The Latvian banking sector started a significant and comprehensive improvement process in 2016 to ensure the highest standards in countering money laundering and terrorist financing as well as to facilitate sustainable development of the banking sector. The improvement of the compliance process is carried out both by the Finance Latvia Association (Association) and by each bank individually.
The Association is committed to achieving the highest anti-money laundering and combating the financing of terrorism (AML/CFT) compliance standards among member banks within the next 2 to 3 years.
Improvements fall into five main compliance categories:
- Corporate governance
- Internal controls
- Training of banking staff
- Independent testing
- Automated banking system enhancement, with a special focus towards internal controls.
Major step in AML/CFT: higher standards through industry self-regulation
In October 2017, the Council of the Association approved Policy Guidance and Guidelines on Anti-Money Laundering, Countering Terrorism Financing and Enforcement of Sanctions. This marks a new direction of activities of the Association and confirms high professional maturity of the banking industry.
The Association will follow the implementation of guidelines by the members of the Association and, based on risk assessment and the development of generally accepted standards, will develop the existing guidelines or, if necessary, issue new guidelines.
Compliance Status Review on progress and planned actions
Latvia Association_presentation_11012018 Banking provides an industry level overview of the accomplishments in the field of compliance since 2016, as well as future plans of the Association and the industry in general.
During 2016, 11 member banks of the Association undertook independent AML/CFT compliance reviews conducted by the US-based compliance firms (Navigant, Exiger and Lewis Baach Kaufmann Middlemiss). Following the reviews, the banks adopted remediation plans to implement the improvements needed to reach full compliance with US standards on top of the EU applicable standards.
The aim of the review was to ensure that the highest industry standards were met, highlighting the areas for improvement. Good results are seen due to applying the following increased AML/CFT standards:
- 90% of the remediation plan actions introduced by September 2017. All items included in the plans are planned to be introduced by the end of 2017, the beginning of 2018.
- Latvian banks are cooperating with the customers whose financial histories they are aware of, avoiding customers with increased risk. The number of de-risked clients in 2016 was reduced by an additional 39% compared to 2015.
- Special attention was paid to the further automation of processes. Significant investments in IT systems automate the monitoring of customers and their transactions to the maximum extent possible and are effective tools for the more timely identification and elimination of potential illegal actions.
Major Enhancements and Other Relevant Developments individually by banks
Individual factsheets by member banks provide detailed information on major enhancements in AML/CFT compliance and other key developments.
Baltic International Bank
ABLV Bank (Since February 16, 2018 ABLV Bank membership in the Finance Latvia Association has been suspended; on March 6 ABLV Bank has terminated its membership)