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Monday 23.01.2017 | Name days: Strauta, Grieta
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Economic Diary of Latvia. Our ship is away

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Baltic news, News from Latvia, BNN.LV, BNN-NEWS.COM, BNN-NEWS.RUSummer has come to Latvia; the season of vacations has begun. This is the time when the country’s political and economic life slows down. This is certainly not something that can be said about this week. Life blossomed as never before in Latvia.

First of all, Latvia lost the head of its State Revenue Service. After long and hard work, or wait, or resistance, Director General Inara Petersone decided to step down. Finance Minister Dana Reizniece-Ozola accepted her decision even though during their previous meeting Petersone had assured her that she would not leave her post.

Petersone explained her decision by saying that she sees no opportunities to improve the situation in Latvia’s state administration. According to her, SRS has done much to make the organization a modern and open institution. Nevertheless, she believes state administration should develop instead, as Petersone mentioned that the government is fractured and lacks a team with a common goal.

It is worth mentioning that Petersone’s role in the service remains unclear, especially if she failed to notice the dishonest behavior of the service’s workers and shady deals that are carried out within. But she has noticed the flaws in state administration. If SRS is to be viewed as part of the system, or rather its lack, Petersone’s own options in sorting out the service were rather limited.

Petersone will remain in her post until 27 June.

In her interview to Latvijas avīze, Petersone mentioned the possibility of leaving SRS.

At the beginning of a long road

Secondly, Latvia’s Prime Minister Maris Kucinskis and Secretary General of the Organization for Economic Cooperation and Development Ángel Gurría in Paris signed the agreement on accepting Latvia into this organization.

After the signing of this agreement and its ratification in the Saeima, Latvia will become the 35th member state of OECD. It is planned that the parliament will view the ratification on 16 June.

But this is not the end of the long road Latvia began in 2013. Membership in this organization proves Latvia’s commitment and hard work in accomplishing serious structural changes in its finance sector and enhancing its reputation on the international arena. But even after joining OECD it will remain important to continue launched reforms, reminded President Raimonds Vejonis during his meeting with the head of the Finance and Capital Market Commission Peteris Putnins.

As previously reported, during the preparation of reports on Latvia’s sectors, OECD experts expressed concerns that 14 out of 20 banks registered in Latvia service foreign clients, whose deposits form more than half of the EUR 30 billion invested into Latvia’s banking system.

As though reacting to criticisms and reminders, banks and other financial structures have announced plans to start checking whether potential clients are politically influential in Latvia or are related in some way to influential figures starting 1 June.

If a potential client turns out a politically influential figure, relative or close associate of an influential person, banks will carry out in-depth evaluation of said client to comply with requirements of the Law on the Prevention of Money Laundering and Terrorism Financing – all to reduce the possibility of money laundering and corruption.

At the beginning of February, the Saeima added amendments to the aforementioned law, making it obligatory for banks to carry out in-depth analysis of financial transactions carried out by politically influential figures. This year, the Saeima adopted amendments to the Law on Credit Institutions. According to those amendments, maximum fines for breaches of the Law on the Prevention of Money Laundering and Terrorism Financing would be equal to 10% of annual income. If 10% of the total revenue does not reach EUR 5 million, FCMC will have the right to apply a fine under EUR 5 million.

The increase of fines is tied to the fourth AML (anti-money laundering) directive of the European Union, which Latvia has to adopt in the near future.

All the best for children

Thirdly, Saeima Defence, Interior Affairs and Corruption Prevention Committee has approved the adoption of a fee of EUR 5,000 for repeated extension of some of the issued residence permits.

The approved norm provides that residence permit holders who were provided with residence permits before the adoption of amendments in 2014 will not be able to pay for the first extension of their permits. They will have to pay a fee for a second extension. When extending residence permits received after the adoption of amendments in 2014 will have to pay a fee of EUR 5,000.

Residence permits are provided for five years in exchange for investments into banks. With that, the payment for extension will be allowed to be paid 10 years after being provided with the permit.

Previously, Economy Minister Arvils Aseradens mentioned that the programme for support of housing acquisition for families is financed using money acquired from the residence permit programme. Nevertheless, the number of issued residence permits continues gradually reducing, the minister said, whereas demand for assistance for housing acquisition keeps rising.

To ensure continued function of the family support programme, it may be partially converted into a commercial one with financial assistance from Altum, the minister explained. This means that families participating in this programme will have to pay interest.

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