Edgars Rinkēvičs: Latvia supports effective cross-border coordination of measures against financial crime at EU level

Keynote speech by the Minister of Foreign Affairs of the Republic of Latvia, Edgars Rinkēvičs, at the 2020 Nordic and Baltic Regional Information-Sharing Symposium:

21 January 2020

The Future of Financial Intelligence Sharing

Ladies and Gentlemen,

I am delighted and honoured to be invited to speak to you this morning on a theme which is so important for my country and the whole Nordic-Baltic region. The fight against money laundering, financing of terrorism, and proliferation financing is a clear and present danger to international peace and security. This is of particular relevance at a point in time when rapid geopolitical changes are underway worldwide.

Increased attention has been paid to these matters since 2015 when Latvia, during its OECD accession talks, began to work on a number of significant amendments to the country’s laws and regulations, and launched major changes in its approach to the supervision of the financial sector. However, following developments related to the ABLV bank proved that changes in the sector needed to be even faster.

A year ago, Latvian Prime Minister Krišjānis Kariņš announced the decision to implement a substantial reform of financial sector. 2019 was a pivotal year for making the needed improvements in order to rectify deficiencies identified in a report by Moneyval, the Committee of the Council of Europe of Experts on the Evaluation of Anti-Money Laundering Measures and the Financing of Terrorism. The comprehensive reform of the financial system carried out by the Latvian Government, extensive amendments made to laws and regulations, measures taken by competent authorities to effectively apply international standards, and intensive international cooperation – all those steps are evidence that Latvia has resolved to establish and strengthen transparency in its financial sector. Coordination and cooperation between law enforcement authorities, private sector, prosecution and courts as well supervision authorities, has resulted in a unified understanding on how to interpret and take action on problems related to money laundering, terrorism financing and proliferation financing.

The changes already effected are profound and irreversible.

Latvia has amended its Law on Sanctions; the law is now in full compliance with international standards. Among other improvements, the law now stipulates that amendments require United Nations Security Council resolutions to be implemented directly and without delay. Last year, Latvia also submitted its updated report to Moneyval. The technical report includes detailed evidence that the joint efforts of the Latvian government and Parliament, as well as the supervisory authorities, the Financial Intelligence Unit of Latvia and law enforcement agencies are yielding tangible results.

Latvia has a tight grip on implementation of the reforms and on ensuring the effectiveness of the reforms since failure here may have far-reaching and serious consequences for the business environment, especially the export sector, capital costs and security interests.

We now understand that we must in our own national self-interest, not because of outside pressure, have a financial sector, which is transparent, sustainable, and secure, and meets all the international standards. We also recognise that the reform of the financial sector is not a brief task, but a long-term process which will take persistent political will and stamina. We have lined up tasks for 2020. The Government has clearly demonstrated its commitment to the process by adopting a new Action Plan for the years 2020-2022 to strengthen Latvia’s anti-money laundering capabilities, and hone and sharpen our ability to combat terrorism financing and financing of proliferation of weapons of mass destruction.

With this introduction, I have meant to convey to you our perspective of what we are doing and what needs to be done. We are today pursuing development of our financial sector by working in a targeted manner in order to have a dynamic and secure financial sector sustainable over the long-term. We know that only by remaining on such a track can Latvia give a truly valuable contribution to the overall regional and global financial stability and security.

Ladies and Gentlemen,

The strengthening of Latvia’s financial sector is our Government’s top priority. This is not an exaggeration and it is not rhetoric. Although the matters of money laundering and sanctions are the primary concern of financial institutions, they have an immediate effect on national security, the business environment, the quality of investment opportunities, and for Latvia’s reputation and prestige. We consider a balanced and well-managed financial system to be an issue of national security.

Last year, the Saeima, the Latvian Parliament, adopted a new National Security Concept. It clearly states that prevention of money laundering, terrorism financing and proliferation financing is a high priority for Latvian national security and international standing. Latvia will be steadfast in its approach to the further improvement of its finance sector supervision and the improvements have already reduced the risk posed by non-resident deposits. Latvia will also continue efforts to fulfil recommendations included in the Moneyval report and to ensure further progress in the prevention of money laundering, terrorism financing and proliferation financing.

Ladies and Gentlemen,

At this conference, we are stressing the importance of both public and private information sharing in our attempts to stem and stop money laundering. Public-private information sharing platform has been created so that these sectors can come together on their own initiative and join in the fight against financial crimes through provision of the crucial information.

Public-private information sharing partnership represents a new approach, and it has been adopted in order to speed up investigations and bring to light suspicious transactions. There are only a few countries in the world who have passed appropriate legislation and who have already had the first real cases in which the law is practically applied, and we can be proud that Latvia is amongst the first.  

In fact, Latvia is one of those rare countries that have a system in place for sharing information based on a public-private information sharing partnership, and this sharing is being done in a practical and pragmatic manner which is completely aligned with the highest global standards and latest tendencies.  

The volume of illicit financial flows around the world is considerable and of these only a small percentage are caught and confiscated. Big help is found quite simply in the good cooperation that can be promoted between the public and private sector, and also in the specific legal framework that allows for information to be shared and discussed   within “Cooperation Coordination Groups”.

The exchange of information gives us the capacity to share concerns not only on trends and typologies but provide information on specific customers and real issues, to exchange information on them in real-time and without delays. It also gives capacity for supervisory authorities, law enforcement agencies and financial institutions to take required action, better understanding what, whom, and where to search. These achievements are measurable; tens of millions of euros in proceeds of crime have been frozen.

Such a model for acquiring evidence can be quite effective in preventing, for example, the financing of terrorism, when a government shares its information on suspicious activities with banks. This leads to the targeting, identification and freezing of one transaction in the midst of million others.

The progress which Latvia has been making in prevention of money laundering and in stemming illicit transactions would not have been possible without the organisers of today’s event - the Royal United Services Institute. I would like to thank you for facilitating positive development and promoting cooperation in this field. RUSI is a leading British research institution and think-tank and its work on models of platforms for information exchange and its strong influence have helped us develop the conceptual framework for the work being done in Latvia. 

We hope that our example and model can be of interest to neighbouring countries, and that they also can put these mechanisms to good use, including across borders. 

Ladies and Gentlemen,

Money laundering and the financing of terrorism and proliferation are most frequently transboundary crimes and the measures taken by a single country alone might not be enough for combating them - crime prevention calls for international efforts.

Developments in other European Union’s Member States also demonstrate that the fight against money laundering and terrorism financing cannot be viewed in isolation. Till now, cooperation and institutional framework at the European Union level have proved insufficient. Therefore, Latvia will continue to advocate better cross-border coordination of measures against financial crime, as well as strengthening supervisory and control authorities at the European Union level. This new supervision function should operate based on a set of harmonized, directly applicable rules. We need to ensure that supervision aimed at preventing the use of financial institutions for money laundering and terrorist financing are of a high quality throughout the European Union.

Illicit financing does not follow borders. It is not confined to a territory or country. So, the fight against illicit financing is an international fight. 2019 was a good year for progress. Latvia’s institutions coordinated their work and made impressive achievements. I was glad to share with you some information on our perspective and our vision. We are ready to share more, and this conference is an example of how this can be done.

Thank you for your attention!