FCMC: Tough requirements for controlling non-resident money flow in Latvia

02.01.2014
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1.01.2014.

FCMC: Tough requirements for controlling non-resident money flow in Latvia

Financial and Capital Market Commission (FCMC) points out that there is a set of special supervisory measures particularly for monitoring non-resident money flow in Latvia, and FCMC experts perform supervision on a regular basis to ensure that these activities are maintained in all Latvian banks.

“As regards non-resident cash flow service, FCMC has introduced a special measure package for monitoring the cash flows and the FCMC experts conduct regular supervision to maintain regulatory activities in all Latvian banks. These measures are aimed at preventing cash inflows in the amounts that are incommensurable for the current Latvian financial sector. We can also remember earlier expressed concerns about the potential negative developments to Latvia’s financial sector after Cyprus crisis, but it didn’t happen.  The introduction of the euro will raise confidence about the stability of the Latvian banking sector,” says Kristaps Zakulis, FCMC Chairman.  

“Being participant in the eurozone we will intend to further reinforce the existing stringent regulatory measures in order to sharpen the combat of potential money laundering through the Latvian financial sector. It will be mainly done through alignment with the Fourth Anti-Money Laundering Directive. Latvian authorities are committed to curbing risks related to the non-resident deposits by using a comprehensive toolkit. Banks focusing on non-residents deposits have already been made subject to additional, much stricter, prudential capital and liquidity requirements within the Pillar 2 framework”, commented Sanita Bajāre, State Secretary of Ministry of Finance

“The regulations regarding anti-money laundering and terrorism financing is the same for all EU member states, and the directives that regulate the supervision of this field must be obeyed by all member states, including Latvia. Currency changeover cannot impact in any way the rules and regulations of the financial system supervision. Besides the supervision of the banking system is becoming fiercer in all European Union and especially in the Eurozone. This year the first elements of the Banking Union will become into action that means even stronger requirements regarding money circulation and transparency. Besides for Latvia as the member state of Eurozone the regulations will be obligatory. Therefore any speculations regarding the amounts of „dirty money” that could increase with Latvia joining Eurozone is not only unjustified, but also is in sharp contrast with the existing supervision of financial system”, states Mārtiņš Bičevskis, President of Association of Latvian Commercial Banks. 

The special supervisory measures cover several provisions such as:
– Individual increased capital adequacy requirements are set for the banks that are focusing on the non-resident customer service.
– Individual increased minimum liquidity ratio is set for the banks of this group.
– Besides, the stricter anti-money laundering and counter-terrorist financing (AML/CTF) measures are applied to the banks of this group. In line with the business model of the bank the greater attention has been paid to the AML/CTF controls, which has been highly approved by the international experts, also Council’s MONEYVAL Committee have highly appreciated Latvia’s progress in the AML area.

Latvian regulatory requirements have been developed based on the EU directives and the FATF (Financial Action Task Force) recommendations. Council of Europe Committee of Experts on the Evaluation of Anti-Money Laundering Measures and the Financing of Terrorism (MONEYVAL) conduct enhanced customer due diligence and customer transaction monitoring has evaluated money laundering and terrorism financing prevention system in Latvia in 2011/2012, admitting its compliance with international standards.

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