On 1 March 2016, the Cabinet reviewed the informative report “On the Process of Accession of the Republic of Latvia to the Organisation for Economic Co-operation and Development”. The banking sector and its compliance with the OECD requirements were analysed by the Financial Markets Committee. The report issued by the Committee included a review of the financial market of Latvia, structure thereof, as well as the banking system and capital market of Latvia, supervision of financial market and the relevant regulatory enactments, international integration of the financial market of Latvia; compliance of the regulatory enactments governing the financial market of Latvia with the OECD legal instruments and liberalisation codes was also assessed, as well as matters regarding access to the financial market of Latvia. The report led to conclusions that in general Latvia complies with the OECD legal instruments in the field of financial markets.
However, the informative report of the Cabinet indicated also several topical matters, in which Latvia must show further progress, so that the OECD Member States could adopt a decision on assigning the OECD Member State status to Latvia:
Working Group on Bribery in International Business Transactions; and
Corporate Governance Committee (matter for state capital companies).
Attention of the working group on bribery combating is being turned also to matters related to the banking sector. The OECD recommendations for that matter recommend the following:
inclusion of all categories of politically exposed persons in the Law on Prevention of Money Laundering and Terrorism Financing;
request on the performance of enhanced due diligence and other additional measures against money laundering from credit institutions and payment institutions;
provision of the Office for Prevention of Laundering of Proceeds Derived from Criminal Activity (Control Office) with sufficient resources, as well as credit institutions and payment institutions with relevant guidelines, typology and training;
increase the resources at the disposal of the Financial and Capital Market Commission (FCMC) for control measures in the field of the prevention of money laundering; and
implementation of immediate measures that would contribute to holding the persons guilty of money laundering criminally liable.
The ALCB has expressed its support to the expansion of the definition of a politically exposed person, at the same time calling for legal requirements not only to be written down on paper, but also to be implemented in real practice in good quality and on the merits.
Realising that this would cause rise in banking supervision costs, the ALCB expresses its understanding and readiness for discussions with the FCMC to reach an agreement on higher payments for the maintenance of the FCMC, which is necessary for the improvement of professionalism and qualification of the supervision institution. Whereas, regarding the capacity of the Control Office, the ALCB calls the responsible public institutions for significant increase of financing for the Control Office to strengthen its performance by using the financial means collected from the financial stability duty.
At the end of last year, the FCMC adopted the Regulatory Provisions for Credit Institutions and Licensed Payment and Electronic Money Institutions on Enhanced Customer Due Diligence, and the banks are already in the process of implementing the referred to legal norm. In order to ensure compliance with the remaining the OECD recommendations, for example, customer due diligence, typology and elaboration of guidelines, as well as training, the ALCB will continue close co-operation with the FCMC and the Control Office for the implementation of further measures.
The fight against money laundering and terrorism financing will lead to further success if timely and unavoidable holding of the guilty persons liable is ensured. Therefore, the ALCB appeals to the state to intensify the investigative and trial capacity of cases related to money laundering and terrorism financing, especially in the case of predicative crimes committed abroad, which is crucial for strengthening the international reputation and competitiveness of Latvia.
Furthermore, the ALCB draws attention to another important matter in the process of accession to the OECD — ensuring of compliance with the OECD guidelines regarding state capital management, significantly affecting the chances of Latvia to receive an invitation for membership in the organisation and for successful and quick implementation of which banks and other participants of the financial and capital market are ready to provide the necessary assistance to the state.
Information was provided by: