Latvia’s Financial Sector Faces Stiff Consequences for Non-Compliance

Introduction

Latvia’s financial sector has been put on notice after a recent review revealed significant shortcomings in anti-money laundering and combating the financing of terrorism (AML/CFT) measures. The country’s failure to address these weaknesses has resulted in heightened scrutiny from international authorities.

MONEYVAL Assessment Reveals Significant Shortcomings

A recent assessment by MONEYVAL, an intergovernmental organisation that monitors compliance with AML/CFT standards, identified numerous areas where Latvia fell short. The key findings are as follows:

• Recommendations 6, 7, 8, 10, 22, 26, 28, 32, 39 and 40: Initially rated as partially compliant, these recommendations have since been downgraded to largely compliant.
• Recommendation 2: Previously rated as largely compliant, this recommendation has slipped further behind, earning a critical rating.

Consequences of Non-Compliance

As a result of these findings, Latvia will remain under enhanced follow-up by MONEYVAL, underscoring the gravity of its non-compliance. The country is now expected to submit regular progress reports to demonstrate tangible improvements in implementing effective AML/CFT measures.

• Regular Progress Reports: Latvia will be required to submit regular progress reports to demonstrate improvements in implementing effective AML/CFT measures.
• First Plenary Meeting in 2021: A clear deadline for the government to address these pressing concerns has been set for the first Plenary meeting in 2021.

Conclusion

This development serves as a stark reminder that non-compliance with international financial standards can have severe consequences, compromising not only the integrity of the financial system but also the country’s reputation as a responsible global actor.