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Financial Institutions Must Beef Up Anti-Money Laundering Measures to Avoid Unacceptable Risk

Riga, Latvia - A Wake-up Call for Financial Institutions

In a bid to prevent financial crimes and ensure the stability of the Latvian financial sector, financial institutions have been advised to undertake regular independent external reviews to ensure compliance with anti-money laundering (AML) and combating the financing of terrorism (CFT) principles.

Unacceptable Risk: Companies Providing Intermediation Services

According to the latest policy guidance from the Association, financial institutions must be aware of companies that provide intermediation services in payments and settlements but do not belong to the same group as the company conducting real economic activity. These companies, which include those using electronic money or virtual currencies, operating mainly using unregulated settlement systems, and are not licensed by the relevant authorities, pose an unacceptable risk to the financial system.

Key Business Principles: Know Your Client

The guidance also emphasizes the importance of implementing key business principles that meet the highest standards, including the “Know Your Client” principle. Financial institutions must ensure that they have robust internal controls in place to prevent money laundering and terrorist financing.

Compliance with OFAC Sanctions Crucial

In related news, financial institutions have been reminded of their obligation to comply with Office of Foreign Assets Control (OFAC) sanctions. The guidelines emphasize the importance of expeditious direct cooperation between Latvian financial institutions and US financial market participants, as well as correspondent financial institutions.

OFAC Sanctions Programs

The OFAC sanctions programs cover several categories of sanctions against designated countries, entities, persons, and individuals involved in international crime. Compliance with these sanctions is essential to prevent reputational risk and maintain the credibility of the financial sector.

Financial Institutions Must Invest in Compliance

To ensure compliance with AML/CFT principles and OFAC sanctions, financial institutions must make necessary investments to eliminate obstacles hindering compliance. They must also ensure that their internal control systems are sufficient and adequate for compliance purposes.

Staying Ahead of Financial Crimes

The policy guidance is a wake-up call for financial institutions in Latvia to prioritize anti-money laundering measures and comply with international sanctions regimes. By doing so, they can avoid unacceptable risk, maintain their credibility, and contribute to the stability of the financial sector.

Conclusion

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In conclusion, financial institutions must take immediate action to ensure compliance with AML/CFT principles and OFAC sanctions. The Association has pledged to provide regular training on the implementation of OFAC sanctions for financial institution employees and organize events to inform the public about the duties under the guidelines. By staying ahead of financial crimes, financial institutions can maintain their reputation and contribute to a stable financial sector.