Financial Crime World

Financial Institutions Must Ensure Compliance with International Sanctions

In an effort to strengthen financial regulations and prevent tax avoidance, Latvia’s financial institutions are required to implement strict measures to ensure compliance with international sanctions.

Compliance Requirements

According to a new policy guidance, financial institutions must:

  • Properly document that clients’ operations are presented in their tax declarations and not intended for tax avoidance.
  • Maintain automated transaction control processes.
  • Provide regular training to employees to prevent any circumvention of compliance requirements or tax obligations.

Importance of Transparency

The policy guidance emphasizes the importance of transparency in financial transactions, requiring institutions to:

  • Ensure that client information is accurate and up-to-date.
  • Report any violations of these guidelines to the Association’s Council.

Compliance with OFAC Sanctions

In addition to the policy guidance, financial institutions must also comply with sanctions imposed by the US Department of the Treasury and the Office of Foreign Assets Control (OFAC). These sanctions cover various categories, including:

  • Designated countries
  • Entities involved in international crime
  • Individuals involved in international crime

Financial institutions must ensure that their transactions do not contravene these prohibitions and preclude execution of transactions that violate them. Failure to comply with OFAC sanctions may result in reputational risk and damage to the institution’s international reputation.

Implementation and Training

To ensure compliance with both policy guidance and OFAC sanctions, financial institutions must:

  • Invest in improving their internal control systems.
  • Provide regular training to employees on these guidelines.
  • Conduct regular trainings for employees and arrange events to inform the public about the duties of financial institutions under these guidelines.

Conclusion

By implementing these measures, Latvia’s financial institutions can ensure a safe and stable financial system, promote international cooperation, and maintain their reputation as responsible financial players.