Goodwill, ambition and close cooperation between the public and private sectors make it possible for everyone to achieve both financial and sustainability goals, which is clearly demonstrated by the example of Latvia, as Sébastien de Brouwer, Chief Policy Officer at the European Banking Federation said a the opening of Finance Latvia Association’s international conference of financial experts, From Grey to Green: Latvia’s Success Story. The conference brought together prominent opinion leaders and professionals in the financial industry, who shared their experiences and best practices regarding the importance of money laundering prevention and applying sanctions to achieve sustainability goals.
The past few years have been full of challenges for all industries, including the financial and banking sector. Geopolitical fluctuations and Russia’s war in Ukraine have raised a number of important issues: scrutinizing companies and private individuals subject to the sanctions, provision of financial services to citizens from Ukraine, and others, where the emphasis was on closer monitoring of the origin of clients’ funds they used in transactions and introduction of the basic principles of sustainable management. More than 20 experts from different areas of the financial industry participated in the conference with presentations, speeches and discussions on these topics, including Howard Rawstron, economic crime prevention specialist with experience in supervision, intelligence, strategy, analysis and crypto-risks; journalist and author of Butler to the World and Moneyland, Oliver Bullough; member of the European Court of Auditors, Dean of Chamber IV, Mihails Kozlovs, and many other professionals from the Baltic states and other countries.
“A few years ago, we were facing a major challenge in the banking sector, narrowly avoiding the grey list of the Financial Action Task Force (FATF). Through close cooperation between the public and private sectors, we managed to completely change the international assessment at that time. Currently, other countries are following Latvia’s example of how to work with clients and ensure transparency in financial systems. However, we have to go further, we must not stop, and I would like to encourage the banking sector to be proactive in cooperation with all the partners involved so we could together achieve the goals we have set for us,” Prime Minister Krišjānis Kariņš said while opening the conference.
A number of experts repeatedly acknowledged during the conference that anti-money laundering and sustainability goals had many similarities, and strong policies in one area could significantly contribute to the other. Latvia has done a great job to get from the grey list to the green list, said Sébastien de Brouwer, Chief Policy Officer at the European Banking Federation.
“At the moment, Latvia’s anti-money laundering standards are among the most rigorous in Europe. It does not mean though that everything that has to be done has been done. The system continues to improve and evolve, and all aspects of sustainability, which are already very important now, will be even more important in the future to maintain the good reputation of the financial sector and an attractive environment for investors. Such success motivates and encourages continuation of good practices, and the case of Latvia clearly shows that goodwill, ambition and cooperation can help achieve great goals,” said Sébastien de Brouwer.
The conference also highlighted the connection between achieving sustainability goals and the need to closely control the origin of finances, apply sanctions, as well as the importance of good governance after sanctions come into force. Participants in the conference emphasized that prevention of circumvention of international financial sanctions was essential for achieving sustainability goals, especially in the realm of governance. They also concluded that law enforcement agencies on all levels, including the police, the Financial Intelligence Unit, prosecutor’s offices and courts, require continued state support to ensure the allocation of resources and independence in order to enable efficient public-private partnerships, exchange of information and fight against financial crime.
The conference went on to focus on the social dimension of sustainability goals and how the banking sector can mitigate the risks of human trafficking in the context of the migration crisis. Fulfillment of anti-money laundering and terrorist financing obligations should not result in financial exclusion of refugees, emphasized Amandine Scherrer, Policy Expert in the Anti-Money Laundering and Countering the Financing of Terrorism Unit of the European Banking Authority.
“The European Union’s system is flexible enough to overcome problems related to customer due diligence in the case of refugees, and there should be relatively few situations where a credit or financial institution has to decline business relations with an asylum seeker from a third country due to higher money laundering or terrorist financing risks,” said Amandine Scherrer.
The example of Latvia was also analyzed at the conference, showcasing Latvia’s contribution to the prevention of money laundering. In July 2018, the Council of Europe’s Committee of Experts on the Evaluation of Anti-Money Laundering Measures and the Financing of Terrorism (Moneyval) made recommendations to Latvia regarding the prevention of money laundering and financing of terrorism, and also provided an assessment of the implementation of FATF 40 recommendations. Latvia took action to address the risks in the report and in 2020 managed to avoid being included in FATF grey list – a list of countries where significant deficiencies in the prevention of money laundering and financing of terrorism have been identified. Latvia’s performance in the prevention of money laundering and terrorist financing is often referred to as a good example at the international arena.
“Since 2018, Latvia has introduced a number of new solutions, which the international community recognized as a good example. In public-private partnership, we not only timely identify current typologies at the strategic level, but also cooperate at the operational level to deny human traffickers, corrupt officials, drug dealers and other criminals access to financial resources. In addition, one of the keys to success is a legally correct and publicly available register of beneficial owners, which has been very helpful in effective application of sanctions against Russia and Belarus and earned international acclaim. As a result, our country, that at one time received a negative report, has become an opinion leader, a promoter of new and effective tools, a country that has been able to learn from its experience and inspire other countries with a new vision in both public-private partnership and data exchange issues,” emphasized the organizer of the conference, Finance Latvia Association’s Chief Executive Officer Sanita Bajāre.
