Banks, Budget, Good for Business, Latvia

After the Financial Sector Development Council's meeting today, Karins told reporters that he had assessed the financial system and how recommendations offered by the Moneyval committee of the Council of Europe would be implemented. Karins believes that implementation of the Moneyval recommendations will enable "cosmetic improvements" to the financial sector, and that Latvia must do more.

"Implementation of Moneyval recommendations will be enough for Latvia to not be included in the so-called gray list, but our goal is to ensure the financial system's integrity and to keep dishonest schemes out of Latvia. We must go further and, besides implementation of the Moneyval recommendations, I am also declaring a reform to the financial sector's supervisory system. The current cosmetic improvements in the financial sector are not enough, it needs a complete overhaul," stressed Karins.

Karins has signed three decrees to step up supervision of banks and expel those banks which do not take measures against financial crimes from the financial sector.

Karins has ordered Finance Minister Janis Reirs (New Unity) to draw up amendments to the Law on Credit Institutions to specify the legal framework for cases when a credit institutions' operations are halted due to violations of the rules on prevention of money laundering and terrorism financing.

The finance minister will also have to prepare amendments to the Law on the Financial and Capital Market Commission to strengthen the commission's role in the prevention of money laundering and terrorism financing and better regulate cooperation between the commission and the Office for Prevention of Laundering of Proceeds Derived from Criminal Activity.

Justice minister and interior minister have been tasked with drafting amendments to the Criminal Proceedings Law to ensure that the legal presumption principle is employed more extensively in dealing with violations of the rules on prevention of money laundering and terrorism financing. The two ministers, in cooperation with the Prosecutor General's Office, will also prepare amendments that will strengthen the capacity of courts, authorities and the prosecutor's office in solving money laundering and terrorism financing cases.

According to Karins, the government could review the reform in a month, while Saeima could start reviewing the legislation right after passing the 2019 state budget.