On Friday 27 November, the Financial Sector Development Council agreed to support the action plan that will promote a common and consistent approach to cooperation between public authorities and financial institutions, the supervision and communication with customers. This will enhance the approach that is proportionate to risks, reduce administrative burden throughout the supervisory, banking and customer cooperation chain.
Prime Minister Krišjānis Kariņš: "The agreement between the financial sector and national supervisory authorities will change the way the sector operates today by providing clear guidelines for financial institutions and its supervisors how to focus on risk management in their activities. The financial sector is the lifeblood of the economy: when implementing the requirements for monitoring illicit money, we need to ensure that it works smoothly and promptly."
Minister for Finance Jānis Reirs: "The main task now is to build trust in relations between the financial institutions and customers. This is a joint work of all the institutions involved. Openness, cooperation and proportionality are the key to a sustainable financial sector that does not tolerate criminal activities and is capable of efficient management of risks in relations with its customers and supporting the national economy." Ieva Tetere, Chairwoman of the Finance Latvia Association Council: “We are pleased that the government has recognised the sector's proposal for a more proportionate risk assessment approach as appropriate and necessary. The 20-point plan has now an action plan and officials in charge of its further progress. In the industry's view, the improvement of regulatory requirements to move from a regulation-based to risk-based approach is a very necessary step. This will help make the overall objective of effectively combating financial crimes more achievable and ensure that our day-to-day cooperation with customers is more convenient and understandable, the customer research is simplified while the mutual exchange of information is improved."
The plan originated from the proposals of the Finance Latvia Association and the Employers' Confederation of Latvia, and has gained widespread support among all the institutions involved. The action plan aims to introduce a common and consistent approach to the cooperation and supervision of financial institutions, as well as to cooperation and communication with customers. It is also intended to raise awareness of joint responsibility for the prevention of money laundering and terrorism and proliferation financing while ensuring that the highest international standards of compliance are met.
The measures contained in the plan are scheduled to be implemented by the end of this year, continuing the gradual improvement by mid-2021, by introducing a risk-based approach to the supervision of credit institutions and cooperation with customers, so that the requirements applied to high-risk clients are not automatically extended to other customers, but they are applied in compliance with the risks identified and nature of customer’s transactions.
The main expected benefits for private and legal persons will be risk-based rather than strict regulatory acts-based customer and business research activities:
Risk-based criteria allowing for a simplified customer research; Improved communication between a credit institution and a customer, improved process for dealing with complaints; Strengthened joint responsibility and awareness of the prevention of money laundering, other financial crimes and the introduction of sanctions; More explanations, less formal enforcement of regulatory requirements without discernment; Supplemented content of national registers and improved acquisition and technical accessibility of information for credit institutions by reducing, where possible, the requirements for customers.The Council also discussed the assessment of the regional financial sector of the Northern and Baltic States in the field of AML/CFT that is scheduled for 2021-2022.