Financial Crime World

Latvia Moves to Enhance Beneficial Ownership Rules Amid Global Standards Upgrade

FATF Updates Guidance on Beneficial Ownership Standards

The Financial Action Task Force (FATF) has recently updated its guidance on beneficial ownership standards, aimed at helping countries like Latvia prevent organized crime groups and corrupt individuals from hiding their illicit activities behind anonymous shell companies.

Key Changes to Recommendation 24

  • Countries are required to ensure that competent authorities have access to accurate and up-to-date information on the true owners of companies.
  • The updated guidance emphasizes a multi-pronged approach, combining information from various sources:
    • Companies themselves
    • Public authorities
    • Alternative mechanisms

Effective Approach to Preventing Misuse of Shell Companies

The new guidance aims to assist policy makers and practitioners in implementing measures that make it more difficult for individuals to use shell companies to launder money or finance terrorism.

Latvia’s Efforts to Enhance Beneficial Ownership Rules

Latvia’s efforts will likely involve:

  • Creating a public authority or body that functions as a beneficial ownership registry
  • Implementing an alternative mechanism for efficient access to beneficial ownership information
  • Assessing and mitigating the risks associated with foreign companies to which it is exposed

Update Reflects Intensive Consultations with External Stakeholders

The update of the guidance reflects several months of intense consultations between the FATF and external stakeholders, including the private sector. It aims to provide a clear framework for implementing the revised Recommendation 24, ensuring that shell companies can no longer be used as safe havens for illicit proceeds linked to crime or terrorism.

Conclusion

Latvia’s move to enhance its beneficial ownership rules and regulations is a significant step towards preventing organized crime groups and corrupt individuals from hiding their illicit activities. The update of the FATF guidance provides a clear framework for implementing the revised Recommendation 24, ensuring transparency and accountability in beneficial ownership information.