The Committee of Experts on the Evaluation of Anti-Money Laundering Measures and the Financing of Terrorism - MONEYVAL is a permanent monitoring body of the Council of Europe entrusted with the task of assessing compliance with the principal international standards to counter money laundering and the financing of terrorism. Consequently it carries huge sway and failing to meet its exacting standards can result in being frozen out of the global financial mainstream.
That was what Latvia had been fearing following highly critical assessments of its banks, but a concerted effort to avoid "graylisting" by MONEYVAL seems to have turned things around.
"As a result of Latvia’s progress in strengthening its framework to tackle money laundering and terrorist financing since its mutual evaluation report in July 2018, MONEYVAL has re-rated the country on ten Recommendations originally rated as “partially compliant” and one Recommendation originally rated as “largely compliant”," said MONEYVAL in a January 22 news release.
"Latvia was placed in an enhanced follow-up process, following the adoption of its mutual evaluation report, which assessed the effectiveness of Latvia’s anti-money laundering and counter-terrorist financing (AML/CFT) measures and their compliance with the Recommendations by the Financial Action Task Force (FATF). In line with MONEYVAL’s rules of procedure, country has reported back to MONEYVAL on the progress it has made to strengthen its AML/CFT framework," it said.
"MONEYVAL has re-rated Latvia on Recommendations 6 (targeted financial sanctions related to terrorism and terrorist financing), 7 (targeted financial sanctions related to proliferation), 8 (non-profit organisations), 10 (customer due diligence), 22 (DNFBPs: customer due diligence), 26 (regulation and supervision of financial institutions), 28 (regulation and supervision of DNFBPs), 32 (cash couriers), 39 (extradition) and 40 (other forms of international cooperation). These Recommendations are now re-rated as “largely compliant”," it added.
Latvia is now “compliant” on seven of the 40 FATF Recommendations and “largely compliant” on 33 of them.
MONEYVAL decided that Latvia will remain in enhanced follow-up and will continue to report back to MONEYVAL on further progress to strengthen its implementation of AML/CFT measures.
However, there is still more work to be done with MONEYVAL concluding the report on improvements made with the words: "Latvia is encouraged to continue its efforts to address the remaining deficiencies."
The full report is available to read online.
Speaking to journalists after the report was released, Prime Minister Krišjānis Kariņš said he was pleased by the news but maintained there was more work to be done - and that a no less important verdict from the Financial Action Task Force (FATF) was also eagerly awaited.
The MONEYVAL report showed that "Not only was there a point, but there are clear results," of the financial sector clean-up the prime minister said.
"This is a clear external confirmation that we have gone in the right direction in strengthening financial sector supervision. It is essential to continue the ongoing reforms and to implement the law, which is a work in progress during the 'overhaul'," he said.
"We will continue on the course we have started, and we still await what could be called the final information in February from international organizations on whether Latvia is or is not on any gray or black lists," said Kariņš.