From Decision to Delivery: Leading Latvia’s Mutual Evaluation Process

Article by Toms Platacis, Head of Latvian Delegation to MONEYVAL/FATF, Vice-Chair of MONEYVAL and Head FIU Latvia,
Dina Spule, Coordinator of MONEYVAL’s mutual evaluation of Latvia, Member of Latvian Delegation to MONEYVAL/FATF and Head of Strategic Development and Planning Division, FIU Latvia

 

 

Entering the new round of evaluations

 

As the previous FATF[1]/MONEYVAL[2] evaluation round was coming to a close, a strategic decision was made to enter the new round at the earliest opportunity. The new round is built on a more demanding framework, reflecting the revised FATF Standards[3] and the updated 2022 FATF Methodology[4], developed after FATF’s strategic review of the previous round. The new round starts from a higher baseline and places even greater emphasis on effectiveness, risk, context and measurable outcomes.

 

If compared with the previous round, the changes to the methodology vary in scope and nature. In some areas, the updates focus more on reorganising the structure of the assessment rather than redefining the core issues. This is particularly evident in regard to the changes to Immediate Outcome[5] (IO) 3 and IO4. Instead of maintaining a strict distinction between supervisory effectiveness and the implementation of preventive measures, the updated methodology shifts the focus towards sectors — assessing financial institutions and virtual asset service providers (VASPs) separately from designated non-financial businesses and professions[6] (DNFBPs). This reflects a more risk-sensitive approach, recognising the different levels of exposure, supervision and compliance across these sectors.

 

In other areas, however, the changes are more substantive. This is evident in IO5, IO6 and IO8. Under IO5, the strengthened standards on beneficial ownership, including the requirement for adequate, accurate and up-to-date information, supported by verification mechanisms and accessibility through registries or equivalent systems. Under IO6, the methodology now expressly introduces a definition of “financial intelligence”, thereby clarifying the scope of the assessment and placing greater emphasis on the quality, use and operational value of financial intelligence produced and disseminated by FIUs and other competent authorities. Under IO8, the revised Recommendations place much greater emphasis on asset recovery, requiring countries to prioritise confiscation, introduce non-conviction-based confiscation regimes, and equip authorities with more effective tools to trace, freeze and recover criminal assets, including FIU’s suspension power.

 

The Universal Procedures 2023[7] introduce a more consolidated and coherent approach to mutual evaluations by bringing together evaluation, follow-up and ICRG[8] processes into a single, unified framework applied across the entire FATF global network. This replaces the more fragmented structure of the previous round, ensuring greater consistency and comparability of assessments.

 

At the same time, the new procedures strengthen risk-based scoping from the very outset of the process, ensuring that evaluations focus more clearly on the most significant risks faced by each jurisdiction. A central innovation is the introduction of Key Recommended Actions (KRAs) and the KRA Roadmap, which set out prioritised, measurable and time-bound actions to address core deficiencies, making follow-up more targeted, structured and outcome-driven. From the perspective of a country such as Latvia, which in the previous evaluation received 76 recommended actions and was placed under enhanced follow-up, we see it as a particularly valuable improvement. It provides much greater clarity on how to prioritise reforms, which deficiencies should be addressed first, and where limited institutional resources should be invested in order to achieve the greatest impact.

 

What may now appear logical and straightforward was, however, far less certain in practice for the first country entering the new evaluation round. The new elements of this round were not yet familiar or tested in practice and Latvia had to navigate the amended methodology and new procedures without the benefit of prior examples.

 

Against this background, the article is a reflection on Latvia’s journey through the new mutual evaluation round and aims to share our experience, highlighting what has worked in practice, and what other countries preparing for evaluation should pay particular attention to. We hope it will also contribute to a wider discussion on what effective implementation of international standards looks like in practice.

 

 

Building an effective AML/CFT system: Latvia’s transformation

 

Back in 2023, Latvia made a deliberate decision: to voluntarily undergo the 6th round MONEYVAL mutual evaluation as the first country under the new round.[9] This decision followed careful consideration and reflected a clear understanding of both the challenges and opportunities such a decision presents. A mutual evaluation is the most demanding international assessments a country’s AML/CFT/CPF[10] system can face. It requires years of preparation, deep institutional reflection and the mobilisation of authorities across both the public and private sectors.

 

That decision also needs to be understood in the context of Latvia's starting point. In Latvia’s MER of 2018 Latvia was still described as a regional financial centre heavily oriented towards non-resident business, with significant exposure to large cross-border flows and money-laundering risks. At that time, only one IO received positive rating (substantial level of effectiveness), the other 10 IOs received failing marks: two were rated low and the rest were rated moderate. In order to improve the AML/CFT/CPF system and to eliminate strategic deficiencies, Latvia received 76 recommendations. The picture today is fundamentally different. In the Latvia’s MER of 2025, Latvia achieved high or substantial effectiveness in ten out of eleven IOs, including five rated high and received all together only 36 recommended actions with very different substance than those almost 10 years ago. That is not a story of mere cosmetic improvement. It is evidence of deep institutional change, sustained political commitment and a very different risk and context than the one assessed in 2018.

 

Latvia’s decision reflects its strong political commitment to AML reforms. As noted by MONEYVAL, the country has shown sustained efforts to address past money laundering risks and strengthen its system. Volunteering for the evaluation was a natural step to assess these reforms and demonstrate their practical effectiveness. Preparation involved coordinated work across numerous institutions, close cooperation with international partners, and active private sector engagement, with FIU Latvia leading the process and showcasing system-wide effectiveness - from risk identification to institutional cooperation.

 

The publication of Latvia’s MER of 2025 confirms that this effort has been worthwhile. The report recognises that Latvia has developed a modern, effective and resilient system for combating financial crime. Among other achievements, it highlights the transformation of FIU Latvia into a highly effective institution with strengthened financial, human and technological resources. The FIU is producing high-quality financial intelligence, supporting criminal investigations and asset recovery, and is recognised as “a global leader… initiating projects like the International Financial Intelligence Task Force (IFIT) and developing new co-operation tools.”[11]

 

Perhaps the most important lesson from the evaluation is that effective systems are not built overnight. They are the product of sustained efforts, consistent reforms, strong institutional cooperation, and a continuous willingness to adapt to new risk landscape.

 

Risk understanding as the foundation

 

The evaluation highlights Latvia’s strong approach to understanding risk as one of the system’s key strengths. For Latvia, risk assessment is the starting point. An effective and smart AML/CFT/CPF system must first be able to identify where the risks lie and how they evolve.

 

At the centre of this work is the National Risk Assessment (NRA). The NRA is not viewed as a purely formal exercise. Rather, Latvia has developed a continuous and data-driven risk assessment ecosystem that allows authorities to monitor evolving risks and adjust their responses accordingly. And the NRA serves the purpose of a stocktake exercise, pulling together all the ongoing risk assessments carried out on essentially daily basis by the FIU, Central Bank of Latvia (Latvijas Banka) and others.

 

FIU Latvia plays a central role in coordinating this ecosystem. By bringing together information from reporting entities, supervisors, law enforcement, national databases, and international partners, we are able to analyse large volumes of data and transform them into insights that guide national policies and operational priorities. At the same time, responsibility for analysing sector-specific risks is shared with other competent authorities, allowing the process to draw on the expertise of institutions working closest to particular threats.

 

This shared approach did not emerge by chance. The importance of broadening institutional ownership of the NRA process was an important lesson from earlier assessments. As a result, the most recent NRA brought together a wide range of authorities and experts who contributed their operational knowledge and analytical capacity. This collaborative model has strengthened both the quality of analysis and the shared understanding of risks across Latvia’s system.

 

The process itself has also evolved significantly. Automated data collection, common analytical methodologies and improved information sharing have made the risk assessment process more efficient and more robust. As the evaluation notes, this approach enables Latvian authorities to develop a comprehensive and well-grounded understanding of the country’s financial crime risks.

 

A simple principle that guides our work is that effective risk management requires reliable data. For this reason, we have invested significantly in data analytics and statistical monitoring. By transforming information into actionable insights, FIU Latvia helps ensure that national policies, supervisory priorities and investigative efforts remain aligned with Latvia’s evolving risk landscape.

 

As highlighted in the key findings of the report “Latvia’s approach to identifying, assessing and understanding money laundering (ML) and terrorist financing (TF) risks is characterised by a genuine curiosity, and a commitment to integrate a wide variety of data sources to generate and maintain an evolving, continuous and an in-depth understanding of its past and present ML/TF risks.”.

 

Cooperation in practice

 

Another major strength identified in the evaluation is the high degree of cooperation across Latvia’s AML system. At the centre of this system (at least from the FIUs perspective) stands the FIU Latvia, which serves not only as the national financial intelligence authority but also as a key coordinator connecting reporting entities, supervisors, law enforcement, prosecutors and the private sector.

 

At the strategic level, authorities cooperate closely in developing risk assessments, national strategies and action plans. At the operational level, cooperation takes place daily through the exchange of information, joint analysis and coordinated investigative work. Within this system, FIU Latvia plays a key coordinating role, strengthening cooperation through innovative mechanisms that connect supervisors, law enforcement institutions and the private sector. This ensures that financial intelligence is shared rapidly and reaches the right authorities at the right time.

 

A particularly practical and productive mechanism supporting this cooperation is Latvia’s public-private partnership - the Cooperation and Coordination Group (CCG). This platform brings together public authorities and private-sector representatives to exchange information and address complex cases. Its flexibility allows the relevant stakeholders to be convened quickly when emerging risks or urgent situations arise. As noted in the evaluation, this mechanism has proven particularly effective in enabling rapid responses to financial crime schemes. In several cases, timely information exchange through the CCG enabled authorities to freeze funds that might otherwise have been lost.

 

Cooperation in Latvia’s AML/CFT/CPF framework also extends strongly to the private sector. FIU Latvia maintains an active dialogue with reporting entities and supervisors, providing guidance, feedback and training aimed at improving the quality and relevance of suspicious transaction reporting. Regular feedback mechanisms and typology reports help reporting entities better understand emerging risks and reporting expectations. At the same time, simplified reporting procedures have been introduced for non-financial sectors to encourage broader participation in the system and reduce unnecessary administrative burden while still ensuring that relevant information reaches the FIU.

 

FIU Latvia has also introduced innovative cooperation tools designed to make information exchange more targeted and efficient. One example is the so-called “Black Box” mechanism, which allows law enforcement authorities to securely verify whether FIU Latvia holds relevant financial intelligence related to a case. This enables investigators to determine whether useful information may be available before submitting a formal request, reducing speculative enquiries and making cooperation more focused and effective. At the same time, strict confidentiality is preserved, as detailed financial intelligence is shared only through established legal channels.

 

For particularly complex investigations, FIU Latvia has also established the Operational Centre (OpCEN), a secure environment where FIU analysts, law enforcement authorities and reporting entities can work side by side on sensitive cases. This model allows investigators and analysts to combine their expertise while maintaining strict confidentiality and security standards.

 

Together, these mechanisms demonstrate how cooperation is embedded throughout Latvia’s AML framework. By placing financial intelligence at the centre and ensuring close collaboration between institutions, Latvia has created a framework where information can be transformed quickly into coordinated action against financial crime.

 

Financial intelligence at the core

 

Today, FIU Latvia operates as a highly effective institution, playing a central role in the country’s AML framework both at the operational and strategic level.

 

The work of FIU Latvia is built on information. Suspicious transaction reports submitted by reporting entities through the goAML system form a key source of intelligence. These reports are complemented by other financial and regulatory data, including threshold declarations, cross-border cash declarations, and information received from national authorities and international partners. Combined with integrated databases, open-source intelligence and other obtainable information, these inputs allow us to build a comprehensive analytical picture of financial crime risks.

 

Using advanced analytical tools and a risk-based prioritisation, FIU analysts transform this information into actionable financial intelligence. Through both operational and strategic analysis, we identify complex financial flows, detect hidden networks and uncover links between individuals, companies and criminal activities.

 

The evaluation confirms that the financial intelligence produced by FIU Latvia is widely used by competent authorities and forms a critical component of criminal investigations, prosecutions and asset recovery. In many cases, FIU disseminations initiate new investigations. In others, they significantly strengthen cases already pursued by law enforcement authorities by providing financial insights that would otherwise remain hidden.

 

FIU Latvia complements its domestic analytical work with strong and trusted international cooperation. In many ways, this is the “secret superpower” of every FIU: enabling financial intelligence produced in one country to unlock investigations in another. The evaluation recognises FIU Latvia as a global leader and trusted partner in this field. Building on its experience with large-scale international cases, the FIU has also driven innovative cooperation through the International Financial Intelligence Taskforce (IFIT), bringing together multiple jurisdictions to jointly analyse complex money laundering schemes. This collaborative approach allows fragmented financial information from different countries to be combined into a coherent intelligence picture, significantly strengthening investigations, asset recovery and the overall fight against financial crime.

 

At the same time, FIU Latvia plays a crucial role in identifying, tracing and freezing criminal proceeds at an early stage. Using its legal powers, the FIU can temporarily freeze suspicious transactions and assets when there are grounds to believe they may be linked to criminal activity. These measures help prevent the dissipation of illicit funds and provide investigators with the time necessary to analyse financial flows and initiate criminal proceedings. Just as importantly, the FIU does not treat dissemination as the end of the process. The MER notes that most FIU Latvia disseminations are used by law enforcement. The FIU also receives  regular feedback on how its intelligence is used in practice. Much of that information is gathered in a simple internal tracking table — proof that not every effective management tool needs to be sophisticated. The principle is straightforward: if you do not measure, you do not manage.

 

One of FIU’s most important analytical products is the “Conclusion of the Competent Authority” which is a comprehensive analytical report that explains complex financial schemes, traces illicit financial flows and identifies links between criminal actors. These reports are admissible in court and are regularly used by investigators, prosecutors and judges to support criminal proceedings and secure the confiscation of criminal assets.

 

The widespread use of these reports reflects the strong level of trust that law enforcement authorities and the judiciary place in the analytical work of FIU Latvia. Investigators frequently rely on FIU analysis not only to initiate cases but also to understand complex financial structures and trace criminal proceeds across jurisdictions.

 

By transforming large volumes of financial information into actionable intelligence, FIU Latvia enables authorities to identify criminal activity, trace illicit assets and support successful prosecutions. Ultimately, the ability to convert information into concrete operational outcomes is the true measure of an effective financial intelligence system.

 

Looking forward

 

For Latvia, the evaluation is both recognition of the progress achieved and encouragement to continue moving forward. At the same time, it is a reminder that financial crime continues to evolve and that maintaining an effective system requires constant adaptation, innovation and cooperation.

 

Latvia’s experience shows that a resilient AML system is not built solely for the purpose of an evaluation, but through years of sustained effort, shared responsibility and a commitment to continuous improvement. Strengthening the system is therefore not a single achievement, but an ongoing endeavour.

 

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About the mutual evaluation

 

This is the leading international assessment in the field of AML/CFT/CPF, conducting ongoing peer reviews of each member to assess levels of implementation of the FATF Standards, providing an in-depth description and analysis of each country’s system for preventing criminal abuse of the financial system. Mutual evaluation of Latvia assessed the effectiveness of the country’s AML/CFT/CPF measures, and their level of compliance with the FATF Standards, at the time of an on-site visit in November 2024.