Latvia

Last updated: 28/01/2011


CENTRAL AUTHORITY FOR REPORTING

Control Service, Office for the Prevention of Laundering of Proceeds Derived from Criminal Activity.


ANTI-MONEY LAUNDERING REGULATOR(S)

Financial and Capital Market Commission (www.fktk.lv) in respect of banks and other financial institutions;

Lotteries and Gambling Supervisory Inspection (www.iaui.gov.lv) in respect of organizers of lotteries and gambling;

Bank of Latvia (www.bank.lv) in respect of currency exchange offices;

The Latvian Council of Sworn Advocates ((www.advokatura.lv/?lang=eng) in respect of sworn advocates;

The Latvian Council of Sworn Notaries in respect of sworn notaries;

The Latvian Association of Certified Auditors  (www.lzra.lv/en) in respect of sworn auditors and commercial companies of sworn auditors;

The State Assay Supervision Inspectorate in respect of legal or natural persons engaged in trading and intermediation of precious metals, precious stones and gems and articles thereof;

The State Inspection for Heritage Protection in respect of natural or legal persons that make transactions with the items included in the list of state protected cultural heritage monuments;

State Revenue Service (www.vid.gov.lv) in respect of:

  1. Tax advisors, external accountants;
  2. Independent legal professionals when they act in the name of their clients to assist in the planning or execution of a transaction, participate in any transaction, perform other professional activities related to transactions or confirm a transaction for the benefit of the client, and the transaction involves:
    1. Buying or selling real estate or an enterprise;
    2. Managing a customer’s money, financial instruments and other funds;
    3. Opening or managing all kinds of accounts with credit institutions or financial institutions;
    4. Creating, managing or ensuring the operation of legal arrangements, making investments necessary for creating, managing or Ensuring the operation of legal arrangements.
  3. Legal arrangements and company service providers;
  4. Persons acting in the capacity of agents or intermediaries in real estate transactions;
  5. Other legal or natural persons trading in real estate, transport vehicles and other articles, acting as intermediaries in such transactions or providing services in relation to such transactions, where the payment is made in cash in lats or other currency and the amount, at the exchange rate set by the Bank of Latvia on the transaction day, is equivalent to 15 000 euros or more, whether the transaction is made as a single operation or several linked operations.


ARE LAWYERS COVERED BY ANTI-MONEY LAUNDERING LEGISLATION?


YES

HAS THE THIRD EU MONEY LAUNDERING DIRECTIVE BEEN IMPLEMENTED? IF NOT, WHEN IS IT EXPECTED TO BE IMPLEMENTED?

Law on the Prevention of Laundering the Proceeds from Criminal Activity (Money Laundering) and of Terrorist Financing (the “AML Law”) implementing Directives 2005/60/EC and 2006/70/EC was adopted on 17 July 2008. It came into force on 13 August 2008. An unofficial translation of the law is available at: http://www.fktk.lv/texts_files/AML_law_engl__January_2010.pdf 


LIST THE LAWS REGARDING ANTI-MONEY LAUNDERING, INDICATING WHICH LAWS ARE APPLICABLE TO LAWYERS

Law on the Prevention of Laundering the Proceeds from Criminal Activity (Money Laundering) and of Terrorist Financing Act On Prevention of Laundering of Proceeds Derived from Criminal Activity, 24/01/02.

In order to comply with international requirements, the Latvian government amended their anti money laundering legislation in 2004 to make all offenses listed in the criminal law predicate offenses for money laundering.

The Criminal Law.

Regulations for Enhanced Customer Due Diligence, issued by the Financial and Capital Market Commision (http://www.fktk.lv/en/law/general/fcmc_regulations/20080827_regulations_for_enhan).


ARE VISITING LAWYERS SUBJECT TO LOCAL LAWS REGARDING ANTI-MONEY LAUNDERING, AND, IF SO, TO WHAT EXTENT?

Information not available.


LIST ANY MONEY LAUNDERING GUIDANCE FOR LAWYERS (FOR EXAMPLE, LAW SOCIETY OR BAR ASSOCIATION GUIDELINES) CURRENTLY IN PLACE.

Information not available.


IS THE LAW SOCIETY/BAR ASSOCIATION INVOLVED IN SUPERVISING OR ENFORCING COMPLIANCE WITH ANTI-MONEY LAUNDERING REGULATIONS?

Information not available.


DESCRIBE CLIENT DUE DILIGENCE REQUIREMENTS, INCLUDING WHEN IT MUST BE UNDERTAKEN BY LAWYERS

See Chapter III of the AML law.


DOES YOUR COUNTRY FOLLOW A RISK-BASED APPROACH TO CLIENT DUE DILIGENCE BY LAWYERS?

Article 17 of the AML Law:

  1. In the framework of a business relationship, customer due diligence involves a set of measures based on risk assessment whereby the person subject to this Law:
    1. Establishes information on the beneficial owner;
    2. Obtains information on the purpose and intended nature of the business relationship;
    3. After entering into the business relationship monitors the business relationship;
    4. Ensures that the documents, data and information obtained during customer due diligence are properly kept and updated on a regular basis.

  2. When establishing the extent and the procedure of customer due diligence, a person subject to this Law shall take into account the risks associated with money laundering and terrorist financing in respect of a customer’s residence (registration) country, legal form, type of operation, services used or transactions made;
  3. The obligations set out in this Law in respect of customer due diligence shall apply to a legal arrangement irrespective of whether it has the status of a legal person.

ARE THERE ENHANCED DUE DILIGENCE MEASURES FOR CERTAIN TYPES OF CLIENTS, FOR EXAMPLE, POLITICALLY EXPOSED PERSONS?

Yes, mandatory enhanced due diligence is required for politically exposed persons in cases when business relationship are not established face to face and also for cross border correspondent banking relationships. Banks and financial institutions have to perform enhanced due diligence also in cases indicated in the Regulations for Enhanced Customer Due Diligence issued by the Financial and Capital Market Commission.  


ARE THERE SIMPLIFIED DUE DILIGENCE MEASURES FOR CERTAIN TYPES OF CLIENTS, FOR EXAMPLE, LISTED COMPANIES?

Yes, see AML Law Articles 26 and 27.


ARE LAWYERS PERMITTED TO RELY ON THIRD PARTY DUE DILIGENCE? IF YES, PLEASE DESCRIBE.

Information not available.


WHEN IS A LAWYER UNDER AN OBLIGATION TO REPORT SUSPICIOUS TRANSACTIONS?

A lawyer is under an obligation to report without delay any financial transaction characterised by one or more of the indicators of unusual transactions. The Cabinet of Ministers approves the list of indicators of unusual transactions in line with FATF recommendations.

Where the Control Service requests, any additional information concerning the report shall be furnished as needed.


DOES ATTORNEY/CLIENT PRIVILEGE AND/OR DUTIES OF CONFIDENTIALITY PROVIDE A DEFENCE OR PARTIAL/TOTAL EXCEPTION TO THE REQUIREMENT TO REPORT SUSPICIOUS TRANSACTIONS? 

Information not available.


DOES LOCAL LAW PROVIDE ANY CRIMINAL AND/OR CIVIL INDEMNITY TO A LAWYER WHO HAS REPORTED A SUSPICIOUS TRANSACTION?

Article 40 of the AML Law.


ONCE A SUSPICIOUS TRANSACTION REPORT HAS BEEN FILED, IS A LAWYER ALLOWED TO PROCEED WITH THE LEGAL ADVICE/TRANSACTION, AND, IF SO, MUST CONSENT FROM AUTHORITIES BE OBTAINED FIRST?

Chapter V of the AML Law.


IS THERE A TIPPING-OFF PROHIBITION? IF YES, PLEASE DESCRIBE.

Article 38 and 39 of the AML Law.


DESCRIBE ANY RESTRICTIONS ON ACCEPTING A NEW CLIENT

The following documents have to be collected before accepting a new client:

For a resident:

  • If a corporate body: the name, domicile, registration number and place of registration;
  • If an individual: name, surname, identity number.

For a non-resident:

  • If a corporate body: the name, domicile, registration number and place of registration;
  • If an individual: identification certificate, including name, surname, date of issue, number and the issuer.

Duty to refrain from conducting any transaction that is suspected to involve money laundering or attempted money laundering.

Where this duty cannot be adhered to without serving to assist those involved in money laundering to evade the legal consequences of such activity, the institution is entitled to conduct the transaction, reporting it afterwards.


ARE THERE ONGOING MONITORING REQUIREMENTS FOR EXISTING CLIENTS? IF YES, PLEASE DESCRIBE. 

Where a single transaction or several obviously linked transactions totals or exceeds 10000 lats and the client has not been identified at the commencement of the relationship, the client shall be identified. 


DESCRIBE ANY OTHER WAYS IN WHICH LAWYERS ARE AFFECTED BY ANTI-MONEY LAUNDERING LEGISLATION.

Information not available. 


HAVE LAWYERS IN YOUR JURISDICTION BEEN IMPLICATED IN MONEY LAUNDERING, INCLUDING ANY TYPE OF COMPLAINT, ARREST OR PROSECUTION?

Information not available.


HAS THE FINANCIAL ACTION TASK FORCE (FATF) CONDUCTED A MUTUAL EVALUATION OF THIS COUNTRY, AND, IF SO, WHAT WERE THE FINDINGS CONCERNING LAWYERS’ COMPLIANCE WITH THE FATF 40+9 RECOMMENDATIONS?

No, but there have been reports conducted by the Committee of Experts on the Evaluation of Anti-Money Laundering Measures. The report was conducted on March 24, 2006.

The report provides a summary of the AML/CFT measures put in place in Latvia as of March 24, 2006, and immediately thereafter. It describes and analysis those measures, and provides recommendations on how certain aspects of the system could be strengthened.

Shortly following, the IMF compiled a report on the Observance of Standards and Codes for the FATF 40 + 9 Recommendations for AML. This report provides a summary of the AML/CFT measures in place in Latvia and level of compliance with respect to DNFBP’s.

According to the report, there are significant gaps in the legal framework for DNFBP’s, with the categories subject to the AML’s Laws requirement for preventative measures being too narrow, leaving out some parties (e.g., lawyers) who should be covered. The regime for monitoring compliance and ensuring compliance by DNFBP’S with their AML requirements is not well structured.  


Information provided by:

Juris Bogdanovs
Head of Financial Integrity Division
Financial and Capital Market Commission
+371 6777 4839
Juris.Bogdanovs@fktk.lv


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