Published: 21.02.2020

The assessment provided by the international organisations Moneyval and Financial Action Task Force (FATF) regarding Latvia's progress in improving the AML framework, inter alia changes implemented in the financial sector, is a positive outcome for Latvia. Nevertheless, FATF decision not to include Latvia on the "grey" list does not mean that we are done, says Mārtiņš Kazāks, Governor of Latvijas Banka. A transparent, sustainable and sound financial sector is necessary, first and foremost, for us ourselves, and it should become the "new normal".

Improvement of the financial sector will also have a positive effect on Latvia's economic growth, sustainability and resilience to shocks. In the future, the responsible authorities, inter alia FCMC and FID, will have to work in cooperation with financial sector participants intensively to develop a uniform understanding about AML compliance, at the same time not curbing business, investment inflows and overall economic growth on account of lending.

Financial sector sustainability is not only the priority of Latvia, but also of the entire Europe, requiring a respective powerful institutional regulatory framework and instruments. We expect a European level discussion about those issues, so that significant improvements in the financial sector transparency are seen not only in Latvia, the Baltic and Nordic regions, but across all Europe, and there would be a common understanding of the sector's regulatory framework.

Latvijas Banka will continue working on AML issues within the scope of its mandate, one of the most important future challenges lying ahead of us already this year being the assessment of Latvia's financial sector under the Financial Sector Assessment Programme (FSAP) of the International Monetary Fund (IMF). IMF experts, in consultation with the Latvian authorities and financial sector participants, will examine any significant changes implemented within the sector over the most recent years as well as the resilience to shocks and sustainability of Latvia's financial sector. Latvijas Banka, as the coordinator of Latvia's cooperation with the IMF, will also coordinate the work relating to the IMF's FSAP. The IMF's FSAP mission to Latvia is currently scheduled for 16 March, whereas the results of the assessment will be published during the second half of the year.