Latvia on the laundry list

RIGA - A report by the U.S. Department of State includes Latvia among a list of 60 countries in which money laundering took place last year, reports news agency LETA. The report says that the largest source of money laundered in Latvia is tax evasion and fraud, some of which appears to originate “from outside of the country.” Other sources include financial fraud, smuggling, and public corruption, according to the State Department’s annual money laundering and financial crimes report.

There has been no significant change in the number of financial crimes over the past year, but the overall monetary value of money laundering may be decreasing due to the economic crisis. At the same time, the number of cases involving trade-based money laundering has been growing. The report recognizes that the country’s four special economic zones are not used for either money laundering or terrorism-related activities.
A positive appraisal is given of Latvian legislation in the fight against the laundering of illegally acquired funds, which is described as “extensive” and covering all the categories of offenses included in international standards. Anti-terrorism legislation in Latvia also conforms with UN requirements.

Latvian legislation requires all financial institutions to identify all clients, both account holders and those who wish to carry out individual transactions, and report cash transactions based on established thresholds. Banks must also retain transaction and identification data for at least five years after ending a business relationship with a client.
In the first nine months of 2009, the Latvian Finance Police received 16,519 reports of suspicious transactions, of which 102 were submitted for further investigation.

The report especially highlighted VEF bank, which in 2005 was named as being involved in money laundering, and against which the U.S. has applied sanctions since August 2006. The first nine months of 2009 in Latvia saw 39 criminal investigations, 24 prosecutions against 48 persons, and 3 persons convicted on money laundering charges, indicated the U.S. State Department.

Enforcement of laws and regulations was highlighted in the report as a weak point, as law enforcement agencies have a heavy workload and their budgets, salaries, and in some cases, personnel have been reduced due to the severe economic crisis.
The report gave a positive appraisal of Latvian law enforcement institutions’ successful cooperation with their U.S. counterparts in the fight against financial crime and narcotics smuggling, highlighting a 20-month investigation concluded by the Latvian Central Criminal Police in 2009, in which they worked in close concert with other European countries, Ecuador and the United States to target a drug smuggling conspiracy led by a major Latvian organized crime figure.

Despite legislative and regulatory improvements, Latvia still faces significant money laundering threats tied to corruption, organized crime and nonresident bank account holders, according to the report. The U.S. Department of State advises Latvia to continue to actively implement and vigorously enforce its legislation in this area, as well as ensure that law enforcement authorities are provided with adequate resources.