RIGA - In the context of sanctions imposed on Russia by the European Union (EU) and the United States Treasury’s Office of Foreign Assets Control (US OFAC), approximately EUR 11.5 million have been frozen in Latvian banks as of March 11, according to data compiled by the Financial and Capital Market Commission (FCMC).
The banks provided the data following a preliminary assessment. Consequently, the amount of frozen funds may increase in the future, in the view that due diligence is still ongoing, transactions in accounts of individual high-risk customers have been temporarily suspended and new sanctions are being imposed.
In Latvian banks, two natural person directly subject to sanctions has been identified, as well as 26 legal entities who are not directly included in the sanctions lists, but property rights or control of the sanctioned persons have been identified, consequently, the funds of those entities have been frozen.
Since the Latvian financial sector applied an approach considering Russia as a high-risk jurisdiction already in the past, Russian deposits in Latvian banks have decreased significantly since 2015, accounting for only 1.1 percent of total deposits.
The banks in cooperation with customers continue to carry out extensive due diligence, providing the activities necessary to implement sanctions, including transaction analysis, identification of beneficial owner, related and controlled persons ensure that sanctions are actually applied and prevent the use of the Latvian financial sector to circumvent sanctions or the receipt of financial services by persons subject to sanctions.
The FCMC follows the updated information on the sanctions imposed, participate in the work of foreign institutions, as well as provide advice to financial institutions on the effective implementation of the sanctions framework. More complex situations, where the solution should be sought by assessing the various impacts, are assessed together with other public authorities.
At the same time, the FCMC draws attention to the fact that it may not carry out customer or business due diligence instead of banks or natural or legal persons. As previously explained by the FCMC, in cases where there is insufficient information about counterparties or clients, or where information is unclear, the decision should be based on a risk assessment that can result, accordingly, in a complete termination of business relationships or enhanced monitoring of business relationships or restrictions on certain transactions. It should also be noted that the war in Ukraine instigated by Russia is continuing and therefore new sanctions are being imposed and are likely to continue to be imposed.
The FCMC urges for understanding of the situation when banks ask additional questions about the targets of payments to or from Russia or Belarus or any payment details. The purpose of this additional scrutiny is to make sure that no payments are made to persons on the list of sanctions or in the interests of those persons.
On the FCMC’s website, there is a section created, which provides up-to-date information on the sanctions imposed on Russia and Belarus by the EU and the US (OFAC), their application, as well as the answers to the questions received by the FCMC on the application of sanctions. The information is updated on a regular basis.