Latvia

New Documents

The Latvian State Security Service announced the confiscation of more than $4 million found in a bank account of an offshore company involved in violating international sanctions and the large-scale laundering of illegally obtained funds.

Latvia’s Financial and Capital Market Commission issued a new general license to financial institutions allowing them to make necessary payments for satisfying the basic economic activities of sanctioned individuals and entities.

News

Enforcement Actions

The Financial and Capital Market Commission issued a fine against the Riga, Latvia-based financial institution for breaches of anti-money laundering and counterterrorist financing regulatory requirements, as well as international sanctions failures.

The Financial and Capital Market Commission (FCMC) issued a fine against the Riga, Latvia-based financial institution for infringements of anti-money laundering (AML), counterterrorist financing (CTF) and proliferation financing rules.


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 : 29/110
Score : 4.61/10

TRANSPARENCY INTERNATIONAL i

Rank : 42/179
Score : 57/100

Tax Justice Network i

Rank : 65/133
Score : 59/100