Financial Crime World

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Financial Institutions Must Ensure Compliance with Anti-Money Laundering and Counter-Terrorism Financing Principles

The Association has issued a new policy guidance for financial institutions to ensure compliance with anti-money laundering (AML) and counter-terrorism financing (CFT) principles.

Regular Independent External Reviews Required

According to the guidance, financial institutions must undertake regular independent external reviews to ensure compliance with the defined principles. The scope of these reviews is outlined in the Association’s guidelines on independent external assessment of AML/CFT compliance programs.

High-Risk Client Segments Identified

The policy also highlights specific client segments that pose a risk to the Latvian financial sector, including:

  • Companies that provide intermediation services
  • Use electronic money or virtual currencies
  • Operate using unregulated settlement systems

Compliance with International Sanctions Crucial

Financial institutions must also comply with international sanctions imposed by organizations such as the United Nations and the European Union. The guidance emphasizes the importance of cooperation between financial institutions and state authorities to ensure effective implementation of these sanctions.

“Know Your Client” Principle Emphasized

The Association has emphasized the importance of the “Know Your Client” principle in its new policy guidance for financial institutions. This principle requires financial institutions to have a thorough understanding of their clients’ business and financial activities to prevent money laundering and terrorist financing.

Compliance with OFAC Sanctions Required

The Association has issued guidelines for financial institutions to ensure compliance with Office of Foreign Assets Control (OFAC) sanctions, which cover:

  • Designated countries
  • Entities
  • Persons
  • Organizations involved in international crime

Financial institutions must comply with prohibitions stipulated in OFAC sanctions and preclude execution of transactions contravening those prohibitions.

Internal Control Systems Must be Sufficient

The Association has emphasized the importance of internal control systems for financial institutions to ensure compliance with AML/CFT principles and OFAC sanctions. These systems must be sufficient and adequate to prevent money laundering, terrorist financing, and reputational damage.

Regular training for employees is essential to ensure effective implementation of these systems.

Association Promotes Compliance through Training and Events

The Association has announced plans to provide regular training for financial institution employees on AML/CFT principles and OFAC sanctions. The association will also organize events to inform the public about their duties under the guidelines.