The UK left the EU on 1 January 2021 and now fits the definition of a “third country.” Having joined the European Community on 1 January 1973, the UK is the first country to have formally left the EU after spending 47 years as a member state. Changes brought about by Brexit are affecting not only taxation, immigration and trading but also the operation of the Anti Money Laundering and Counter Terrorism and Proliferation Financing (“AML/CTPF”) Act.
The pandemic has not only brought restrictions but also accelerated the digitisation of the customer identification process. Before the pandemic, the Latvian Anti Money Laundering and Counter Terrorism and Proliferation Financing (“AML/CTPF”) Act had its subjects focusing on customer identification in person, yet the restrictions are forcing them to minimise direct contact and to create new ways of customer identification.
The topic continued from MindLink.lv news 24.07.2020. Based on EU and Latvian legislation, in 2019 the Financial Intelligence Unit drew up guidelines, describing methods for identifying politically exposed persons (“PEPs”).
Although the Anti Money Laundering and Counter Terrorism and Proliferation Financing (“AML/CTPF”) Act has been in force for more than ten years, some of the entities governed by the Act still find it difficult to identify the status of a “politically exposed person.”
Although Latvia is a European leader in P2P crediting, the fintech industry has also suffered from the Covid-19 crisis. According to financial blogger Kristaps Mors, four Latvian online platforms have closed down or stopped paying money in recent months. He says if this tendency continues, Latvia might become famous as a fraud centre of this industry. We assume that these signals have reached the State Revenue Service and the National Data Office, who are carefully monitoring the business conducted in this industry to ensure that fintechs comply with statutory requirements.
Amid the international outbreak of COVID-19 and the resulting public uncertainty, we see that crime in general, including fraud, blackmail, money laundering and other economic crime, tends to grow. It basically makes sense to expect such activities from persons that have been involved in illegal activities and tried to exploit the weakest links of the existing legal framework and public order in their own interests. A similar illegal strategy is implemented in the present situation, in which people are focusing on other crucial and urgent issues and becoming less cautious or making rash decisions because of the emergency situation. Practice also suggests that the rising crime rates are directly linked to the circumstances caused by COVID-19.
In times of adverse and significant events, such as a war, crisis or pandemic, there is a certain group of people that will try to exploit the national emergency situation in their own interests. It is no surprise that this phenomenon has now surfaced in response to the global outbreak of COVID-19. At the very outset of the pandemic, cybersecurity companies and news agencies repeatedly warned us about an increase in phishing attacks, with people receiving virus reports from authorities such as the WHO enticing them to download malware on their devices.
We have lately heard that it is advisable to register your company as a person subject to the Anti Money Laundering and Counter Terrorist and Proliferation Financing (AML/CTPF) Act rather than receiving a letter from the State Revenue Service (SRS) warning that they are about to examine your system of internal controls, which does not exist. This article explores how much of this talk is true.
