The United States put sanctions on North Korea last year. However, banks that are owned by the state in Pyongyang found a backchannel. According to the U.S., North Korea kept money coming for their ballistic missile programs from a small country in Europe, Latvia.

Latvia is a country that is a part of NATO and the European Union. One of their biggest banks built a huge business from illegal money transfers. The U.S. government says that this allowed North Korea to obtain their missiles.

Latvia Denies

Both EU and the U.S. rely on financial sanctions. That’s why Latvia became a possible weak link in the West’s banking system. They’ve accused Latvia banks of high-level corruption. The country is now trying to appease its European and U.S. allies and to reform its financial sector.

Maris Kucinskis, Latvian Prime Minister, told the media in an interview that his country is not able to avoid money flow controls. This is because the U.S. and EU are constantly monitoring them to avoid influence and meddling.

ABLV Breakdown

The U.S. Treasury released a report in February on Latvia’s biggest bank, ABLV. Since then, the U.S has pressured Kucinskis and the Latvian government to take action. The report from the U.S. Treasury said that bank is constantly avoiding financial rules, skirting sanctions, and laundering money. The report also stated that the bank is bribing officials from Latvia to be able to continue their illegal practices.

The bank denied the accusations. However, the report put a lot of pressure on the bank and it collapsed the next week.

Latvian officials said that same week that Ilmars Rimsevics, the central bank chief, was suspected of taking bribes. Security services are also investigating Rimsevics after media reported that he asked a Latvian bank to do money laundering from Russia.

Questions from the American People:

1. Why is so much money flowing from Latvia in the first place? Who is sending money via Latvia? Who was funding North Korea? Does the investigation point to Russia as the primary funder?
2. What steps can the U.S., E.U., and U.N. take to ensure that worldwide banks respect official sanctions?
3. How did the collapse of the ABLV affect the Latvian economy?