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Anti-money laundering chief: Not following Moneyval advice would be costly

Latvian institutions have been severely criticized in the Moneyval report over anti-money laundering initiatives in the country, in particular for the country's ability to determine ultimate beneficial owners and prevent illicit funding of weapons of mass destruction.

Ilze Znotiņa, Latvia's top anti-money laundering official -- officially, the head of the Office for the Prevention of Laundering of Proceeds Derived from Criminal Activity (Control Service) -- admitted to Latvian Radio August 23 that, should the recommendations be ignored, there would be far-reaching and unpleasant consequences.

The report, published on August 23, criticizes both policy makers and the private sector for lack of understanding of the risks related to money laundering and notes that authorities are not active enough, with cases rarely ending in convictions.

Therefore Latvia is put under an "enhanced follow-up" regime, and the country will have to carry out regular reports over its activities in tackling the flow of illicit proceeds.

Latvian officials find the report objective. Following an August 23 meeting of the Financial Sector Development Council where Daniel Thelesklaf, the head of Moneyval, presented the findings of the report, Znotiņa stressed Latvia should definitely follow the recommendations set out.

"We have to understand that, without allocating both intellectual and financial resources we cannot do it. It's a task of utmost importance, as if we don't do it there'll be far-reaching and unpleasant consequences," said Znotiņa.

"Enhanced follow-up means that we have to fulfill many recommendations set forth in this report, and we have to do it within the next five years when the next review will take place," she said.

"We are starting work on a plan of measures we have to take, divided between short-, mid- and long-term tasks. On September 11 we'll confirm this plan which will include clearly defined things we should do by the end of 2019," said Znotiņa. 

Moneyval is a Council of Europe body that has evaluated the Latvian Anti-Money Laundering and Terrorist Financing system.

The report comes in a particularly intense year that saw ABLV Bank -- which was the country's third-largest bank -- fold itself after being hit by US sanctions over anti-money laundering.

In turn, Latvia hastily introduced a number of initiatives designed to curb the flow of illicit proceeds. 

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