Financial Services, Latvia

Prime Minister Krisjanis Karins (New Unity) told journalists after the government meeting that the restrictions on cash transactions are an essential element in the process of fixing Latvia’s financial sector.

“Cash transactions have been mentioned as one of financial crime risks in Latvia, which is why such transactions have to be restricted. The purpose of the draft legislation is to prevent people from buying real estate for money from the suitcase and to make checking the legality of this money possible,” the premier said.

The current law allows cash transactions the value of which does not exceed EUR 7,200, irrespective of whether the transaction involves a single operation or several operations. The State Revenue Service has established that taxpayers often find ways to reduce the real value of their transactions to make settle their payments in cash.

The Finance Ministry has therefore proposed setting the cap on cash transactions at EUR 3,000. The ministry believes the measure will encourage people to choose noncash transactions and reduce money laundering opportunities.

Under the draft amendments, which have been drawn up by the Finance Ministry, the caps on cash transactions involving real estate and transport vehicles will be set at EUR 1,500 for individuals who are not involved in economic activity.

The Finance Ministry projects the new amendments to bring EUR 675,000 into the state budget this year and EUR 900,000 in the following years.

The new amendments are expected to take effect in May this year after it is approved by Saeima.