Analytics, Banks, EU – Baltic States, Financial Services, Latvia

International Internet Magazine. Baltic States news & analytics Thursday, 21.11.2019, 21:52

OECD: Reforms in Latvia must result in stronger enforcement to tackle foreign bribery and subsequent money laundering risks

BC, Riga, 16.10.2019.Print version
Latvia has continued to improve its framework against bribery of foreign public officials and subsequent money laundering but the reforms need to translate into further effective enforcement, according to a new report by the OECD Working Group on Bribery.

According to the Working Group, which is composed of 44 countries, Latvia's enforcement results are still not commensurate with the country's exposure to foreign bribery and subsequent money laundering. Since Latvia joined the Convention on Combating Bribery of Foreign Public Officials in International Business Transactions in 2014, no foreign bribery case has been prosecuted and three foreign bribery investigations are ongoing. Proceeds of foreign bribery have been laundered through some Latvian banks and other corporate entities in at least two multijurisdictional bribery cases. However, while waiting for the outcome of recent prosecutions in court, the money laundering conviction rate remains low. The Working Group also regrets that the Minister of Justice's repeated and open criticism of the Prosecutor General risks creating political interference into the operation of the Public Prosecutor Office.


The Working Group has just completed its Phase 3 evaluation of Latvia's implementation of the Convention and related instruments. In order to improve Latvia's implementation of the Convention, the Working Group has recommended that Latvia take certain measures, including that it should:

●                 Provide sufficient resources and expertise to its authorities to effectively investigate and prosecute foreign bribery and subsequent money laundering cases;

●                 Step up its enforcement actions against companies, especially against Latvian financial institutions and other corporate entities involved in foreign bribery schemes, where relevant;

●                 Reinforce coordination between Latvia's anti-corruption law enforcement body (KNAB), the State Police and the prosecutors and implement a strategic approach towards foreign bribery and subsequent money laundering investigations;

●                 Strengthen detection of Latvian individuals and companies involved in foreign bribery;

●                 Ensure the efficient operation of the banking supervisory body (the FCMC), to contribute to the prevention and detection of foreign bribery and subsequent money laundering.


The Report highlights positive aspects of Latvia's efforts to fight foreign bribery. Latvia took steps to strengthen KNAB's functional independence. Latvia also adopted comprehensive legislation on whistleblower protection and increased sanctions against individuals for foreign bribery, money laundering and false accounting offences. A lower evidentiary threshold to prove money laundering has been introduced and the number of cases prosecuted has increased. Reforms have been implemented to enhance the Financial Intelligence Unit's operational capacity. Latvia's efforts to upgrade its legislative and regulatory framework to prevent money laundering in the financial sector are welcome together with Latvia's financial sector supervisor' efforts to renew its approach to supervision of financial institutions. Whether these developments will substantially contribute to more detection and enforcement of the foreign bribery offence remains to be tested in case law and practice.

 

Latvia's Phase 3 Report was adopted by the OECD Working Group on Bribery on 10 October 2019. The Report (available at http://www.oecd.org/corruption/anti-bribery/OECD-Latvia-Phase-3-Report-ENG.pdf) lists the recommendations the Working Group made to Latvia on pages 82-88, and includes an overview of recent enforcement activity and specific legal, policy, and institutional features of Latvia's framework for fighting foreign bribery. In accordance with the standard procedure, Latvia will submit a written report to the Working Group within two years (October 2021) on its implementation of all recommendations and its enforcement efforts. 






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