The Financial and Capital Market Commission (hereinafter – the FCMC) has published its Annual Report and Activity Report for 2016, presenting the relevant information on the activities of the FCMC and performance of the supervised financial and capital markets participants in 2016.
Describing the last year, FCMC Chairman Pēters Putniņš points out in the foreword to the annual report, “In 2016, we were working under more stringent requirements assuming fully fledged accountability. This has indeed been a phase of intense work, during which the FCMC had to make a lot of important decisions as well as to ensure, in the field falling under its responsibilities, a positive outcome of the negotiations for our country to join the organization of the developed countries, i.e., the OECD“.
In April 2016, the OECD Working Group on Bribery in International Business Transactions, having assessed Latvia’s performance in implementing its priority recommendations, provided a positive opinion to the OECD Council regarding Latvia’s readiness to join the OECD. The opinion of the Working Group confirmed the progress made by Latvian supervisory authorities and the financial sector in preventing money laundering and terrorist financing (AML/CTF) as a high-quality and timely completed task.
“In 2016, both the supervisor and market participants had to leave their conventional comfort zone. Several Latvian commercial banks and their responsible officials were subject to significant penalties for deficiencies in their internal control systems and for inadequate management of risks in providing services to foreign customers“, highlighting most important developments in the financial sector in 2016, indicates Pēters Putniņš.
In 2016, within the scope of carrying out regular supervision in the AML/CTF area, the FCMC imposed a penalty of EUR 5,933,636 on four banks for failure to comply with the requirements laid down in the AML/CTF law, as well as specified a number of duties to be carried out in order to fine-tune and improve the internal control systems of the banks. In addition, a fine of EUR 25,000 was imposed on one board member of the bank, whereas in one case a warning was issued to the board member responsible for AML/CTF.
In 2016, for the first time, an independent testing was started in 12 Latvian banks which had a focus on providing services to foreign customers. The inspection was carried out by three US consultancy companies, using a uniform methodology pursuant to US regulatory requirements in the AML/CTF area.
During the reporting year, there have been changes in the structure of the FCMC, i.e., with a view to strengthening the AML/CTF area, a new structural unit, i.e., the Compliance Control Department.
In March 2016, following a proposal of the FCMC, the European Central Bank approved the decision to withdraw the licence of AS TRASTA KOMERCBANKA. The FCMC submitted such a proposal for consideration by the ECB because the bank had been continuously and seriously violating a number of key areas of banking activity. Following the withdrawing of authorization, AS TRASTA KOMERCBANKA had sufficient liquid assets to ensure the disbursement of all guaranteed compensations to customers, and the guarantee system covered 95.4% of AS TRASTA KOMERCBANKA depositor claims in the amount of 100%.
The FCMC, ensuring continuous monitoring of market participants, carried out standard supervisory measures; namely, the monitoring of the performance of market participants after completing the analysis of the financial statements thereof, as well as carrying out on-site inspections. Overall, in 2016, FCMC carried out on-site inspections of 34 market participants.
The most relevant information regarding the work of FCMC in the financial sector supervision, licensing and regulatory requirements area is included in the Annual Report and Activity Report for 2016. Other issues covered concern the financial stability ensured by the Deposit Guarantee Fund, as well as Fund for the Protection of the Insured, protection system of the customers of the financial instruments market, financial stability fee. Also, issues on the national and cross-border cooperation are covered as well as educating customers and improvements in financial literacy, the FCMC governance and structure, staff policy and financing of the FCMC activities.
FCMC Annual Report is available on the FCMC website at Media room/Annual Reports: http://www.fktk.lv/attachments/article/6474/FKTK-Gada-parskats-2017-ENG.pdf
Public Relations Specialist
Financial and Capital Market Commission
Phone: +371 67774808, +371 29467009