Latvia is an attractive financial and trading centre to facilitate business operations in this region, due to its location between CIS and Western countries and membership in European Union. The country has highly sophisticated banking system within Eastern Europe.
There are 30 banks in Latvia, 10 of them are branches of foreign banks. The number of Latvian commercial banks has grown significantly since the crisis of 1998, when there were 22 banks.
All Latvian banks working with non-resident customers offer full range of services including credit cards, online (Internet) banking and other remote account management tools.
Latvian offshore bank accounts once were quite popular and well-known vehicle for conducting international business. About twenty international banks offered the service of opening personal and corporate accounts to international clients.
Now, it is hardly possible to open offshore bank account in one of Latvian banks, because of changed legislation and more strict rules especially concerning due diligence and customer’s identity. Being member of the European Union, Latvia brought its legislation concerning foreign investments in accordance with EU standards. Latvia also strengthened the regulations governing the formation of Latvian companies by foreign investors, and this step has reduced the number of possible business entities that can be incorporated under the Latvian law.
(based on FKTK information)
The banks and other financial institutions in Latvia must identify their customers and follow due diligence procedures, under the requirement of the Law on the Prevention of Laundering the Proceeds from Criminal Activity (Money Laundering) and of Terrorist Financing.
According to Article 28 (1) of the Law, a customer shall have a duty to provide truthful information and documents to the bank necessary for performing customer due diligence, including information and documents to the bank necessary for performing customer due diligence, including information and documents on the beneficial owners (in case a customer is a legal person or is executed in the interest of another person), transactions, economic and personal activities of customers and beneficial owners, the financial standing and the origin of money or other funds.
In terms of combating money laundering and terrorism financing, the proceeds derived from robbery, fraud, drug trade, human trafficking and other criminal activities, are to be prevented from becoming apparently legal, using banking and other financial institutions’ services. Therefore, Latvian banks are obliged to apply ‘know your client’ principle, according to which the bank shall know their clients and the ways how they are going to use banks services. The bank should also know the essence of client transactions, and make sure his funds are not of criminal origin.
In accordance with Section 62 (5) of Credit Institution Law, information regarding a client is non-disclosable, but it does not contain official secrets. There is criminal liability for disclosing such information.