With New AML Laws, Latvia Looks To Remove Main Regulator

money laundering

Latvia’s parliament has passed new regulation to bolster the fight against money laundering and terrorism financing.

After a series of recent scandals, the country’s government was accused of being too lenient with banks. The move to strengthen its laws comes before a review by international money-laundering standards watchdog Moneyval, which some officials worry will deem the country as risky.

The new anti-money laundering (AML) and combatting the financing of terrorism (CFT) regulations outline the duties of the country’s banking watchdog, the Financial and Capital Market Commission, so it can fight money laundering and terrorism financing in the financial sector. The new rules states that the board of the commission will be appointed by parliament, which will also be able to fire members.

“These ambitious reforms are a big step forward in our fight against money laundering, the financing of terrorism and arms proliferation,” Prime Minister Krisjanis Karins said in an emailed statement to Reuters about the reforms. “These measures demonstrate our unbending political will to make further changes in the financial sector as quickly as possible and to become a leader in transparency and governance in EU.”

But the current head of the commission, Peter Putnins, is critical of the changes.

“This is an unprecedented case of political interference in the Financial and Capital Market Commission’s operations,” he said.

In 2017, two Latvian banks were fined more than 2.8 million euros ($3.26 million) for allowing clients to violate sanctions imposed by the European Union and United Nations on North Korea. Three others received smaller fines.

And last year, Latvia’s third biggest bank, ABLV, was shut down after U.S. authorities accused it of money laundering and U.S. sanctions breaches, which led to the country’s worst financial crisis in a decade. In addition, central bank Governor Ilmars Rimsevics is awaiting trial after he was accused last year of accepting an offer of a 500,000 euro ($566,100) bribe from a Latvian bank. He denies any wrongdoing.



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