A BANK partly owned and run by Celtic’s biggest shareholder Dermot Desmond has been fined for letting its clients bust sanctions against North Korea after an FBI probe.

A watchdog in the Baltic state of Latvia found Rietumu banka - where Mr Desmond has been a key player for more than a decade - had breached rules on both money laundering and counter terrorist financing.

Latvia's Financial and Capital Market Commission said Rietumu had allowed customers to use offshore companies and a complicated chain of transactions to transfer payments to North Korea, thus bypassing international sanctions.

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The regulator imposed a penalty of around £1.4m on the bank for the transactions, which took place between 2009 and 2015.

The fine comes after an international investigation led by America's FBI and the US Treasury Department in to payments to and from the world's most secretive state and designed to bypass sanctions imposed both by the United Nations and the European Union.

North Korea is considered an international pariah whose leadership is currently threatening the West with what it claims are nuclear weapons.

North Korea

HeraldScotland: A North Korean long-range rocket is launched into the air at the Sohae rocket launch site, North Korea, in this photo released by Kyodo February 7, 2016. North Korea launched a long-range rocket on Sunday carrying what it has called a satellite, but its n

BACKGROUND: Herald's Tom Thomson on North Korea

Mr Desmond has consistently refused to comment on a series of scandals involving Rietumu, of which he is one of three shareholders. The Irish tax exile sits on the bank's management board. His office on Friday did not respond to requests for comment from The Herald.

Rietumu itself said it had tightened up internal measures in response to the North Korean investigation.

The bank also said that the individual clients concerned were not named in EU or UN sanctions documents and said it had no knowledge of, or interest in, the transactions concerned. It has now dropped the clients at the centre of the probe, it said.

The latest penalty comes as the bank and its board appeal against what is the biggest fine in French history - some £70m - imposed after a Paris court found it guilty of facilitating industrial scale tax evasion.

Prosecutors convinced the court the bank was an “indispensable link” in what they called a vast scheme to criminally evade tax led by a financier called Nadav Bensoussan, and his company, France Offshore.

Judge Benedicte de Perthuis, whose court specialises in high-value tax crime crime, said Rietumu could not ignore the fraudulent nature of the funds.

Rietumu's board argues that its actions in the French case were legal. The bank has been banned from France and its chief executive given a suspended jail sentence.

Mr Desmond was not specifically named in either the French conviction or the latest fine.

Dermot Desmond

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Both the French tax evasion prosecution and the FBI sanction-busting investigation are part of wider international pressure on Latvia's non-resident banks.

These institutions have traditionally focused on providing accounts to people living in other parts of the former Soviet Union.

Rietumu and other banks have, for example, opened accounts for the anonymous owners of controversial Scottish limited partnerships at the heart of a two-year Herald investigation.

The bank is one of five in Latvia now fined for circumventing sanctions against North Korea.

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Peteris Putnins, the head of Latvia's banking watchdog, said: "The measures taken in this case (are) a lesson to all the banks in Latvia not to be used for suspicious deals."

Foreign deposits in Latvian banks have fallen by more than quarter in the last year and a half under tighter rules.