Pēters Putniņš: Notable efforts made in the Latvian banking sector to mitigate risks and to raise awareness about business model change

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Press Release 

Pēters Putniņš: Notable efforts made in the Latvian banking sector to mitigate risks and to raise awareness about business model change 

During the meeting of Special Committee on Financial Crimes, Tax Evasion and Tax Avoidance (TAX3) delegation with the Financial and Capital Market Commission (FCMC), Pēters Putniņš, Chairman of the FCMC, informed about the progress in the Latvian financial sector regarding radical transformation of the Latvian bank business model that has been implemented in close cooperation with the supervised industry. In the three years of changes since 2016, the banking customer base has been revised under guidance of the FCMC; there is a reduction in risky segment and a significant decline in foreign deposits with domestic and EU deposits prevailing in the portfolio as Latvian banks have discontinued service to unnecessary shell companies. 

TAX3 delegation assessed performance of Latvia in the reduction of high-risk non-resident deposits in the banking sector, as well as a change in business approach. This year Latvia has achieved the historically lowest share of foreign deposits in the Latvian banks, 20 percent.  


FCMC Chairman Pēters Putniņš: “The dialogue with colleagues from TAX3 launched in April continues in a really professional atmosphere. I am pleased that we can statistically prove essential progress in the Latvian financial sector as well as changes in market participant awareness of further business design approach in Latvia. Notable efforts have been made, in particular over past four months, to mitigate risks related to money laundering. In 2015, the share of Latvian and European Union citizens’ deposits in Latvian banks was 65 percent, but by now it has reduced to 90 percent. Over past years we have made radical changes in the structure of customers that had been built up over 25 years. An entirely different risk assessment model has been now embedded in business strategies. There are no longer grounds for speaking about a free flow of risky money in Latvia. The percentage of high-risk deposits and transactions will be insignificant in future, and there are no concerns that we cannot control it. The process of fundamental changes in the Latvian banking sector will consistently continue under guidance of the FCMC. With incorporation of new business models into future action strategies the banks will complete this transformation process.”

The FCMC head emphasized that the process of historical changes involving the Latvian banks that are focused on foreign customer service has been implemented under control of FCMC in line with risk mitigation approach. The enhanced stability ratios imposed required by the FCMC to the foreign segment banks have proved right, demonstrating how to radically change business model at the same time meeting obligations to customers. 

Further information:

Ieva Upleja 

Head of FCMC Communications Division 

Phone: + 371 67774807; e-mail: ieva.upleja@fktk.lv


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