Latvia Struggles with Flow of Illicit Money Despite Regulatory Crackdown

  • Richard Marley
  • May 28, 2021
  • 2 minutes read
  • 282

Latvia continues to face illicit financial flow despite the regulatory crackdown that shut down the banks and financial institutions. This has been reported by the country’s anti-money laundering watchdog. 

The regulatory authorities enforced strict measures on the financial institutions, especially the one that handled one percent of the dollar flow from the U.S. The investigation was increased when the U.S Treasury claimed that a local lender has been laundering money from shell companies in North Korea. 

Latvia took necessary steps to clean up by replacing the regulator of its Central Bank, the governor of the Central bank, and the financial regulatory body. It even took steps to freeze the suspected funds, initiated a procedure for criminal investigations and expelled the shell companies. These strict regulations pushed the flow of illicit funds into the new countries through different channels. 

“Where are those flows now? They are definitely continuing to circulate in Europe and of course the world,” Ilze Znotina, director of the financial intelligence unit, said in an interview. “We, unfortunately, have to start to think a lot more about different financial services, for example, payment companies, e-money companies and virtual money providers that have taken on handling the flows.”

The authority in Latvia is working towards putting back the reputation of the financial sector of the country. It froze up to $525 million of the funds that were suspected to be illicit. 

The country planned on moving ahead with taking the cases to the court for the verdict if the money can be seized and if it can be used in the state budget or not. This process has been slowed a bit due to the COVID-19 pandemic but now the court is getting back into shape with complete dedication towards economic or financial crises. 

The investigation into the illegal funds by the nation has got some international recognition. The European Commission has recently highlighted, in its review of the EU, that Latvia has shown significant progress in the fight against financial crimes like money laundering.