JULY 26, 2011, 4:11 PM ET

http://blogs.wsj.com/corruption-currents/2011/07/26/fincen-withdraws-money-laundering-rule-on-latvian-bank-amid-liquidation/

The U.S. Treasury Department said Tuesday it withdrew a primary money-laundering concern label on a Latvian bank after the country took steps to ensure its liquidation.

The Financial Crimes Enforcement Network, or FinCEN, Treasury’s financial intelligence arm in charge of enforcing the Bank Secrecy Act and provisions of the Patriot Act, ruled in 2006 (pdf) that VEF Banka, one of Latvia’s smallest banks, was a financial institution used by illicit shell companies in financial fraud rings. The ruling, under Section 311 of the Patriot Act, designated VEF Banka as a primary money laundering concern.

Since the ruling, FinCEN said Tuesday, the Latvian authorities took “significant steps” to liquidate the bank that “led FinCEN to determine that VEF no longer poses a significant money laundering threat to the United States.”

The Latvian bank regulator revoked VEF’s operating license in May 2010, a fact confirmed by the Senate of Latvia’s Supreme Court, resulting in the termination of its ability to operate as a financial institution, FinCEN said.

In November 2010, the Riga District Court issued a non-appealable order to begin liquidating the bank, and FinCEN said the process should be complete in one to two years.

In its statement, FinCEN recognized Latvia for making progress in its anti-money laundering and counter-terrorist financing regime since 2008, including passing legislation and adopting regulations to tighten controls, establishing a national coordinating body to handle it and increasing penalties for money laundering.