Latvia updates MONEYVAL on banking system reforms

On August 30, Latvia submitted its update report to MONEYVAL – the Council of Europe’s Committee of Experts on the Evaluation of Anti-Money Laundering and the Financing of Terrorism, saying that a major overhaul of the legal framework, banking regulator and law enforcement is "yielding tangible results".

A statement from government said it remained "resolutely committed to continuing to deliver the reforms identified by MONEYVAL in 2018 to restore the banking sector’s financial integrity and reputation" and that it had taken "proactive steps" to improve Latvia’s anti-money-laundering capacity.

"We have made meaningful progress in 10 of the 11 areas identified by MONEYVAL and have implemented most of its recommended actions. We will continue to work on implementing any outstanding areas as soon as possible," the government promised.

"We are confident that Latvia will meet the conditions to remain off the list of jurisdictions with strategic AML/CFT deficiencies," it added.

As previously reported by LSM, after years of inaction, Latvia won an unenviable reputation as an international money-laundering hub thanks to its large number of boutique banks catering to foreign clients. Following the naming of ABLV bank in 2018 as a money-laundering institution by the U.S. authorities, efforts have intensified to address the problem.

The share of non-EU deposits in Latvian banks has decreased from 35.6% in 2015 to 7.7% in June 2019, reducing the risk of money laundering associated with shell companies. The value of all foreign deposits has shrunk from €8.1 billion in 2017 to €3.5 billion in June 2019 (39.7% to 21.3% in total deposits).

The report submitted to MONEYVAL focuses on the technical compliance of the financial system with global anti-money laundering and terrorist financing (AML/CTF) standards and will be discussed at MONEYVAL’s plenary in December. Latvia will submit a further report on the operational efficiency of its AML/CFT framework to MONEYVAL before that in November.

Minister of Finance Jānis Reirs said: “The message of today’s report is clear. Addressing money laundering remains the top priority for this government and my country. We have zero-tolerance for money laundering in our banking system. The report demonstrates that much progress has been made. The supervision of Latvia’s financial sector is stronger and the fight against financial crime more effective. But there is no room for complacency. We will remain focused, ambitious and vigilant.”

As previously reported by LSM, the government also provides a regular newsletter in English updating the world on its effort to reform the financial system.

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