Financial Services, Latvia

The amendments to the Credit Institution Law, drawn up by the Finance Ministry, are intended to define more precisely the provisions regulating credit institutions’ (banks) liquidation process, enhancing oversight and anti-money laundering control.

The new legislation obliges the FCMC to supervise the liquidation process but also authorizes the regulator to obtain the information necessary to carry out this task. The FCMC is also expected to make sure depositors’ interests are protected during the liquidation process, as not all depositors receive their money from the Deposit Guarantee Fund and some of them recover their money only in the liquidation process.

The Credit Institution Law also obliges the credit institution’s liquidator to ensure financial crime control in line with legislative provisions and the risks associated with the given credit institution. This includes a requirement to report any suspicious transactions detected in the liquidation process to the Financial Intelligence Service.

The FCMC will also monitor the liquidation process for compliance with provisions of the Credit Institution Law, Law on the Prevention of Money Laundering and Terrorism Financing, Law on International and National Sanctions, Commercial Law, and FCMC regulations. For this purpose, the FCMC will be authorized to access all credit institutions’ documents and the liquidator’s documents concerning the given credit institutions, as well as to receive all the necessary explanations and information from the liquidator about the liquidation or self-liquidation process.

The amendments are part of the “financial system’s overhaul”, announced by Prime Minister Krisjanis Karins’ (New Unity). Saeima passed the above amendments in the second reading on May 30.