Financial Sector Development Board: The reforms implemented have improved the national capacity to combat financial crimes


On Wednesday, November 15, a meeting of the Financial Sector Development Board was held. During this meeting the National Risk Assessment for Money Laundering and Terrorism and Proliferation Financing covering the 2020-2022 period (NRA 2023), that was prepared by the Financial Intelligence Unit of Latvia, was reviewed. As well as, the National Strategy for the Prevention and Combating of Financial crimes, and the current affairs of the MONEYVAL in connection with 6th evaluation round were discussed.

It is important for every country to carry out a National Risk Assessment to be aware and identify the risks of money laundering, terrorism financing, and proliferation financing (ML/TF/PF), create a common understanding and prepare appropriate measures to mitigate the risks. Therefore, a risk assessment report serves not only as a basis for policy makers to further develop the prevention of money laundering and terrorism and proliferation financing (AML/CFT/CFP) policy, but also private sector representatives can use the conclusions included in it to review and adapt their internal control procedures to the current situation, and law enforcement authorities could determine their operational priorities.


“The National Risk Assessment is the basic document of every country in the field of AML/CFT/CFP – it shows what the risks of money laundering and terrorism financing are in the country, how to manage them, what to do if the risks occur and how to reduce them. Our basic risks today are related to the geopolitical situation in the world and the sanctions regime – here, as in many other countries, there is a high threat of violation and circumvention of sectoral sanctions. The second area that will have to be focused on is the grey market and frauds related to cybercrime, which are currently developing very rapidly all over the world," says the Prime Minister, Evika Siliņa.


“An investment-friendly environment, lending and capital market development is impossible without effective combating of financial crimes and successful cooperation between all parties involved. We have confirmed that Latvia is a responsible international partner with effective cooperation in the fight against financial crimes – NRA 2023 shows significant improvements in the fight against money laundering, terrorism and proliferation financing; we have also applied for the 6th round of Moneyval's accelerated evaluation; and at the same time, work continues on both effective and risk-based approaches in the field of Anti-Money-Laundering (AML), as well as the implementation of tasks included in other policy planning documents, such as insolvency, combating the grey market and improving the business environment," says the Minister of Finance, Arvils Ašeradens.


An effective national AML/CFT/CFP system is based on a comprehensive and unified understanding of the risks inherent in Latvia, therefore NRA 2023 is the first national joint work of such magnitude and scope in the field of financial crimes. In its creation, the Financial Intelligence Unit has organized work and closely cooperated with the partners of the AML/CFT/CFP system - law enforcement authorities, supervisors, representatives of the private sector etc.


The Head of the Financial Intelligence Unit, Toms Platacis emphasizes: “The latest National Risk Assessment clearly shows that the reforms carried out in previous years have significantly improved the national ability to combat the money laundering. The current risk profile is no longer associated with Latvia as a regional financial center - it is history. This assessment demonstrates our shared vision of risks and their management. Regardless of whether risks are identified as high or low, the most important thing is how these risks are managed and whether we allocate sufficient resources to it. Today it is not only a matter of our national security, it is also our responsibility as an accountable international partner. In the near future, Latvia's achievements in the field of AML/CFT/CFP will also be evaluated by an external and independent evaluator - Moneyval - and NRA 2023 will be one of the documents to which the committee will focus a significant part of its attention."


“NRA 2023 marks the end of an important stage of Latvian AML/CFT/CFP system. It confirms that the level of ML/TF/PF risks in the Latvian financial sector has been significantly reduced and that the controls of financial institutions for managing these risks have been significantly improved. The work must be continued so that the regulation of ​​AML/CFT/CFP in commercial banks is applied proportionately, without hindering the availability of financial services, investment attraction and the growth of Latvia's economy, as well as in the current geopolitical situation, the risks related to the application of sanctions are appropriately managed," says Kristīne Černaja-Mežmale, a member of the Council of the Bank of Latvia.


The National Strategy for the Prevention and Combating of Financial Crimes was also considered at the meeting of the Financial Sector Development Board. It defines the future strategic goal, vision, and priority directions for the development of the system for the prevention and combating of ML/TF/PF, based on the identified risks of ML/TF/PF. The strategy will help to coordinate the cooperation of the state administration and the private sector to effectively prevent and combat financial crimes, promote the rule of law, Latvia's economic growth and investment environment, thereby strengthening both Latvia's internal and external security.


The Financial Sector Development Board, which is chaired by the Prime Minister, is a coordinating institution with a main purpose to coordinate and improve the cooperation of state institutions and the private sector in promoting the sustainable development of the financial sector and AML/CFT/CFP.


According to the regulations of the Financial Sector Development Board, the members of the Financial Sector Development Board are the Prime Minister (Chair of the Board), the Minister of Economy, the Minister of Foreign Affairs, the Minister of the Interior, the Minister of Finance, the Minister of Justice, the Prosecutor General, the President of the Bank of Latvia, the Head of the Financial Intelligence Unit, the Chair of the Boards of the Latvian Financial Industry Association, the President of the Association of Latvian Insurers, the Chair of the Board of the Association of Latvian Payment Services and Electronic Money Institutions, the Head of the Fintech Latvia Association and the President of the Confederation of Latvian Employers.

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