In a report published today on Latvia, MONEYVAL acknowledges that large financial flows passing through the country pose a significant money laundering threat. Latvia is a regional financial centre, with a majority of its commercial banks focusing on servicing foreign customers, mainly from the Commonwealth of Independent States (CIS) countries. Hence one of Latvia’s key money laundering (ML) risks remains the vulnerability of CIS countries to economic crime, especially corruption. Latvia’s own level of corruption, vulnerability to international organised crime and significant shadow economy are also key factors of the overall ML risk faced by Latvia.
The report concludes that the overall appreciation of ML and financing of terrorism (FT) risk in the financial sector is not commensurate with the factual exposure of financial institutions in general, and banks in particular, to the risk of being misused for ML and FT. The general understanding of risks among designated non-financial businesses and professions is limited to risks relevant for their particular businesses and professions; it does not amount to an appropriate perception and awareness of ML/FT risks.
MONEYVAL underlines that certain authorities, such as the Office for the Prevention of Laundering of Proceeds Derived from Criminal Activity (financial intelligence unit) and the Financial Capital Market Commission (FCMC), demonstrated a rather broad understanding of the risks within the anti-money laundering and combating financing of terrorism (AML/CFT) system. However, there is uneven and overall inadequate appreciation of the potentially ML related cross-border flows of funds passing through Latvia.