bnn.lv Latviski   bnn-news.com English   bnn-news.ru По-русски
Saturday 22.02.2020 | Name days: Rigonda, Adrians, Ārija
LatviaLatvia

Control Service: Latvia’s focus solely on banking sector’s «cleaning» is not enough

FaceBook
Twitter
Draugiem
print
(No Ratings Yet)

Baltic news, News from Latvia, BNN.LV, BNN-NEWS.COM, BNN-NEWS.RUEconomic crimes are not crimes in which there are no victims. It is exactly the opposite – the entire society is the victim. Latvia’s focus on «cleaning» the banking sector is absolutely not enough to sort things out – economic crimes are not possible without corruption, says Anti-Money Laundering Service’s Chief Ilze Znotiņa.

In an interview to BNN, Control Service’s Chief Ilze Znotiņa explained what it would mean for Latvian residents if their country remains in the so-called grey area and why political will to tackle economic crimes has been insufficient in the past several years.

«There is a lack of understanding in the political environment as to what anti-money laundering measures are»

Latvia’s fears of ending up on the «grey list’ have increased so far in less than a year that voicing the slightest criticism towards the financial sector now basically means shooting yourself in the foot again. Still, Latvia does have a self-preservation instinct. Ending up among countries with high risks means Latvia would be put alongside countries like Serbia, Syria, Sri Lanka and even North Korea, as well as many African countries – Botswana, Ghana, Ethiopia, etc., which are constantly mired in corruption scandals.

How and why after countless warnings from the European Union and different institutions on lack of anti-money laundering measures Latvia has ended up in a situation when it is unclear if it could end up on this «list»?

When asked this question by BNN, the head of Latvia’s Control Service said this: «There is a severe lack of understanding of what money laundering is and what needs to be done to prevent this crime.» She also notes politicians do not understand what international partners expect of Latvia. According to Znotiņa, Latvia lacks experience and knowledge combating money laundering. «Meanwhile, those few experts that understand this topic are unjustifiably questioned.»

When asked about her opinion on the initiative for forming an expert group to combat dirty money, Znotiņa said: «Some time ago I had to ask politicians are all talk and no walk with these problems or if it’s the lack of understanding that this is a very important process – supporting experts to combat economic crimes.»

«It is possible that expanding the capacity of the police, KNAB and customs police could potentially step on the interests of those who have slept calmly all these years, knowing they can do whatever they want. So then the question is whether or not this is all because of lack of knowledge or if this is intentional negligence. I hope to never come to the conclusion that it is all intentional,» says Znotiņa.

She does admit the situation is starting to recover – she has been in her post for nine months and political support for strengthening the Control Service has been provided.

After the Mneyal report Latvia has ended up under strict monitoring of the US FinCEN. A couple of years may be needed for Latvia to be able to prove everything is fine on a technical level – legislation, external and internal regulations, etc. Until there is clarity, Latvia will have to continue its efforts. Meanwhile, it is hard to get away from the monitoring process. «Latvia should not linger in it for long. It’s not that hard, after all – sort out the legislative foundation and processes,» says Znotiņa.

It should be said that Moneyval also follows closely to developments in Latvia. Meanwhile, Financial Action Task Force is currently in the process of evaluating whether or not Latvia should be put on the «grey list».

Znotiņa believes Latvia has a chance of avoiding the list. Nevertheless, there is a lot of work to do, and the Control Service requires funding in order to implement recommendations that cannot be implemented without funding.

Unanswered questions about ABLV Bank – the risk that could potentially sink Latvia

Control Service’s chief says the scandal with ABLV Bank has made other countries worried about the way Latvia handles the situation. She says during the meeting of representatives of anti-money laundering services from 159 countries, she was asked by colleagues how Latvia intends to deal with ABLV Bank situation.

«This is a very serious matter. I we cannot prove that we’ve got the situation under control, there will be no way to prove we’ve learned our lesson. The unresolved problem with ABLV Bank could have a serious impact on the stability of Latvia’s financial sector,» says Znotiņa.

She notes: «A year ago, FinCEN criticized Latvia for ABLV Bank and the problems associated with it. The first Moneyval report was received some time ago. It wasn’t something that could have prompted us to consider FATF grey list. Then we received the second report in February and the situation took a massive turn.»

«One of the biggest problems that surfaced because of all this is Latvia’s lack of reaction to the first report.» Znotiņa says the world has specific standards on how problems should be addressed and which measures should be undertaken in the event of receiving such reports.

«When I became head of the Control Service, I was already the head of Moneyval delegation. A plenary meeting was held in Strasbourg, and we had to defend our positions. It was impossible to convince delegations of other countries that we’ve assessed the problem and that we intend to deal with it.»

While some worry Latvia could be added to this «grey list», most of our society have no idea how this could affect their lives. The answer is quite simple – economic decay; we would become poorer.

«This means there is a risk of loans becoming more expensive for residents and interests rates going up as a result. Bigger guarantees will be required. There is a risk of some banks closing in Latvia. With that, the range of services might become narrower as well. It is only logical for there to be surges and drops in the economic development cycle, but this drop is something we can avoid,» says Znotiņa.

She also notes that in such a problematic situation some companies could end up insolvent, because payments for goods will likely end up delayed. «It is possible the companies that produce now will no longer be able to sustain exports of goods or services. There is a risk of foreign partners reconsidering cooperation plans with companies to which transfer of money would require gathering a pile of documents and proof that they are not money launderers».

Znotiņa describes this situation as «the new reality we all live in». «First we are accused of money laundering and then we clean house. The new forget to follow rules of the game. For example, in 2008, during the financial crisis, when the question was about the country surviving financially, we sought a solution to improve the situation. At the same time, we made numerous mistakes, including selling residence permits to citizens whose backgrounds were not checked. It was important for them to invest in Latvia. But by doing this we opened the way for dirty money to enter our country.»

As an example she mentioned the lack of funding for the police and other law enforcement institutions. «It is possible that we did not pay enough attention to what supervisory institutions know of their duties,» comments Znotiņa.

«No economic crime is possible without corruption»

At the same time, Znotiņa says it is important to no overdramatize solely Latvia’s situation. «Currently Europe is engulfed in numerous scandals involving money laundering cases. Latvia is not the only country. Let’s look at Estonia, where a very small bank turned out to be the cause of an enormous toxic element. We know this bank was technically only a branch of a large Danish bank. The question is: what were Danish supervisors doing this whole time? And this is not all – other examples include Andora’s bank, Malta’s bank, Cyprus’ Bank, Deutsche Bank, which keeps ending up in publications about their ability to combat money laundering.»

Znotiņa believes nearly the entire world is in a very complicated situation. Superpowers impose all kinds of sanctions, forcing small countries play «by the rules». «There are also efforts to combat terrorism financing. We can say from Latvia’s experience that terrorism financing often goes hand in hand with money laundering.»

However, she adds: «I believe focusing solely on banking sector’s development or its ‘cleaning’ is absolutely not enough. We have to understand – no economic crime is possible without corruption».


Leave a reply

  1. Zerry says:

    It really is worth investing more to KNAB and high skilled investigators. If Latvia could split the grey economy then would not be a problem how to finance education or medical services. Just lack of moral backbone among politicians is the problem.

Financial Action Task Force decides to not add Latvia to its «grey list»

The world’s central anti-money laundering organization Financial Action Task Force has decided to not exercise increased monitoring of Latvia. This means the country will not be added to the organization’s «grey list», as LETA was informed by Latvian Prime Minister Krišjānis Kariņš’s office.

Latvian minister outlines Germany as an important strategic partner

Germany is a strategically important economic partner for Latvia, said Latvian Foreign Affairs Minister Edgars Rinkēvičs during his meeting with Germany’s Federal Minister for Economic Affairs Peter Altmaier on Friday, 21 February.

Access to illegal TV content denied to 11 000 Latvian households last year

In 2019 access to illegal TV content in Latvia was denied to 11 000 households. A dozen criminal processes have been commenced over illegal supply of audiovisual content, as reported by State Police.

Producer price level in Latvia’s industry down 1.3%

Compared to December 2019, the level of producer prices in Latvian industry didn't change in January 2020. Prices of products sold on the domestic market reduced by 0.7 %, but prices of exported products – increased by 0.7 %.

In China, coronavirus hits prisons as 500 prisoners and guards infected

In China, the outbreak of the dangerous coronavirus continues, over 500 cases of infections have been registered in prisons. Meanwhile, death toll from health problems related to the virus has reached 2 236, according to The Guardian.

Saudi Arabia provides Latvian companies stable tax regime

Latvia and Saudi Arabia have plans to provide businesses with stable tax regimes for companies working in each respective country without coverage from the other country’s regulations, as reported by Saeima’s press-service.

Estonia accuses Russia over large cyberattack against Georgia

Estonian Foreign Minister Urmas Reinsalu has stated that Estonia, just as Georgia and a number of Western countries, sees a Russian intelligence service as having perpetrated a large cyberattack on Georgia in autumn 2019, according to a statement on the web site of the Estonian Foreign Ministry.

Latvian Healthcare Ministry puts third stage of e-health project on hold

Healthcare Ministry plans to focus on existing e-health services and will not develop their next stage, said minister llze Viņķele at a press-briefing on Friday, 21 February.

Latvian Saeima decides to reduce planned excise tax rise for alcohol

The increase of excise tax rate for alcoholic beverages planned for 1 March will be more moderate. This much is provided by amendments to the Law on Excise Duties approved in the final reading by the Saeima on Thursday, 20 February, as reported by Saeima’s press-service.

Irish PM Varadkar loses confidence of parliament

Irish prime minister Leo Varadkar has stepped down from office after he failed to win the confidence of the majority of the new composition of the Irish legislature, British news portal The Guardian reports.

National Electronic Mass Media Council agrees on members’ duties

Latvian National Electronic Mass Media Council, following the election of two new council members, has agreed on duties of members, as confirmed by newly-elected NEPLP members in an interview to Latvijas Radio.

Shareholder Juris Radzevičs dismisses Rīgas namu pārvaldnieks board member

Juris Radzevičs, who is a shareholder in LLC Rīgas namu pārvaldnieks has dismissed RNP board member Ardis Pāvilsons, as LETA was told by the official.

Germany remembers victims of Hanau shooting; attacks investigated as terrorism

In Germany, the death toll of the Hanau shooting attacks has risen to nine people. Police has pointed to a possibly racist mindset of the suspected attacker and is investigating the crimes as terrorism, BBC and DW report.

Experts predict number of electric vehicles in Latvia exceeding 36 000 by 2030

There will be more than 36 000 electric vehicles in Latvia by 2030. This prediction was voiced by AS Latvenergo board member Kaspars Cikmačs during Clear Energy for Transports conference on Thursday, 20 February.

Highest volume of harvested grains recorded in Latvia’s history in 2019

In 2019 the highest harvested production of grain was recorded – 3.2 million tonnes, which is 1.1 million tonnes or 1.5 times more than a year ago.

Denmark cancels Misāne’s extradition to SAR in favour of extradition to Latvia

On Thursday, 20 February, the Danish court approved the decision of the Danish office of the prosecutor to cancel Latvian citizen Kristīne Misāne’s extradition to the South African Republic. On top of that, the Danish office of the prosecutor has also decided to extradite the woman to Latvia instead, as reported by Ritzau.

Warmest winter anyone can remember is wreaking havoc on Lithuania’s nature and store shelves

This winter, so abnormally warm in Lithuania, is bewildering everyone and is wreaking havoc both in the nature and on the store shelves.

Finnish court acquits Baltic online alcohol seller over tax evasion

A court in Finland has delivered a not guilty ruling in a case, where a man had been charged with tax evasion over the online sale of alcohol to Finns in Latvia and Estonia, using online platforms, Finnish broadcaster YLE reports.

Latvian Saeima committee to consider initiative to establish a park at former Marss cycling track

On Thursday, 20 February, the Saeima decided to submit the collective initiative on establishing a part on the territory of the former cycling track Marss to the parliament’s National Security Committee for review, BNN was told by Saeima’s press-service.

Ruling in Maxima tragedy criminal case to be appealed

Riga City Pārdaugava Court’s ruling in the Maxima tragedy criminal case will definitely be appealed, said senior prosecutor Aivars Ostapko in an interview to Latvijas Radio on Thursday, 20 February.

Proposal voiced to deny Aivars Lembergs the option to enter the Saeima

A proposal has been voiced to deny suspended Ventspils mayor Aivars Lembergs, who is accused of committing serious crimes and is added to the list of sanctions of USA, the right to participate in Saeima’s activities, according to information from LTV.

Latvian police liquidates fake news site www.aumytests.net. Employee detained

Latvian State Police has detained a 2001-born young man for reporting fake news, BNN was informed by police.

Cyber security drill held by Estonia in NATO Parliamentary Assembly

In Brussels, during the NATO Parliamentary Assembly, Estonian experts have held a strategic cyber drill, where member state legislators have been asked to look for solutions in a simulated cyber incident, ERR reports.

Turkey warns of military operation in Syria to stop government-Russian forces

Turkish President Recep Tayyip Erdoğan has stated that Turkey’s offensive in north-eastern Syria could start at any moment with the aim of stopping an offensive of the Syrian government and Russian forces on opposition-controlled territory, BBC reports.

Riga Zoological Garden board members Līdaka and Morozovs laid off

Both Riga National Zoological Garden’s chairman of the board Ingmārs Līdaka and board member Andris Morozovs have been fired from their respective posts, as confirmed by Līdaka.

Most read

Most commented

Newest comments

Do NOT follow this link or you will be banned from the site!