In the future it will no longer be possible to open an account with the bank without the institution making inquiries about the client, as LETA was told by Swedbank board chairman Lauris Mencis.
“There was a time when the “Moneyval” Sword of Damocles hung over us and in the form of a grey list, and therefore this pendulum was once moved too far because there was no time and other possibilities. This has since calmed down, so it’s just about the expectations. If someone things they will be able to come over to a bank and open an account no questions asked, there will no longer be such a possibility,” said Mencis.
He also said that the banks are aware they have to improve communication and explanations which information will be requested in order to prepare everything well in advance. Work is already underway.
He explained that last year the Saeima parliamentary investigative committee that was composed to assess the consequences of “capital repairs” of the country’s financial sector was active, and there were many complaints voiced. A discussion about corporate income tax and support of mortgage loan takers did become active at one point, but then all went quiet.
Mencis stressed that this is where “anectotal evidence” appears, which is some deputy’s “plumber” or “major investors” that have allegedly went around interviewing banks and how no one spoke to them, and there are facts about the number of businesses and private persons that open accounts every year – and numbers reach dozens of thousands.
“But these positive arguments do not deserve such attention. Of course, there could be problems we will need to analyse, and yes – we are working to improve customer experience in bank communication when it comes to implementation of legislative requirements and regulations. However, we cannot assume everything is absolutely bad,” said Mencis.
He also explained that starting with 2022 sanction packages started coming up every month instead of every year. This is why banks had a lot of work to do in order to ensure technical and operational readiness. In this case a lot has been done in the past two years.
However, Mencis admits that a bank’s ability to detect cases in which parties are under sanctions is one thing and it’s a completely different think to make the decision to work with one or another client, understanding the risk profile of sanctions and money laundering risks (AML). And this is not about cases when sanctions make it impossible to continue working, because this is obvious. However, if a client’s business model includes an increased sanction and AML risk, which is difficult to manage, Swedbank will not work with such a client.
“We are a universal bank that works with hundreds of thousands of private persons and tens of thousands of businesses. The banks that work in narrower segments may have it differently. At the same time, it is necessary to understand that we live in an environment with risks, and the question always remains if businessman are even able to manage risks and their consequences,” said Mencis.
He said he is happy there’s been evolution on the side of the state, and the Office for Prevention of Laundering of Proceeds Derived from Criminal Activity will now serve as the institution that will consolidate all sanction-related issues. Previously there were issues that had to be resolved with the Ministry of Foreign Affairs, issues that had to be resolved with customs and the Bank of Latvia. According to Mencis a single-stop approach does help out.
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Swedbank: opening an account won’t be possible without the bank making inquiries
