The Financial Intelligence Units of Latvia, Estonia and Lithuania publishes the first international strategic assessment on illicit cash flows

Though the use of digital payments is on the rise, because of how difficult it is to trace, cash remains an important instrument for criminal activity and money laundering at an international level. The findings of the assessment “Licit and illicit cash flows in the Baltic states – a Strategic Assessment” suggest that cash-related risk exposure in the Baltic states has changed between 2019-2022.

The travel restrictions imposed in response to the Covid-19 pandemic and Russia’s recent invasion of Ukraine have significantly cut cash flows from Russia across the three countries. However, cash movement in the Baltic states remain high, with a lot of cash inflows from other countries. Though cash movement trends imply that the Baltic states are generally used for transit, illicit cash that stays in the Baltic states risks being laundered and entering the shadow economy.

The assessment concludes with several recommendations for bolstering the prevention of cash-based money laundering. Most importantly, more research needs to be done to develop an ongoing understanding of illicit cash trends, which requires closer collaboration and date exchange between Financial Intelligence Units, law enforcement, and other data holders. It is also important to continue harmonizing anti-money laundering rules among different countries, to prevent criminals from being able to exploit less strict cash rules in other countries in the European Union.

The collaborative strategic assessment was one of the latest activities of the AML Innovation Hub (AMLIH). AMLIH is a permanent Financial Intelligence Unit of Latvia initiative aimed at fostering the development of innovative solutions for more effective prevention, detection, and combating of money laundering. The project "Establishment of an AML Innovation Hub to improve the identification of the legalization of proceeds of crime" is implemented within the framework of the The Recovery and Resilience Facility of the European Union.

Licit and illicit cash flows in the Baltic states – a Strategic Assessment (ENG)