Article published on Jauns.lv
Latvia’s financial market reforms can be assessed positively, yet concerns remain and there is still considerable uncertainty related to the bank customer evaluation process, said Armands Gūtmanis, head of the Swiss Chamber of Commerce in Latvia.
He explained that the Chambers of Commerce of Ireland, the United Kingdom, Norway, Switzerland and Sweden in Latvia, together with the law firm Ellex Kļaviņš, had organized a meeting with the Chairwoman of the Financial and Capital Market Commission (FKTK), Santa Purgaile.
According to Gūtmanis, several participants in the discussion pointed to the very lengthy process of evaluating bank clients. “For example, a foreigner working in Latvia cannot open an account quickly — it takes several months. It is also complicated for companies with partners outside the European Union to start operations in Latvia and open a bank account. For this reason, companies often choose Estonia,” Gūtmanis noted.
It was noted during the discussion that the customer‑assessment procedures carried out by banks increasingly affect clients’ privacy. “This may create a risk of losing not only privacy but also freedom, potentially leading to a totalitarian society,” Gūtmanis added.
Meanwhile, according to Gūtmanis, the head of the FKTK explained that anti–money laundering procedures apply to all countries. Moreover, Latvia is at the forefront and may have introduced stricter requirements than its counterparts, yet the entire world is moving in this direction.
Emphasizing that Latvia is at the forefront of these changes, the head of the FKTK quoted European Commission Vice‑President Valdis Dombrovskis, who stated that the serious money‑laundering scandals involving a number of European banks demonstrate that Europe must do more to clean up its financial sector.
Purgaile explained that, in order to help banks operate in the new environment and improve the customer‑assessment process, the FKTK is preparing a handbook that will compile all regulatory norms along with concrete examples and comments related to evaluation. The handbook could be fully completed in July or August.
The study “Foreign Investment Environment Index 2019”, presented on 15 January by the Foreign Investors’ Council in Latvia (FICIL), concluded that foreign investors appreciate the progress made in combating economic and financial crime.
The study notes that the stability of Latvia’s financial sector was one of the key topics discussed both during FICIL’s high‑level meeting with the government in 2019 and throughout the entire year. Given the importance of financial sector stability and its potential impact on retaining and attracting foreign investment, as well as on Latvia’s overall economic development, foreign investors were asked to share their views on this matter as part of the 2019 study.
When assessing progress in combating economic and financial crime in Latvia on a scale from one to five, foreign investors gave an average rating of 3.2, which, in the view of the study’s authors, is a relatively good result.
Meanwhile, in response to the question of whether the investor’s company has experienced any negative consequences due to the state of the financial sector over the past two years, opinions ranged from “rather positive” to “negative.” However, the number of negative responses was significantly higher.
Foreign investors were also asked to assess whether the recent actions taken in response to Moneyval’s recommendations have had a positive or negative impact on their companies and on the overall business environment in Latvia. In most cases, respondents indicated that these measures had not affected their operations.
The FICIL Foreign Investment Environment Report is an annual study that assesses the competitiveness of Latvia’s economy from the perspective of foreign investors, identifying the most significant challenges in the business environment. It is a qualitative study based on interviews with foreign‑owned companies, conducted by FICIL in cooperation with the Stockholm School of Economics in Riga.
Photo: Armands Gūtmanis, Head of the Swiss Chamber of Commerce in Latvia. Image credit: Evija Trifanova, LETA