Saeima’s press-service reports that the parliamentary investigative committee managed to pass the final report on problems in the financial sector on Friday, the 25th of August.
This report now needs to be viewed by the parliament.
On Tuesday, the 22nd of August, the vote for the draft of the report failed because one member did not vote. The draft received three votes in favour, two members of the committee abstained and one – Edmunds Jurēvics – voted against. This deputy sharply criticised the committee’s work, stressing that there would be attempts to include false information in the final report, as well as phrases to be used by those engaged in legal battles with the Latvian state.
“After eight years of work and 21 meetings, the committee composed to assess the consequences of the “overhaul” of banks on the finance and capital market system has finally passed the final report, and one of the conclusions in it is that it is necessary to set a common understanding with other countries about Latvia’s money laundering and counter-terrorism policy,” said the parliamentary investigative committee’s chairman Vilis Krištopans.
The investigative committee concluded that often
the requirements presented to clients of credit institutions are exaggerated
and misunderstood. It is mentioned in the final reports that “it is necessary to prevent the continuation of the current situation in relation to disproportionate administrative burden, including costs, as well as in relation to the right of legal persons to open a basic account for economic activity in Latvia,” said Krištopans.
Since the formation of Latvia’s financial sector in the 90s, foreign clients have been an integral part. Up until 2018 the primary business model of most Latvia-based credit institutions was focused on servicing and attracting foreign clients, the report mentions.
The report also mentions that following the critical assessment from Moneyval – Council of Europe Committee of Experts on the Evaluation of Anti-Money Laundering Measures and the Financing of Terrorism [which includes 47 member states] – in 2018 most of the reforms Latvia’s financial monitoring sector received were warranted.
However, some of them were rushed and lacked proper assessment of all the pros and cons for the country. Companies were given too little time to implement all the new requirements and rules presented to them by the state in an effort to avoid being added to Moneyval’s “grey list”.
“The global attitude towards the financial sector has changed only relatively recently in efforts to find solutions for money laundering prevention. There have also been enormous changes made to the global financial sector – anonymous accounts are now banned, banks are required to study their clients in more detail and work with tax administrations, financial intelligence services and law enforcement institutions,” the final report stresses.
The report also mentioned the administrative burden businesses have to take on in order to open accounts, the high account maintenance fees, the need to lower requirements for low-risk businesses, as well as the limited lending options for the manufacturing sector due to the lack of competition among commercial banks.
The parliamentary investigative committee was composed to assess the consequences from the “overhaul” of the financial sector, which was mainly focused on efforts to strengthen state monitoring, prevent negative consequences for the state finance and capital market system, as well as investigate the possible forced insolvency of PNB Bank, forced self-liquidation of ABLV Bank, as well as the cessation of operations of the Baltic International Bank.
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