Finland Times

 

Kristaps Zakulis tendered resignation as head of the Latvian Financial and Capital Markets Commission on Monday amid media reports that blamed him for alleged poor bank oversight.

 

Latvia's TV3 commercial television had reported that the Organization for Economic Co-operation and Development (OECD) had criticized the Latvian Financial and Capital Markets Commission for not being keen enough to combat corruption.

 

Specifically, OECD experts said in their report that the commission had not provided regulations that would prevent risks of money laundering through Latvian commercial banks and that Latvian banks' branches in foreign countries had been left without any supervision.

 

Inspections were conducted at the banks too infrequently, which increased fraud risks, the OECD said in its findings.

 

In recent months, however, the regulator had started slapping substantial penalties on some banks operating in Latvia. The Ukrainian-controlled PrivatBank, for example, which has been accused of involvement in defrauding banks in Moldova, was ordered to sack two of its board members and pay a two million euro fine. In its latest move, the Financial and Capital Markets Commission last week imposed restrictions on Trasta Komercbanka which was suspected of involvement in a major money laundering scheme in which billions of euros reportedly left Russia to end up in the Latvian bank.

 

Zakulis will continue performing his duties as the regulator's chairman until the parliament appoints a new head of the Financial and Capital Markets Commission.

 

Latvian Prime Minister Laimdota Straujuma said on public radio before Zakulis' resignation announcement on Monday that "decisions about the Financial and Capital Markets Commission have been taken already but it is too early to comment on them."

 

"We had several meetings about the quality of bank supervision in Latvia. There is room for improvement there," Straujuma said.

 

Politicians of Latvia' s ruling coalition have been slamming Zakulis' performance for some time already, criticizing him for the inability to bust major money laundering schemes. Also, the OECD's report might theoretically prevent Latvia from joining the organization.

 

Zakulis became chairman of the Latvian Financial and Capital Markets Commission after Irena Krumane resigned from the post over the collapse of Latvijas Krajbanka in late 2011.