In order to prevent money laundering and terrorism financing, in the Republic of Latvia is in force Law On the Prevention of Money Laundering and Terrorism Financing.
In Republic of Latvia for money laundering criminal liability occurs for evasion of tax payments and payments equivalent thereto, which is included in the Criminal Law chapter "Criminal Offences of an Economic Nature", the direct object of which is economic interests and the interests of the State in the field of tax revenues.
Therefore credit institutions, tax advisors,
accountants, auditors, sworn notaries, attorneys at law, other independent
providers of legal services, persons providing encashment services and other
legal or natural persons, according to the type of their activity, perform the
relevant procedures to clarify, evaluate and conceive clients` typical money
laundering risk and, based on the risk analysis, establish money laundering
prevention internal control system and they have a duty to report to the
Control Service for every unusual and suspicious transaction.
An internal control system is a set of measures in order to prevent as much as possible the subject involvement in money laundering. An internal control system includes:
- the procedure for the identification of clients and the actual beneficiaries;
- the procedure for assessment of clients;
- the procedure for assessment of money laundering and terrorism financing risk connected with client;
- the procedure discovering unusual and suspicious transactions;
- the procedures for carrying out transactions with politically significant persons;
- the procedure how to monitor the client`s transactions; etc.
Transactions in which might occur money laundering:
- buying and selling of immovable property, shares of the commercial company,
- managing of the customer’s money, financial instruments and other funds,
- opening or managing of all kinds of accounts in credit institutions or financial institutions,
- creation, management or provision of operation of legal arrangements, as well as in relation to organisation of contributions necessary for the creation, operation or management of a legal arrangement;
Funds are considered as proceeds of crime if they are owned or possessed by a person in the result of a direct or indirect criminal offence.
Banks of Latvia as intermediaries in money laundering appear in the loudest transactions.
Until May 2014 the major punishment established in Law for such violation was EUR 142 000.
Larger punishment – till 10% from the net income of the bank, was established as European Union passed such norm.
Therefore in December 2015 PrivatBank was punished with EUR 2 million, with the request to change the board and with individual penalties for board members.
In January 2016 controller set significant
restrictions to Trasta komercbanka. Clients cannot perform transactions
exceeding EUR 100 000.
In conclusion, the comparison of the penalties set for banks for money laundering is as follows:
- In 2010 – EUR 85 372;
- In 2011 – EUR 184 973;
- In 2012 – EUR 106 715;
- In 2013 – EUR 341 489;
- In 2014 – EUR 70 000;
- In 2015 – EUR 2 211 830.
In banks of Latvia in 2010 residents have
deposited 9,23 billion euros, non-residents – 6,57 billion euros.
In 2015 residents in banks of Latvia have deposited 10,96 billion euros, but non-residents 11,91 billion euros.