Banks in Latvia have implemented numerous changes to improve their internal control systems, as reported by the Finance and Capital Market Commission (FKTK).
In 2020, FKTK performed 12 inspections in the field of money laundering and terrorism financing prevention. While in previous years most inspections concluded with administrative cases and penalties, in 2020 FKTK had to decide on administrative cases and penalties only in some cases.
The commission noted that in 2020 the focus was on monitoring of the influence of Covid-19 restrictions and introduction of a flexible monitoring approach.
“The shock of Covid-19 did not leave much of an impact on Latvia’s financial sector. This is because Latvian banks were well-prepared for Covid-19 crisis with plenty of reserves,” notes FKTK.
“We are happy with accomplishments of 2020 because we have adapted to the changes brought about the Covid-19 pandemic. We have improved out internal and external processes. This helped provide a quality and flexible approach for the monitoring of the financial sector. In the field of financial crime prevention the year started off with great news – Latvia will not be added to the “grey list”. For the remainder of the year FKTK focused on improving the dialogue with the sector, balancing requirements of regulations and their application in practice, and using risk assessment-based approach to operations,” says FKTK chairman Santa Purgaile.
She said FKTK experienced internal changes in 2020 – the institution’s organizational structure was changed.
“FKTK’s management model was changed by the Saeima. The parliament decided to limit the council of the institution to three members instead of five. The goal of the structural changes within FKTK was improving efficiency while also providing an equal amount of attention to all other fields of the financial sector, including the capital market,” mentioned Purgaile.
The commission noted that in 2020 the development of Latvia’s capital market became the focus of attention – strategic dialogue with all parties involved in Latvia’s capital market. A survey was performed among existing and potential bond issuers. An evaluation of Latvia’s capital market was prepared. The report was later used as the foundation for the ten-step program for the development of Latvian capital market. It was presented at the Latvian Capital Market Forum on January 19 and later integrated into Latvia’s Financial Sector Development Plan 2021-2023.
At the same time, 2020 also paved the path towards the merging of FKTK and the Bank of Latvia. As of the end of the year the Law on the Bank of Latvia was completed. This law provides for the integration of FKTK in the Bank of Latvia.
It is planned for the new merged institutions will commence operations in 2023.
For 2021 FKTK outlined multiple priorities – focus on the development of the entire segment, monitoring of Covid-19 influence, sustainable financing, risk-assessment based approach in money laundering and terrorism prevention, development of Latvia’s capital market, creation of an inclusive and sustainable environment of innovations, as well as improvement of efficiency and development within FKTK. (BNN/Business World Magazine)
