Banks, EU – Baltic States, Financial Services, Latvia

The prime minister informed that the council’s first meeting since the appointment of Latvia’s new government was devoted to recommendations provided by the Council of Europe’s Committee of Experts on the Evaluation of Anti-Money Laundering Measures and the Financing of Terrorism (Moneyval). The recommendations are intended to help Latvia eradicate money laundering through its banks.

Latvia is expected to implement more than 90 measures recommended by Moneyval. In Karins’ words, Latvia is committed to meeting the deadline for the recommendations, but the issue of ABLV Bank’s self-liquidation methodology, namely, how the origin of ABLV creditors’ money will be checked, still remains unresolved.

The Financial and Capital Markets Commission (FCMC) and the Latvian Office for Prevention of Laundering of Proceeds Derived from Criminal Activity (Control Service) are both dealing with the issue but each agency has a different position on the methodology issue. The FCMC and the Control Service have now been given two weeks to agree on the methodology. In two weeks’ time, the methodology issue will be addressed again at a meeting of the Financial Sector’s Development Council.

“It is important to me that the agreement on the methodology is reached and a controlled process of the bank’s self-liquidation can be started. We need make sure that the money paid out to the creditors is legal. If the methodology is bad, then even if we meet all Moneyval recommendations except this one, Latvia can end up in the grey list,” Karins warned.

The prime minister would not reveal details of the disagreements between the FCMC and the Control Service, but voiced confidence that the agencies would reach an agreement in the next two weeks.

Asked if the methodology has to be agreed also with international partners, Karins confirmed that it has to be agreed with the US Department of the Treasury.

As reported, Moneyval has placed Latvia in enhanced follow-up procedure because of the number of Low and Moderate ratings awarded for Effectiveness. Two areas were considered to have low levels of effectiveness - relevant beneficial ownership information and preventing proliferation financing.