Proposal of Special Measure Against ABLV Bank, AS as a Financial Institution of Primary Money Laundering Concern; Withdrawal

DEPARTMENT OF THE TREASURY <SUBAGY>Financial Crimes Enforcement Network</SUBAGY> <CFR>31 CFR Part 1010</CFR> <RIN>RIN 1506-AB39</RIN> <SUBJECT>Proposal of Special Measure Against ABLV Bank, AS as a Financial Institution of Primary Money Laundering Concern; Withdrawal</SUBJECT> <HD SOURCE="HED">AGENCY:</HD> Financial Crimes Enforcement Network (FinCEN), Treasury. <HD SOURCE="HED">ACTION:</HD> Withdrawal of finding and notice of proposed rulemaking. <SUM> <HD SOURCE="HED">SUMMARY:</HD> This document withdraws FinCEN's finding that ABLV Bank AS (ABLV) is a financial institution of primary money laundering concern and the related notice of proposed rulemaking seeking to impose the fifth special measure regarding ABLV, pursuant to section 311 of the USA PATRIOT Act (section 311). Because of material subsequent developments that have mitigated the money laundering risks associated with ABLV, FinCEN has determined ABLV is no longer a financial institution of primary money laundering concern that warrants the implementation of a special measure under section 311. </SUM> <EFFDATE> <HD SOURCE="HED">DATES:</HD> The finding and notice of proposed rulemaking, published at 83 FR 6986 (Feb. 16, 2018), are withdrawn as of September 27, 2024. </EFFDATE> <HD SOURCE="HED">ADDRESSES:</HD> Mail: Global Investigations Division, Financial Crimes Enforcement Network, P.O. Box 39, Vienna, VA 22183. <FURINF> <HD SOURCE="HED">FOR FURTHER INFORMATION CONTACT:</HD> The FinCEN Resource Center at 1-800-767-2825 or electronically at <E T="03">frc@fincen.gov.</E> </FURINF> <SUPLINF> <HD SOURCE="HED">SUPPLEMENTARY INFORMATION:</HD> <HD SOURCE="HD1">I. Background</HD> On October 26, 2001, the President signed into law the Uniting and Strengthening America by Providing Appropriate Tools Required to Intercept and Obstruct Terrorism Act of 2001, Public Law 107-56 (the “USA PATRIOT Act”). Title III of the USA PATRIOT Act amended the anti-money laundering provisions of the Bank Secrecy Act (BSA)  <SU>1</SU> <FTREF/> to promote the prevention, detection, and prosecution of international money laundering and the financing of terrorism. Section 311 of the USA PATRIOT Act (section 311), codified at 31 U.S.C. 5318A, grants the Secretary of the Treasury (Secretary) authority, upon finding that reasonable grounds exist for concluding that one or more financial institutions operating outside the United State is of primary money laundering concern, to require domestic financial institutions and financial agencies to take certain “special measures”. The authority of the Secretary to administer the BSA and its implementing regulations has been delegated to the Director of FinCEN. <SU>2</SU> <FTREF/> <FTNT> <SU>1</SU>  The BSA, as amended, is the popular name for a collection of statutory authorities that FinCEN administers that is codified at 12 U.S.C. 1829b, 1951-1960 and 31 U.S.C. 5311-5314, 5316-5336, and includes other authorities reflected in notes thereto. Regulations implementing the BSA appear at 31 CFR chapter X. </FTNT> <FTNT> <SU>2</SU>  Pursuant to Treasury Order 180-01, the authority of the Secretary of the Treasury (Secretary) to administer the BSA, including, but not limited to, 31 U.S.C. 5318A, has been delegated to the Director of FinCEN. Treasury Order 180-01 (Jan. 14, 2020). </FTNT> The five special measures enumerated under section 311 are safeguards that may be employed to defend the U.S. financial system from money laundering and terrorist financing risks. The Secretary may impose one or more of these special measures in order to protect the U.S. financial system from such threats. Through special measures one through four, the Secretary may impose additional recordkeeping, information collection, and information reporting requirements on covered domestic financial institutions and domestic financial agencies—collectively, “covered financial institutions”. <SU>3</SU> <FTREF/> Through special measure five, to the Secretary may prohibit, or impose conditions on, the opening or maintaining in the United States of correspondent or payable-through accounts by covered financial institutions. <SU>4</SU> <FTREF/> <FTNT> <SU>3</SU>  31 U.S.C. 5318A(b)(1)-(b)(4). </FTNT> <FTNT> <SU>4</SU>  31 U.S.C. 5318A(b)(5). </FTNT> <HD SOURCE="HD1">II. Procedural History and Subsequent Events</HD> <HD SOURCE="HD2">A. Finding and Notice of Proposed Rulemaking</HD> On February 16, 2018, FinCEN issued a notice of proposed rulemaking (NPRM) that (1) set forth FinCEN's finding that ABLV, a commercial bank located in Riga, Latvia, was, at that time, a foreign financial institution of primary money laundering concern and (2) proposed imposing special measure five under section 311, prohibiting covered financial institutions from opening or maintaining in the United States correspondent accounts for, or on behalf of, ABLV. <E T="03">Proposal of Special Measure Against ABLV Bank, AS as a Financial Institution of Primary Money Laundering Concern,</E> 83 FR 6986 (Feb. 16, 2018), <E T="03">available at https://www.fincen.gov/sites/default/files/federal_register_notices/2018-02-16/2018-03214.pdf.</E> </FTNT> <HD SOURCE="HD2">B. Subsequent Developments</HD> In light of significant developments since FinCEN issued that NPRM, FinCEN has now determined that ABLV is no longer a financial institution that is of primary money laundering concern. <HD SOURCE="HD3">1. ABLV Lost Its License, Ceased Banking Operations, and Is Undergoing Irrevocable and Supervised Liquidation</HD> On February 23, 2018 (one week after FinCEN issued its NPRM), the European Central Bank (ECB) determined that ABLV—as well as its subsidiary ABLV Bank Luxembourg—was failing or likely to fail, noting that, following issuance of FinCEN's NPRM, ABLV had experienced an abrupt wave of deposit withdrawals and increasing lack of access to U.S. dollar funding. <SU>6</SU> <FTREF/> As a result, the ECB instructed the Latvian supervisory authority, the then-named Financial and Capital Markets Commission (FCMC), <SU>7</SU> <FTREF/> to impose a moratorium on ABLV in order to provide the bank time to stabilize operations. A similar moratorium was placed upon ABLV's subsidiary in Luxembourg. <SU>8</SU> <FTREF/> In addition, on July 11, 2018, ECB formally withdrew ABLV's banking license. <SU>9</SU> <FTREF/> <FTNT> <SU>6</SU>   <E T="03">See</E> ECB, Press Release, <E T="03">ECB determined ABLV Bank was failing or likely to fail</E> (Feb. 24, 2018), <E T="03">available at https://www.bankingsupervision.europa.eu/press/pr/date/2018/html/ssm.pr180224.en.html.</E> </FTNT> <FTNT> <SU>7</SU>  In January 2023, the FCMC was integrated into the Bank of Latvia. Latvijas Banka, Press Release, <E T="03">As of 1 January, the FCMC will be integrated into Latvijas Banka</E> (Dec. 28, 2022), <E T="03">available at https://www.bank.lv/en/news-and-events/news-and-articles/press-releases/16285-as-of-1-january-the-fcmc-will-be-integrated-into-latvijas-banka.</E> </FTNT> <FTNT> <SU>8</SU>   <E T="03">See id.</E> </FTNT> <FTNT> <SU>9</SU>   <E T="03">See</E> Nasdaq, <E T="03">ECB Withdraws Credit Institution's License of ABLV Bank, AS in Liquidation</E> (July 12, 2018), <E T="03">available at https://view.news.eu.nasdaq.com/view?id=bd5ccbdd7886f3040713f0c5eb9193353&lang=en.</E> </FTNT> As a consequence of the ECB's determination and subsequent action by relevant national authorities, ABLV and its subsidiary began winding up shortly afterwards. On June 12, 2018, ABLV—with the approval of FCMC—entered irrevocable liquidation, formally changing its name to ABLV Bank-in-Liquidation. <SU>10</SU> <FTREF/> By July 12, 2018, ABLV no longer operated as a depository institution. On January 29, 2019, Luxembourg's main financial regulatory authority, the Commission de Surveillance du Secteur Financier (CSSF), issued a fine against ABLV Bank Luxembourg of €250,000, the maximum allowable by law, on the finding that, <E T="03">inter alia,</E> ABLV had failed to comply with obligations established under Luxembourg's AML/CFT legal requirements. <SU>11</SU> <FTREF/> Shortly afterward, the Luxembourg courts ordered ABLV Bank Luxembourg dissolved. <SU>12</SU> <FTREF/> <FTNT> <SU>10</SU>   <E T="03">See</E> <E T="03">Latvian bank regulator approves liquidation of ABLV Bank</E> (June 12, 2018), <E T="03">available at https://www.reuters.com/article/business/latvian-banking-regulator-approves-liquidation-of-ablv-bank-idUSKBN1J82E0/.</E> </FTNT> <FTNT> <SU>11</SU>   <E T="03">See</E> CSSF, <E T="03">Administrative penalty imposed on the credit institution ABLV Bank Luxembourg S.A.</E> (Jan. 29, 2019). </FTNT> <FTNT> <SU>12</SU>   <E T="03">See</E> CSSF, <E T="03">Dissolution and judicial liquidation: ABLV Bank Luxembourg S.A.—Appointment of liquidators</E> (July 2, 2019). </FTNT> Significantly, since July 2018, ABLV-in-Liquidation has undergone a strictly supervised liquidation process, closely monitored by the Government of Latvia, which ensures AML/CFT compliance. Throughout the process (which is at an advanced stage), Latvian authorities have kept FinCEN apprised of ABLV's liquidation with updates on the authorities' role in: (1) supervising the liquidation; (2) approving updates to the liquidation methodologies for verifying creditors and ensuring AML/CFT and sanctions compliance; (3) reviewing the liquidators' submitted reports; and (4) monitoring ABLV creditors' claims. <SU>13</SU> <FTREF/> <FTNT> <SU>13</SU>  Notably, Latvian authorities ultimately confirmed that, having reviewed the bank's records, they found evidence to support FinCEN's findings in the NPRM concerning the complicity of ABLV owners, shareholders, and senior leadership in the use of the bank for money laundering purposes. </FTNT> Fur ━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━ Preview showing 10k of 18k characters. Full document text is stored and available for version comparison. ━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━