Santa Purgaile, the FCMC Chairwoman: “I am pleased that the work of Latvian authorities has brought the result we all were hoping for; however, the work on combating financial crimes must be continued by refining the nuances of awareness and attempting to reach a more shared understanding of the application of regulatory enactments. The problems outlined by the recipients of services provided by the financial sector clearly demonstrate the need to strengthen a risk-based approach; however, a prerequisite for the successful implementation of this approach is a common understanding of the implementation of regulatory enactments, as well as the ability of all parties to take responsibility. I hope that the development of the manual and intense consultation process will be productive and be a stepping stone for the further development of the Latvian financial sector.”
In recent years, the FCMC has provided for the measures for risk mitigation:
- sectoral risk assessment has been developed and banks have been called for taking specific measures for reduction of risk levels and their management;
- the banks are required to change existing business models that were targeting foreign customer services and payment services;
- the number of on-site inspections carried out by the FCMC has been increased significantly;
- in 2018 and 2019, fines were imposed on 7 banks; at the same time, an obligation was imposed to improve internal control systems.
The FCMC has taken a series of measures to strengthen monitoring:
- an information technology solution has been introduced to increase the efficiency of money-laundering and terrorist financing risk supervision and to analyse cash flows more effectively and take appropriate risk-based monitoring measures;
- the staff number working in the field of compliance control has been increased significantly;
- monitoring procedures have been improved.
The FCMC has implemented significant measures to improve banking internal control systems:
- checks have been carried out at all banks in order to verify that banks have fully completed internal control systems in the field of international sanctions;
- checks have been carried out on the awareness of the identification and compliance verification of the true beneficiary and good practices have been compiled on the verification of the identification and compliance of the true beneficiary, and sent to the banks;
- requirements for independent audits have been developed and approved as well as requirements for customer due diligence have been improved;
- regulatory enactments have been approved setting out the requirements for carrying out the risk assessment of international sanctions and the establishment of internal control systems.
The measures taken by the FCMC have led to a substantial drop in the credit turnover for high-risk customers in the financial market participants, a significant decrease in the number of shell companies and the development of internal control systems by financial market participants.
In Annex, infographic on measures taken by the FCMC in the field of financial crime prevention.
FCMC Communications Division
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