In the money laundering prevention field banks in Latvia have done a lot, which inspires confidence that the country’s financial system is no longer used for money laundering purposes, says the chief of Finance and Capital Market Commission (FKTK) Santa Purgaile.
“In recent years we have worked and have done a lot in this field. We can see banks have done a lot, they have introduced and improved their internal control systems, which was the main problem in the past. We in FKTK have improved a lot as well. We have developed a methodology and thanks to a dialogue with banks we have reached an understanding for the improvement of different regulations. Work continues all the time,” said Purgaile.
She also mentioned that the most important thing at the moment was strengthening a risk-based approach, so that banks were able to assess risks and come up with appropriate internal control systems.
Purgaile notes that in recent years only a few FKTK inspections have resulted in penalties and administrative cases. Most inspections conclude with recommendations and general conclusions that the system is effective and works sufficiently well to avoid use of sanctions against market participants.
When asked if FKTK continued receiving complaints from bank clients about problems caused by ALM requirements, such as refusal of requests to open accounts, Purgaile said the number of such complaints had decreased very rapidly.
“We have put a lot of effort into improving understanding of use of AML requirements. This has resulted in a very rapid decrease of complaints. Last year we received 11 such complaints. Most of them were received in the first half of the year,” she said.
Purgaile also mentioned there have been mediation measures performed, concluding that in reported complaints banks did not act illegally or unlawfully. Most of those cases were situations when clients refused to provide information necessary for those banks to perform in-depth evaluation of said clients.
“If a client refuses to cooperate and does not provide information, the bank is unable to perform its duties, which results in the financial institution having to decide in favour of not cooperating with such clients,” said Purgaile.
She added that banks had understood that communication and proper customer service were very important. It is also highly important to have competent employees who can explain requirements and rules, as well as maintain normal relations with clients.
Purgaile also said banks in Latvia had created protection systems to ensure the country’s financial system was not used for money laundering purposes.
“We are sufficiently strong in this regard. No major risks exist. Of course, I cannot say the entire banking sector, the entire payment processing sector or all market participants are homogenous and that everything is good. This is not the case, obviously. We have champions, who have done more than what we asked. However, this depends on the bank and shareholder structure. We have to conclude there are no major problems in Latvia,” she said.
The chief of FKTK added that by letting banks open accounts remotely, it was possible to observe if this service was safe and met all AML requirements.
“We can see banks are using the newest and safest financial service technologies. Chosen solutions are sufficiently safe, and their use has rapidly increased – the number of remotely identified clients and accounts has increased by more than 50%,” said Purgaile. (BNN/Business World Magazine)
