The two Latvian banks that the U.S. government claims are “a danger to the international community” say they adhere to their nation’s banking regulations.

Multibanka and VEF banka, two of the nation’s smaller banks, were singled out April 21 by the U.S. Treasury Department as “primary money laundering concerns.” The Treasury Department is proposing that American banks not be allowed to have dealings with the two Latvian banks.

Svetlana Dzene, chair of Multibanka’s board of directors, said in an April 22 statement posted on the bank’s Web site that the institution doesn’t understand the U.S. government’s action. Multibanka doesn’t have any unidentified clients and has no information about any clients engaged in financial fraud, Dzene said. The U.S. government’s action, she added, threatens the bank’s reputation.

VEF banka, in an April 22 statement posted on its Web site, said that since last autumn it has not received any requests from correspondent banks, including those in the United States, questioning the legality of funds. The U.S. government’s action, VEF banka said, was completely unexpected.

The Treasury Department action was taken under a provision of the USA PATRIOT Act, which generally addresses concerns about terrorism.

The U.S. Treasury Department has designated two of Latvia’s smaller banks as “primary money laundering concerns” and is proposing that American banks be forbidden from dealings with them.

Multibanka and VEF banka, both based in Rīga, were singled out under a provision of the USA PATRIOT Act, approved by Congress in the wake of the Sept. 11, 2001, terrorist attacks in New York and Washington, D.C. The act generally addresses concerns about terrorism.

“These two Latvian banks represent a danger to the international community because they facilitate the placement and movement of dirty money in the global financial system,” Daniel Glaser, the Treasury Department’s deputy assistant secretary for terrorist financing and financial crimes, said in a statement released April 21.

“This action has been taken to protect the U.S. financial system from abuse,” the U.S. Embassy in Rīga announced in a separate press release, “and comes after a lengthy U.S. government review of VEF Bank’s and Multibanka’s business practices and compliance with international anti-money laundering norms.”

Spokespeople for the two banks were not immediately available for comment.

Multibanka, Latvia’s oldest commercial bank, was founded in 1988 as a branch of the Soviet Union’s Foreign Economic Relations Bank and was nationalized in 1991. It ranked as the nation’s 15th largest bank out of 23 listed by the Association of Latvian Commercial Banks.

The Treasury Department said that a large share of Multibanka’s activity involves transferring money out of Latvia, that Russian and other shell companies have used the bank to facilitate financial crime, and that some criminals have used the bank in cases of financial fraud.

VEF banka was founded in 1992. It is the 21st largest bank in the nation.

The bank was singled out because of what the Treasury Department says are VEF’s lax controls against money laundering and because less than 20 percent of those who use the bank’s confidential services are Latvian residents.

Although the U.S. Embassy emphasized that the Treasury Department’s action is aimed at the two banks and not at the Latvian banking system, it urged the Latvian government to take “aggressive steps” to stem money laundering.

Latvia’s new ambassador to Russia, Andris Teikmanis, has presented his credentials to Russian President Vladimir Putin, the Latvian Ministry of Foreign Affairs has announced.

Teikmanis was one of seven ambassadors presenting their credentials in an April 20 ceremony in Moscow. He replaces Normunds Penke, whose tour of duty ended late last year.

The ceremony came less than three weeks before Latvian President Vaira Vīķe-Freiberga is to join other European leaders in Moscow for the May 9 Victory Day celebration, when Russia will mark the 60th anniversary of the end of World War II.

Latvia’s relations with Russia have been strained for months over issues such as educational reforms that some in the Russian community in Latvia see as discriminatory. Even Vīķe-Freiberga’s decision to participate in the Victory Day remembrance is being viewed skeptically in Moscow because of her statement that World War II for Latvia didn’t end until 1991, when the Soviet Union collapsed.

Teikmanis officially began his ambassadorial duties on April 6. He previously was the undersecretary of state in the Ministry of Foreign Affairs. Teikmanis also has been mayor of Rīga and Latvia’s ambassador to Germany and the Council of Europe.

Besides its embassy in Moscow, Latvia also has a consulate general in St. Petersburg and a consulate in Pskov.