Banks, EU – Baltic States, Financial Services, Latvia, Legislation

The evaluation was carried out by experts from Moneyval in accordance with international Financial Action Task Force on Money Laundering (FATF) standards during their visit of October 30 to November 8, 2017 and is an independent audit that will help Latvia meet the latest global AML/CTF standards. For the first time, the committee assessed both the technical compliance and operational efficiency of Latvia’s system.

The Latvian Cabinet of Ministers has welcomed the report, and has indicated that it is a valuable guide for the ongoing reform process initiated by Latvian financial sector institutions. The Latvian Government has acknowledged that there are shortcomings in the Latvian AML/CTF system, as was demonstrated by the case of ABLV Bank. The government has committed to following the recommendations of Moneyval experts, in particular to implementing improvements in areas marked as “low” or “moderate” efficiency in the report.

In addition, the government is reviewing Latvia’s AML/CTF strategy, supplemented with a detailed action plan for state institutions. It is also renewing the National Risk Assessment of Latvia. While introducing the necessary mechanisms for strengthening the AML/CTF system, the government plans to strengthen the dialogue between the public and private sectors in order to ensure the necessary information sharing and collaboration.

Ilze Znotiņa, head of the Financial Intelligence Unit (FIU) Latvia, who led the Latvian delegation to the Moneyval plenary session, emphasised that: "Moneyval's assessment objectively reflects the Latvian AML/CTF system through the end of 2017, but it should be taken into account that several important reforms have been made in the first half of 2018 – reduced risk in the financial sector, improved access to information about beneficial owners, amendments made Law On International Sanctions and National Sanctions of the Republic of Latvia, and initiated changes in actions of the FIU Latvia. However, to improve the efficiency of our system, we must persist in the work that we have started. All public institutions involved and the private sector, including their representative organizations, share this responsibility."

A detailed action plan will be approved on 11 September this year, during a meeting of the Financial Sector Development Council, which will set out further steps to improve the AML/CTF system. It will be implemented by FIU Latvia, who will coordinate with the responsible ministries - the Ministry of Finance, Justice, Interior, and Foreign Affairs, as well as industry representatives. The implementation of the plan requires close cooperation with the private sector; therefore, it will be important to maintain dialogue with entrepreneurs, employers, foreign investors, and organizations representing the financial sector.

In order to better shape its action plan, the Latvia government has invited Moneyval chairman Daniel Thelesklaf to visit Riga. He will be in Riga on 22 and 23 August.

Moneyval has conducted 5th round evaluations on Anti-Money Laundering and Terrorist Financing (AML/CTF) systems in the following countries so far: Andorra, Armenia, Hungary, Isle of Man, Serbia, Slovenia, Ukraine. Most of these countries have also received indications of weaknesses in the national AML/CTF system.