Financial Crime World

Latvia Financial Institutions’ Policy on Compliance with OFAC Sanctions

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Introduction

This policy document outlines the guidelines for financial institutions in Latvia to ensure compliance with economic sanctions set by international organizations, including the United Nations (UN) and the European Union (EU), as well as extraterritorial sanctions imposed by the US Department of the Treasury’s Office of Foreign Assets Control (OFAC).

Main Themes

1. Compliance with OFAC Sanctions

  • The policy emphasizes the importance of complying with economic sanctions set by international organizations and extraterritorial sanctions imposed by the US Department of the Treasury and OFAC.
  • Financial institutions are expected to actively work towards improving the business environment in Latvia, including the investment climate.

2. Whistleblowing and Reporting

  • Financial institutions are encouraged to establish whistleblowing policies, providing a safe channel for employees to report unfair actions or violations.
  • Institutions must implement improvements to their internal control systems to ensure compliance with the policy guidance and OFAC sanctions.

3. Internal Controls and Compliance

  • As a member state of the UN and EU, Latvia has assumed obligations to ensure compliance with economic sanctions set by these organizations, and financial institutions play a significant role in fulfilling these obligations.
  • The policy encourages cooperation between financial institutions, state authorities, and international partners (EU and US) to promote the implementation of key business principles meeting the highest standards.

4. “Comply or Explain” Principle

  • Financial institutions must either ensure full compliance with OFAC sanctions or provide documentation explaining specific circumstances and reasons for non-compliance.

Consequences of Non-Compliance

1. Reputational Risk

  • Failure to comply with OFAC sanctions may result in reputational damage, reducing the credibility and reliability of financial institutions.

2. Council Actions

  • If a financial institution fails to comply with the policy guidance, the Association’s Council may take actions according to the procedures outlined in the Articles of Association.

In Summary

This policy document emphasizes the importance of compliance with OFAC sanctions for financial institutions in Latvia, promoting cooperation and active pursuit of systemic improvements. Failure to comply may result in reputational risk and potential council actions.