Ilmars Rimsevics, the embattled governor of Latvia’s central bank,  told a press conference in Riga on February 20 that he will not resign as he is not guilty of corruption allegations recently made against him.

Rimsevics’s choice to dig in comes in spite of calls from the Latvian government and president that he should resign to protect the reputation of the country and of its financial system. Latvia has only belatedly begun to clamp down on the shady operations of its banks – which had given the Baltic state a reputation as a haven for illicit money - and Rimsevics’ refusal to step down has the potential to compromise those efforts.

Rimsevics – who also sits on the board of the European Central Bank – has been the governor of Latvijas Banka since 2001, making him the longest serving central bank chief in the Eurozone.

The official is subject to a probe by the Latvian anti-corruption police KNAB. The probe concerns “requesting and acceptance of a bribe” of at least €100,000 from a businessman. The bribe is believed to come from businessman Maris Martinsons.

An allegation from the owner of Latvian Norvik Bank has also emerged recently. Grigory Guselnikov, a Russian-born UK citizen, claims Rimsevics attempted to extort money from him in return for making “successful banking” possible in Latvia, the Associated Press reported on February 19.

Rimsevics denied all charges during a presser held in Riga. He described them as “a coordinated campaign by some of Latvia's commercial banks with the purpose of discrediting the Latvian state”, according to LSM. The campaign aims at undermining the authority of the central bank as an institution and himself as its governor, he added.

Allegations against Rimcevics are not the only problem for Latvia, which has long been pressed to act to make its banking sector more transparent and ensure it is not involved in money laundering or helping individuals and companies dodge tax. 

A scandal involving the country’s third-largest bank, ABLV Bank, is unfolding concurrently. The bank’s executives are at the European Central Bank in Frankfurt today to present a stabilisation plan after €600mn were withdrawn from the bank following a report from the US Treasury’s Financial Crimes Enforcement Network (FinCEN) that is involved in money laundering and breaking sanctions on North Korea.

“FinCEN assesses that, beginning in 2012 and continuing into 2017, ABLV [Bank] conducted a high volume of transactions for shell companies registered outside of Latvia in offshore secrecy jurisdictions totalling tens of billions of dollars,” the US institution said in its report.

Following the US report, which sparked a flood of withdrawals, the European Central Bank ordered the Latvian financial market watchdog FKTK to impose a freeze on ABLV’s payments until liquidity improves. The troubled bank received a loan of €100mn, collateralised by the bank’s securities, from the Bank of Latvia for that purpose.