Key highlights of the conference “Future of AML: Building Resilience in the Evolving Financial Crime Environment"

The conference was organized to bring together international experts of the industry, share experiences, and discuss current affairs and future of sanctions, virtual assets, digital transformation, and asset recovery.

Karina Ploka, the Parliamentary Secretary of the Ministry of Finance opened the conference by emphasizing that Latvia has worked significantly to strengthen the financial sector and is ready to apply for the 6th round of MONEYVAL evaluation.

The Chair of MONEYVAL, Elžbieta Frankova-Jaškieviča stated in her opening speech that the sanctions imposed by the European Union have not limited Russia’s war in Ukraine so far. Accordingly, it’s important that MONEYVAL ministers and high-level delegates keep condemning Russia’s actions, and support stronger proportionate legal responses. She also drew attention to the fact that crypto assets and associated assets relevance continue to grow, but policymakers struggle to monitor the risks and the financial sector. Therefore, it is extremely important to learn and share best practices and experiences at an international level.

T. Raja Kumar, the Presidents of the Financial Action Task Force (FATF) joined to emphasize that, Latvia is a formidable leader in the world of AML. Every country needs to be aware of the challenges and opportunities of technological solutions in order to use innovations and technologies in the fight against financial crimes as successfully and efficiently as possible.

Some of the main highlights gained at the conference are:

• Dārta Tentere, the Policy Advisor to European Union (EU) Special Envoy David O'Sullivan, and Paulis Iļjenkovs, the Deputy Head of the Financial Intelligence Unit of Latvia came together in a conversation about the Enforcement of EU sanctions. It was concluded that the three main objectives for sanctions implemented against Russia were to cripple Russian military capabilities, deprive Russia of sensitive tech and cut Russian revenue. The introduced sanctions are said to be successful, as the data shows that Russian revenue from oil alone down 40% in 2023 due to oil price cap and more general sanctions. Implementation and addressing circumvention will be on top of EU agenda for the closest future.

• In a panel discussion “Sanctions compliance in EU member states: Implementation, circumvention and enforcement” it was concluded that communication with the private sector is crucial, including to ensure that the new packages of sanctions are reasonable from a business perspective. Equally important is that the policies, legal framework, and enforcement work as deterrent to sanctions evasion. Tom Keatinge, the Director of the Centre of Financial Crime & Security Studies “RUSI” emphasized that not all countries implement sanctions effectively, but are ready to act quickly and overcome challenges. Therefore, it is important to maintain momentum, to be able to exchange information – especially at the international level.

• Marine Krasovska, the Head of Financial Technology Supervision Department in the Bank of Latvia, in a presentation on overcoming the challenges created by the crypto world, drew attention to the fact that technology develops faster than regulation. A fundamental issue is that cryptography is becoming more and more complex and a large part of virtual asset transactions take place outside the EU, and cross-border cooperation is thus very important. It helps both to share information and standardize data, and to improve inter-agency cooperation and joint investigations, but it also requires specialized training and new tools.

• In a panel discussion “Building a secure crypto ecosystem: Compliance and beyond” participants concluded that monitoring virtual assets must begin with awareness. It can be easily monitored, analyzed, and compared due to the existence of various tools and developed criteria. At the same time, we should not be afraid to involve the private sector in it, but should rather work on determining cross-sectoral priorities, and simplify data sharing, otherwise it is impossible to gain complete insight and achieve the greatest possible effect.

• Alexandra Antoniadis, the Deputy Head of Directorate-General for Migration and Home Affairs in European Commission, in a presentation on asset recovery, emphasized that each country should internally determine strategies for asset recovery and confiscation, and should implement smooth cooperation between all parties involved in combating financial crimes - the private sector, FIU, law enforcement authorities, prosecutors and judges. At the same time, she informed that a new directive on the recovery and confiscation of assets has been proposed, based on the identified shortcomings and good practices, which are being negotiated in the European Council and the European Parliament.

• Laila Medina, the Advocate-General in the Court of Justice of the European Union, in the presentation on the Case law of the CJEU in ensuring effective confiscation of criminal assets said that the main aim for organized crime is financial gain. Thus, the only way to fight them is with sufficient powers to trace, freeze, manage, confiscate proceeds of crime. The Court of Justice of the European Union is consistently trying to find the balance between effective confiscation and other European Union principles.

• In a panel discussion “Asset recovery: Strengthening the global framework and evaluating are we effective?” which was moderated by Yehuda Shaffer, the Former Head of FIU and Deputy State Attorney Israel, the speakers concluded that Latvian legislation has significantly improved in recent years and there are several success stories related to the identification, freezing and confiscation of criminally obtained funds. However, countries must continue to strengthen mutual assistance and cooperation, as this remains a challenge both within the European Union and beyond. Countries should consider harmonizing the regulatory framework to be effective across Europe. Stefan D. Cassella, the Asset Forfeiture and Money Laundering Expert, pointed out that it is equally important to change the culture of law enforcement by refocusing attention from punishment to recovery of assets.

• Daina Ispodkina, the Financial Services Counsellor in Ministry of Finance of Republic of Latvia, moderated a panel discussion “AML's digital transformation journey.” Participants concluded that countries are focusing on becoming more efficient, achieving results, and being able to access and use data, but at the same time are confronted with privacy issues, leading to concerns about accessibility. United Nations Office on Drugs and Crime (UNODC) Advisor in cybercrime and crypto, Oleksiy Feshchenko highlighted that policymakers and judges lag far behind investigators and prosecutors in understanding technology. In order for solutions to be relevant, it is necessary to continue developing and improve them continuously.

A recap video of the Conference can be viewed on FIU Latvia YouTube channel.