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Riga (AFP)

Latvia's financial sector was left reeling Monday after anti-corruption officials arrested its central bank chief over an alleged bribe and the country's third-largest bank's payments were frozen amid accusations of money laundering.

While the Baltic eurozone member's government held an emergency meeting Monday to address governor Ilmars Rimsevics's weekend arrest, the European Central Bank (ECB) dealt an unrelated blow to the sector by announcing it was freezing payments by the private-sector ABLV bank.

The ECB said the ABLV's finances had deteriorated after Washington took action against the bank earlier this month over concerns about money laundering and activities linked to North Korea's weapons programme.

A source familiar with the case told AFP there was no connection between the ABLV case and the arrest of the Bank of Latvia governor, who also sits on the ECB's Governing Council, along with his heavyweight eurozone counterparts.

Prime Minister Maris Kucinskis said there was no sign of danger to the financial system after Rimsevics was detained by the Corruption Prevention Bureau (KNAB) on Saturday.

On Monday, KNAB chief Jekabs Straume announced an investigation had been launched into suspected bribery involving an unnamed individual.

"The senior official is suspected of having extorted and received a bribe of at least 100,000 euros ($125,000)," KNAB Straume told reporters.

He added that the allegations "made it impossible for the official to continue to perform his duties".

The Baltic News Agency (BNS) and other local media reported that the official in question was Rimsevics, who was appointed governor in 2001.

Kucinskis said Monday that restrictions would be imposed on Rimsevics if he is released on bail.

"He will be prevented from carrying out his functions," Kuncinskis told reporters after an emergency cabinet meeting.

- Urged to resign -

Rimsevics was questioned for seven hours on Saturday before being taken to another location on Sunday.

Anti-corruption officers also raided the Rimsevics's residence and his offices at the Bank of Latvia.

LTV public television reported that businessman Maris Martinsons, who operates in the construction and credit industries, had also been arrested by KNAB.

Rimsevics's lawyer requested that he be freed on bail. A friend of the governor has already posted the 100,000 euros which, if accepted by justice officials, could see Rimsevics freed late Monday.

The head of the parliament's national security committee, Inese Libina-Egnere, on Monday urged Rimsevics to resign. Otherwise parliament would seek other legal avenues to dismiss him, she told reporters.

Also Monday the ECB announced in a statement that "temporarily, and until further notice, a prohibition of all payments by ABLV bank on its financial liabilities has been imposed, and is now in effect."

It is the first time the ECB has used its power to impose a moratorium since taking on eurozone-wide banking supervision responsibilities in 2014.

The US Department of the Treasury last week named ABLV "an institution of primary money laundering concern" and accused it of connections to North Korea's weapons development programme.

© 2018 AFP