Finance Latvia

On May 7th, the European Banking Federation (EBF) expanded on its EBF Blueprint for an effective EU framework to fight money laundering, published in March. The blueprint was developed in collaboration with experts from the Finance Latvia Association, who were able to share their experience and the progress achieved in Latvia. The necessary measures suggested by the EBF have either already been introduced in Latvia or are under discussion.

An effective fight against money laundering can only be achieved on a national level with close cooperation between government institutions and industries, and this is particularly important on an international level. The EBF has set four priorities for its future operations: harmonisation; cooperation; empowerment; and smarter, more rational use of resources. In this way, the EBF is supporting the plan prepared by the European Commission which aims for close cooperation and the effective implementation of information sharing to reach the aforementioned goal.

Every year, financial intelligence agencies—analogues of the Financial Intelligence Unit of Latvia throughout Europe—receive millions of notifications of suspicious transactions from banks alone. The European financial sector has invested around one hundred billion Euro into compliance for the fight against money laundering, in addition to using around 10% of its staff. At the same time, the authorities have confiscated around 1% of criminal proceeds in the European Union, and around 1% of cases are prosecuted.

After analysing examples of best international and European Union practices, the EBF Blueprint expresses the need for:

turning existing Directives into Regulation—thus achieving greater harmonisation and unified standards in all member states. This process must take place in accordance with the highest standards already applied to the industry, with no support for adapting to low or medium standards;
strengthening the role of financial intelligence agencies on a European Union-wide level, including implementing effective feedback for the financial sector on the current work of law enforcement agencies, so that banks know where to focus their attention and to ensure that notifications of suspicious activity give law enforcement agencies realistically useful, high-quality information;
providing suitable resources and authority to institutions involved in anti-money laundering;
centralising the monitoring function, expanding the rights of the European Banking Authority to regulate and coordinate the supervision of the money laundering and terrorism financing field;
clarifying a risk-based approach;
providing trustworthy information on beneficial owners throughout the European Union member states, making information collection as easy as possible and reducing the costs linked with this, based on the Latvian experience;
taking a mutually agreed approach balancing data protection and anti-money laundering regulation;
encouraging cross-border bank-to-bank information sharing. It is crucial that banks can legally share information on clients with whom they have ceased cooperation due to suspicions of money laundering and terrorism financing, involvement in financial crime or breaching international sanctions;
promoting the creation of a platform enabling information sharing between the private and public sector, similar to those in Latvia and the United Kingdom;
modernising and standardising client investigation policy, including supporting the creation of a shared KYC utility, giving banks the opportunity to make their checks more efficient and simplifying procedures for clients;
promptly anticipating the potential impact of technologies on the anti-money laundering and terrorism financing framework.