Financial Crime World

Latvia Takes a Stand Against Financial Crimes: Strengthening AML/CFT Efforts

Commitment to Combating Financial Crimes

In its commitment to combating financial crimes, Latvia has implemented robust measures to prevent money laundering (ML) and terrorist financing (TF). The country’s efforts have been recognized by international organizations and Non-Governmental Organizations (NGOs) that advocate for transparency.

Transparent Disclosure Mechanism

Latvia’s Financial Intelligence Unit (FIU) maintains a transparent disclosure mechanism, ensuring that all persons in the chain of control are disclosed. This includes:

  • Verification and reporting mechanisms to address discrepancies
  • Compliance with standards set by the Financial Action Task Force (FATF) and the European Union (EU)

Increased Capacity to Combat ML

Since 2017, Latvia has significantly increased its capacity to combat ML, with:

  • Enhanced human and technical resources
  • Developed strategies, policies, procedures, and training programs
  • Active use of a public-private partnership model for both operational and strategic issues

Consequences of Non-Compliance

The burden of proof lies with the accused in cases involving the confiscation of illicit funds. This includes:

  • Standalone ML is criminalized
  • Sanctions are applied to non-compliant institutions
  • In 2021, three banks were sanctioned for a total of €6.6 million, along with administrative requirements

Effective Internal Control Systems

Latvian credit institutions have implemented:

  • Accurate and strict enforcement of sanctions against Russia and Belarus
  • Measures to tackle de-risking phenomena using innovative technologies, public-private partnerships, and risk-based approaches

Customer Due Diligence and AML/CFT Training

Credit institutions in Latvia are required to ensure that all responsible employees undergo training in AML/CFT and sanctions enforcement. This includes:

  • Use of digital solutions for effective internal control systems and customer due diligence procedures

Whistleblowing Protection and Reporting Channels

The Whistleblowing Law is in force, and credit institutions have implemented guidelines to encourage the introduction of high standards regarding whistleblower protection and reporting channels. Additionally, the Finance Latvia Association has approved guidelines stating no tolerance for financial crime.

Foreign Deposits Share Drop

The share of foreign customer deposits in total deposits dropped from 39.7% in 2017 to 15.1% in 2021, indicating a significant reduction in the country’s reliance on foreign deposits.

Conclusion

Overall, Latvia’s commitment to combating financial crimes and its robust AML/CFT measures have earned recognition from international organizations and NGOs. The country continues to strengthen its efforts to prevent ML and TF, ensuring a safer financial environment for its citizens and businesses.