[Updated August 2021] Rietumu Banka is one largest banks in the Baltic states. Headquartered in Riga, Latvia, the bank has approximately €3.8 billion in assets. What is particularly noteworthy is that just 7 years ago, the bank had less than half those deposits. Rietumu’s growth has been extraordinary.
How did Rietumu Bank grow so quickly? We suspect the answer is fraud. The bank just paid a huge fine for money laundering.
In our experience, when regulators crack down on one “fast and loose” bank, another one surfaces to take its place. UBS, Wells Fargo, Credit Suisse, Barclays, Deutsche and HSBC have all been under the microscope in recent years. While that was going on, depositors were quietly moving their money to Rietumu.
Last week, a Paris court fined Rietumu Bank $91 million (USD). The French government claimed the bank was helping wealthy French families avoid taxes and launder money. Regulators believe they have just found the tip of the iceberg. US News and World Report says that the government believes that over a four year period, the bank laundered as much as $984 million (USD). Much of that with the help of Nadav Bensoussan, and his company, France Offshore.
For his part in the scheme, Bensoussan received a two year prison sentence.
Two bank officers were also convicted for their role in the scheme but were spared prison.
Latvia has been off the radar screen as far as money laundering goes. To us, that simply means it is the ideal place to launder money. And ideally poised to capitalize on money laundering and tax evasion is Rietumu Banka. [See updates below.]
Where do Rietumu’s customers come from? They can certainly come from anywhere. Today, it cross border banking is the norm. As far as physical offices go, the bank has facilities in Russia, Israel, Belarus, Romaine and Ukraine. (If we added the Grand Caymans, Switzerland and Cyprus, the money laundering recipe would be complete!)
That the bank has no offices in the US means Uncle Sam has no jurisdiction. In our experience, however, Rietumu Bank is using a correspondent bank in the US to clear cross border transactions. Even with transactions involving parties completely outside the United States, the Justice Department doesn’t like having dirty money flow through US banks on its way from one country to another.
And that means potential whistleblower awards.
Rietumu Bank and Whistleblower Awards
If Rietumu Banks is helping Americans evade taxes, there are a potential IRS whistleblower claims. The largest whistleblower award to date was paid in an IRS case. Former UBS manager Bradley Birkenfeld received $104 million after blowing the whistle on his former employer. Birkenfeld showed the IRS how UBS was helping wealthy Americans evade taxes.
If a US bank or bank with US presence is helping Rietumu Banka launder money, that information could give rise to an award of up to $1.6 million under the FIRREA statute. (Maximum whistleblower awards are common.)
In our opinion, Rietumu Banka is ideally poised to be a major player in tax evasion and money laundering. Let’s look at the facts.
First, the bank is growing at a phenomenal pace. While not illegal, when examined with other factors, it is certainly suspicious.
Two, the bank was just fined for money laundering. And media reports say that French authorities think the misconduct is much more widespread. You can’t ask for a bigger red flag.
Three, Rietumu has offices where lots of Americans go to hide money. Israel!
Four, Rietumu Banka has no physical presence in the US. HSBC, Deutsche, UBS… they all had offices here meaning the feds had jurisdiction. Not with this bank. Without an office in the United States, the bank is largely outside the regulatory jurisdiction of the United States. The Justice Department could still prosecute the bank criminally and make it next to impossible to transact business in the United States, however.
Once upon a time, foreign banks wanted offices here to help lure wealthy American clients. Those same clients today see a presence here as a detriment. If I am evading taxes, I certainly don’t want to make it easy for the IRS to get my records. Some foreign banks realize that and offer their lack of a U.S. office as an asset!
One downside of the lack of jurisdiction is the inability for courts here to protect whistleblowers in Latvia or other countries. The lack of extraterritorial whistleblower protections hasn’t stopped bankers in other countries from coming forward and collecting awards. Sometimes individual bankers come forward in the hopes of striking deals to avoid criminal charges.
IRS and FIRREA Whistleblowers Can Remain Anonymous
There are few guaranties in life. The IRS and Justice Department do a great job of keeping the names of bank whistleblowers confidential, however. Birkenfeld’s name came out because of related criminal charges. Almost always, however, the names of IRS whistleblowers remain sealed. We can help you determine whether your identity is likely to be exposed BEFORE we file anything.
As whistleblower lawyers well versed in financial services cases, we have experience in working with the Justice Department, SEC and IRS to keep our client’s names out of the public’s eye when so requested by clients. We have also received over $100,000,000.00 on behalf of our banking clients over the last 5 years. The next award could be yours.
Congress Pays Anti-Money Laundering Whistleblower Law
January 1st, 2021 was a special day. Congress finally gave bank whistleblowers their own AML whistleblower law. And unlike other whistleblower programs, compliance officers and bank auditors are eligible for rewards. That is important since they usually are the first to spot money laundering violations.
Under the new law, AML whistleblowers can receive up to 30% of whatever the government collects from the wrongdoer. There are no caps.
Looking for Rietumu Banka and Other Bank Whistleblowers
There is a saying in the U.S. that goes like this, “Where there is smoke, there is usually fire.” We have no direct evidence of AML or tax evasion issues by the bank involving U.S. citizens or occurring with the aid of U.S. banks or wire rooms. Just as French prosecutors believe that they have only found the tip of the iceberg, we too believe there is more going on.
Our mission is to stop financial fraud and crime, level the playing field for legitimate banks and of course, obtain the largest whistleblower awards possible for our clients. If you have inside information about Rietumu Bank or any other banks engaged in money laundering or helping Americans evade taxes, call us.
All inquiries are protected by the attorney – client privilege. That means your information is kept confidential. We only file claims with the government and investigate your claims with your permission.
How do we get paid? We get paid only if we win and collect money on your behalf. Otherwise, you owe us nothing.
Worried that you are not a U.S. citizen? Awards can be paid to virtually anyone, anywhere.
Updates: We said in 2017 when this post was first written that Latvia seemed like the ideal place for money laundering. It seems like others now agree.
In April 2018, the Hurriyet Daily News reported this headline, “Banking overhaul seeks to shut Latvian money laundromat.” That story was about a different Latvian bank, ABLV Bank and allegations as to how that bank engaged in large-scale money laundering with connections to North Korea’s nuclear weapons development program.
The article didn’t stop with ABLV, however. It also noted how “Latvia’s ’boutique banking’ sector has long sold itself to foreigners as a gateway to the European Union, with 11 of Latvia’s 23 registered commercial banks catering to non-residents.”
Another bank in Latvia, Trasta Komercbanka is alleged to have laundered $13 billion in proceeds fraud schemes in Moldova.
It’s not just Latvian banks that are being questioned. Last year the head of Latvia’s central bank, Ilmars Rimsevics, was picked up by police on suspicion that he solicited a bribe from a banker. Earlier this year he was formally charged with more crimes. He denied those charges.
What does this mean for Rietumu Banka? We don’t know.
On the one hand, Latvian banks are still awash with money laundering allegations and investigations. Reitumu Banka said, however, that it rid itself of two-thirds of its foreign customers. The bae bank still is the largest bank in both Latvia and the Baltic states.
Once again, if you have information about money laundering or foreign banks facilitating American customers who wish to evade taxes, you may be eligible for both an IRS and FIRREA whistleblower cash reward. See the links for more information on each of these programs.
Our bank whistleblowers have to date received over $100 million in whistleblower rewards. And you don’t need to be a U.S. citizen to collect a reward. Best of all, the IRS whistleblower program can keep your identity secret.