Moneyval report forthcoming this week

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A crucial report for the reputation of Latvia's finance sector is forthcoming this week, the State Chancellery told the press August 22.  

Earlier on, finance and banking sector figures LSM spoke to at an event March 23 all pointed to the release of a report by MONEYVAL, a Council of Europe body which has evaluated the Latvian Anti-Money Laundering and Terrorist Financing (AML/CTF) system, with the report expected to be nothing short of a litmus test for the industry.

A favorable report would boost confidence in the sector, an unfavorable one could see Latvia put on a ''gray list'' alongside acknowledged money-laundering countries that would have huge repercussions and would make it extremely difficult for Latvian banks to do any international business at all. 

Moneyval experts carried out the evaluation from October 30 to November 8, 2017. It is understood that the hasty reforms, implemented in early 2018 and which have, inter alia, seen banks cease virtually all business with shell companies will therefore not be reflected in the report.

Ilze Znotiņa, head of the Financial Intelligence Unit (FIU) Latvia, who led the Latvian delegation to the Moneyval plenary session, emphasised that: "Moneyval's assessment objectively reflects the Latvian AML/CTF system through the end of 2017, but it should be taken into account that several important reforms have been made in the first half of 2018 – reduced risk in the financial sector, improved access to information about beneficial owners, amendments made Law On International Sanctions and National Sanctions of the Republic of Latvia, and initiated changes in actions of the FIU Latvia. However, to improve the efficiency of our system, we must persist in the work that we have started. All public institutions involved and the private sector, including their representative organizations, share this responsibility."

The Latvian Cabinet of Ministers called the report a "valuable guide for the ongoing reform process initiated by Latvian financial sector institutions." It acknowledges that there are shortcomings in Latvia's anti-money laundering initiatives and measures against terrorism financing, "as was demonstrated by the case of ABLV Bank."

"The government has committed to following the recommendations of Moneyval experts, in particular to implementing improvements in areas marked as “low” or “moderate” efficiency in the report.

"In addition, the government is reviewing Latvia’s AML/CTF strategy, supplemented with a detailed action plan for state institutions. It is also renewing the National Risk Assessment of Latvia. While introducing the necessary mechanisms for strengthening the AML/CTF system, the government plans to strengthen the dialogue between the public and private sectors in order to ensure the necessary information sharing and collaboration," the State Chancellery said.

The press release also said plans would be approved on September 11, 2018 at a meeting of the Financial Sector Development Council, which will set out further steps to improve the AML/CTF system.

To coordinate the plan, the Latvian government has invited Moneyval chairman Daniel Thelesklaf on a visit to Rīga, taking place August 22 and 23. 

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