The head of the Latvian Financial and Capital Market Commission (FKTK), the country’s financial system watchdog, resigned on July 5 amidst differences over Riga’s plans to clean up its financial system ahead of the Council of Europe’s review.
Latvia will undergo a review next year by Moneyval, the Council of Europe’s body monitoring money laundering and terrorism financing, in the wake of a string of scandals that shook the Baltic state in recent years.
Peters Putnins, the FKTK’s chairman, submitted his resignation on July 4, the Latvian Finance Minister Janis Reirs told a news conference on July 5, Reuters reported.
The minister said Putnins’ resignation would allow “more productive talks” with Moneyval.
The writing was already on the wall for Putnins after Latvia’s parliament approved legislation to strengthen control over the country’s financial regulator at a session in June.
The new legislation sets out the duties of the FKTK.
Under the new rules, all members of the FKTK board including its chairman will be appointed by the parliament.
An important part of Riga’s plan to fix its problem-spawning financial system is to tighten control of the FKTK itself, an idea Putnins criticised as potentially compromising the watchdog’s independence.
He also claimed the reforms aimed at removing him from office before his term expires in 2022.
The government is under pressure, however, to see the reform through after Latvia’s already weak reputation in the finance world suffered further blows.
Allegations of money laundering and complicity in financing deals of the North Korean regime that the US authorities posed against one-time third largest Latvian bank ABLV last year were the most serious. ABLV folded in aftermath of the charges.