OREANDA-NEWS. The Financial and Capital Market Commission (FCMC) and ABLV Bank, AS entered into the administrative agreement regarding the violations detected under the FCMC inspections, which is aimed at improving the functioning of the bank’s internal control system. According to the agreement, a fine of EUR 3.17 million will be applied to the bank and warning will be given to the responsible member of the bank’s board.

By signing the administrative agreement, the FCMC and ABLV Bank have agreed on amicable settlement to terminate the administrative matter initiated by the FCMC.

Determining the amount of fine to be applied, the FCMC took into account that ABLV Bank currently complies with all regulatory requirements and continues improvement of its internal control system, and therefore the fine amount was set to be a minor one, i. e., EUR 3.17 million, which corresponds to 2.5% of the bank's total income for the year. Pursuant to the Credit Institution Law, the FCMC may apply the fine of up to 10% of the bank’s total net income for the previous financial year.

During the inspections, the FCMC has discovered that the bank had not ensured appropriate extent of verification and documentation of economic nature and legal purpose of particular clients’ transactions in previous years. The FCMC considers that the bank had not paid sufficient attention to the client’s untypically large, complex, or interrelated transactions and also had not performed intense supervision of some clients’ transactions under the enhanced due diligence.

The parties to the administrative agreement have agreed upon further measures that the bank committed to take in full within the set terms in order to improve the internal control system and to strengthen its efficiency. In turn, the FCMC will monitor the bank’s performance of assumed obligations within the terms and to the extent set forth in the agreement.

The conclusions made by the FCMC during the inspections concern previously executed clients’ transactions and their documentation, however viewing those from the perspective of current more strict criteria. In the last year, there were rapid considerable changes in the requirements regarding provision of services to clients. Currently, the bank fully complies with the regulatory requirements. The number of compliance officers has been substantially increased and the capacity of respective structural units has been strengthened. This was also taken into account by the FCMC when setting the amount of fine to be de minimis applicable to credit institutions according to the law.

Unfortunately, in previous years, no sufficiently detailed requirements for examination and documentation of the clients’ transactions were set. The bank refused cooperation with some clients which might cause inadequate risk in terms of the current requirements, and strong assessment of the clients is continued. ABLV Bank will keep working on improvement of the internal control system in accordance with the FCMC recommendations and will allocate not less than EUR 6.5 million for this purpose. The bank’s internal control system will be assessed and necessary measures will be taken in order to improve the system functioning and strengthen its efficiency.