Germany and other G7 members are finding ways to help Ukraine with loans financed by Russia's frozen assets. The German Finance Ministry announced the initiative on Tuesday. Latvia – a country where Russian funds were once deposited – is now a strong supporter of this plan.
Jurmala, near the Latvian capital Riga, was once one of the main vacation spots for high-income Soviet citizens until 1991 when the Soviet Union collapsed.
Subsequently, as an EU member state, Latvia offered so-called “golden” visas and residence permits to those who opened a bank account and invested in real estate.
The country became a major entry point to the EU for wealthy Russians, Sanita Jemberga of the Baltic Center for Investigative Journalism told VOA.
“People in the Soviet Union used to come here; it was like a nostalgia, the window to Europe. And then when we started selling properties and banks. Here is a street where you would meet every possible Russian oligarch who had property here,” she says.
As an investigative journalist, Ms. Jemberga follows Russian money in Latvia. She says that over the past two decades, the Russians have created a safe haven on the coast of Jurmala.
“Let's call it a little Russia, without Putin,” she says.
She says Latvia's laws at the time allowed the unimpeded flow of Russian money in and out of the country. The scheme continued after Russia's invasion of Crimea in 2014.
Paulis Iljenkovs, is the chief financial investigator in Latvia.
“Until 2018, Latvia was really considered a safe place for money laundering,” he tells VOA.
But Mr Iljenkovs says things changed in 2018 after a European Commission report accused Latvia of not doing enough to fight money laundering. The United States also charged a Latvian bank with institutionalized money laundering and sanctions evasion.
“There was a very strong political commitment to quickly reform our financial system and it was done in a very short time frame indeed. There have been many changes in the legislative framework. A lot of resources were given to the competent authorities to fight financial crime,” he says.
Latvia also reformed its financial sector, creating the Financial Intelligence Unit, which fights money laundering and enforces EU and US sanctions following Russia's attack on Ukraine.
“We have published a list of all persons whose funds have been frozen in Latvia due to sanctions and not only certain individuals who are on the sanctions list, but also legal entities that are owned or controlled by these individuals,” Mr. Iljenkovs told VOA.
In Latvia, sanctions have been imposed on 157 individuals and funds worth about 110 million dollars have been frozen, says Mr. Iljenkovs.
The frozen assets include seventy-four real estate properties, including one in Jurmala owned by Mikhail Fridman, a Ukrainian-born Russian-Israeli tycoon.
“This used to be a sanatorium, which was bought by Mikhail Fridman's company. Maybe they wanted to make it a hotel or an apartment building, because the sea is only 200 meters from here”, says Mrs. Jemberga.
Earlier this summer, the foreign ministers of three Baltic states, including Latvia, urged the G7 to work on using frozen Russian assets to support Ukraine.
