, financial, and professional links between key facilitators and the governments of Russia and Ukraine.
C4ADS points out that a network of Ukraine-based individuals and logistics companies - referred to as the Odessa Network due to its key leadership being located in Odessa, Ukraine - is responsible for transporting weapons out of Russia and Ukraine on behalf of government sellers. Evidence suggests that some of these companies may transport weapons to the Assad regime in Syria, among other notorious violators of human rights.
The report states that Russian and Ukrainian weapons are big business, both for the governments who export them and the Odessa Network companies contracted as transporters. Russia exported over $17.6 billion of weapons in 2012 alone, with Ukraine coming in at $1.3 billion.
The Odessa Network company leaders facilitating these weapons flows clearly earn significant profits from doing so. There is also evidence that some of these companies employ Latvian banks known or accused of money laundering and a series of Panamanian companies run by Latvian nationals who act as “proxy directors.”
According to the report, a group of Latvian nationals (most notably Erik Vanagels and Stan Gorin) are among the most prolific proxy directors. Their identities have been used by Ireland and BVI-based International Offshore Services to set up thousands of companies responsible for a wide range of crimes.
The Odessa Network also is an active user of Latvian proxies. For example, the companies owning the MV Faina, which transported weapons to South Sudan, are all Vanagels-Gorin shells. The ship’s manager Almar Shipping is directed by Williston Line, which is directed by Williston Impex Corp, which is directed by Integri, a Gorin-Vanagels Panamamian shell company used to register thousands of other shell companies.