Latvia

New Documents

The Council of Europe’s Group of States Against Corruption published its Compliance Report on the Fifth Round Evaluation Report concerning Latvia’s effort to prevent corruption and promote integrity in law enforcement agencies and central governments, also referred to as top executive functions.

The Financial and Capital Market Commission of Latvia issued a press release highlighting the 12 inspections of banks it carried out in 2020 with respect to anti-money laundering, counterterrorist financing and non proliferation financing compliance.

News

Enforcement Actions

Latvia’s Financial and Capital Market Commission issued a €473,076 fine against the Riga, Latvia-based financial institution for its anti-money laundering failures, particularly related to customer due diligence.

The Financial and Capital Market Commission of Latvia fined the Riga, Latvia-based bank €906,610 for breaches of the anti-money laundering, counterterrorism and proliferation financing regulatory requirements.


Important Facts

  • The U.S. State Department categorizes Latvia as a jurisdiction of primary concern. The main sources of laundered funds are tax evasion and organized criminal activities, including prostitution and fraud committed by Russian and Latvian groups. In contrast, proceeds from narcotics and contraband smuggling are not a major source of laundered money. The country’s geographic location and high levels of public corruption represent challenges to combating money laundering, though regulatory agencies keep close watch on financial transactions related to terrorist financing. Latvia is a regional financial center with a sizeable nonresident deposit base. Total bank deposits have increased in the past year, with nonresidential deposits accounting for almost half of total bank deposits. In May 2015, the Financial and Capital Market Commission stated that the growth of nonresident deposits from Russia has remained steady despite international sanctions imposed in the spring of 2014. There is a black market for smuggled goods, primarily cigarettes, alcohol and gasoline, though smuggling does not generate significant funds laundered through the financial system. Suspect transactions and the overall value of laundered money have remained below levels before the financial crisis.
  • KYC Covered Entities: Banks, credit institutions, life insurance companies, and intermediaries; private pension fund administrators, investment brokerage firms, and management companies; currency exchange offices, payment service providers, money transmission or remittance offices, and e-money institutions; tax advisors, external accountants, and auditors; notaries, lawyers, and other independent legal professionals; trust and company service providers; real estate agents or intermediaries; organizers of lotteries or other gaming activities; persons providing money collection services; EU-owned entities; and any high-value goods merchant, intermediary, or service provider
  • STR Covered Entities: Banks,credit institutions, life insurance companies, and intermediaries; private pension fund administrators, investment brokerage firms, and management companies; currency exchange offices, payment service providers, money transmission or remittance offices, and e-money institutions; tax advisors, external accountants, and auditors; notaries, lawyers, and other independent legal professionals; trust and company service providers; real estate agents or intermediaries; organizers of lotteries or other gaming activities; persons providing money collection services; any high-value goods merchant, intermediary, or service provider; and public institutions
  • Enhanced Due Diligence Procedures for PEPs: Foreign: Yes; Domestic: No
  • Money Laundering Criminal Prosecutions/Convictions: Prosecutions: 27 (Jan. 1, 2015 – Nov. 1, 2015); Convictions: 14 (Jan. 1, 2015 – Nov. 1, 2015)
-Source: 2016 International Narcotics Control Strategy Report (INCSR)

Rankings

FATF i | 2013 Methodology

Technical Effectiveness
Compliant : 7 High : 0
Largely Compliant : 33 Substantial : 1
Partially Compliant : 0 Moderate : 8
Non-Compliant : 0 Low : 2

Latvia's technical compliance was re-rated in a Jan. 22, 2020 follow-up report

BASEL i

Rank : 97/141
Score : 4.62/10

TRANSPARENCY INTERNATIONAL i

Rank : 44/180
Score : 56/100

Tax Justice Network i

Rank : 65/133
Score : 59/100