Latvia regained its vote on the European Central Bank’s Governing Council on Monday.
The Bank of Latvia appointed a new governor, following the suspension of Ilmars Rimsevics in February on corruption allegations.
Rimsevics is charged with soliciting and receiving a €100,000 payment. Rimsevics has denied the allegations and has sued Latvia to the European Court of Justice.
Rimsevics was suspended without designating an alternate, which means Latvia lost its vote for just under six months.
Since February, the meetings of the ECB’s Governing Council were attended by the Bank of Latvia Deputy Governor Zoja Razmusa, who did not have voting rights. Following his formal designation, he will now be able to vote.
The loss for Latvia was largely symbolic as the 19-member Governing Council presided over by Mario Draghi makes most of its decisions on the basis of a clear majority or consensus.
Perhaps more significantly, Latvia has been embroiled in a major money-laundering scandal. In February, US regulators accused the country’s third-largest lender (ABLV) of “institutionalised” money laundering, including violations of North Korean sanctions.
The Bank of Latvia is tasked with supervising national lenders and their compliance with anti-money-laundering legislation.
ABLV had faced a series of money-laundering allegations since 2016, but there appears to be systemic failure to limit its activity. National regulators have accepted part of the responsibility but are pointing to the bigger picture, as ABLV was merely a nod in a money-laundering network that involves many more European banks.
ABLV is one of the several high-profile cases of money laundering in Europe, along with Estonia’s Versobank, the Dutch ING, the Danish Nordea, and the Swedish Handelsbanken. Last Friday, the Eurogroup discussed plans for a dedicated EU body that would have the mandate and powers to fight money-laundering across the Eurozone.