The MONEYVAL committee of the Council of Europe considers that in Latvia, the overall appreciation of the risk of money laundering and terrorist financing in the financial sector is “not commensurate” with the factual exposure of the Latvian banking sector, particularly as regards its foreign clientele from the Community of Independent States (CIS), which comprises nine former Soviet-era republics.
“Until recently, the judicial system of Latvia did not appear to consider money laundering as a priority”, reads the committee's report, published on Thursday 23 August on the basis of on-site missions at the end of 2017. However, it notes recent increased awareness, with the launch of large-scale investigations and judgements sanctioning infringements of the rules.
MONEYVAL also notes that “sanctions for natural persons appear neither dissuasion nor proportionate”, due to the frequent reduction of sentences in light of the length of proceedings, or the legal possibility to suspend a custodial sentence of up to 5 years' imprisonment.
It is acknowledged that the Latvian regulators are cooperating in the international fight against money laundering and terrorist financing, but the committee considers that the main challenge lies in their cooperation with their opposite numbers from the CIS countries.
In February, having been alerted by the USA, the Latvian authorities prevented Ilmārs Rimšēvičs, the governor of the Latvian central bank, who was suspected of corruption in a case of money laundering, from continuing his activities.
This case raised questions as to the effectiveness of the fight against money laundering at Eurozone level. As single supervisor within Banking Union, the ECB is reported to approve of the creation of an ad hoc entity competent in an area which comes mainly under the national aegis.
As part of work to deepen Economic and Monetary Union, a European action plan may be agreed upon at the end of 2018 on the fight against money laundering (see EUROPE 12049).
When approached for comment on Thursday, the Commission reiterated that the fifth anti-money laundering directive (AML) had been in force since early July (see EUROPE 11927) and that several member states (Greece, Ireland, Romania) had already been referred to the Court of Justice of the EU over the transposition of the fourth 'AML' directive (see EUROPE 12066). (Original version in French by Mathieu Bion)