Analytics, Banks, EU – Baltic States, Financial Services, Latvia
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Thursday, 28.03.2024, 17:27
OECD: Reforms in Latvia must result in stronger enforcement to tackle foreign bribery and subsequent money laundering risks
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.