The results of the inspections carried out by Latvijas Banka and the best practice in the area of prevention of financial crime (AML).

Report on the Results of the Horizontal Inspection of Money Laundering, Terrorism and Proliferation Financing and Sanctions Risk Assessment Process Including Methodology

  Report on horizontal off-site inspection results

Latvijas Banka in 2023 conducted thematical review to assess the effectiveness and efficiency of sanctions screening systems in 22 financial institutions (banks and selected non-banking financial institutions like payment service providers, investment firms etc). 45 IT systems were assessed - automatic and manual, as well as internal and from third-party providers. The main findings show that, in general, the institutions' IT systems are able to identify the subjects of the various sanction lists in an efficient and timely manner, including when the data is incomplete. At the same time, institutions need to further improve their IT systems, in particular as regards the quality of screening for manipulated data and strengthening the efficiency of the system to reduce the resources spent on processing false alerts, as well as strengthening the scope and procedures for testing of the IT systems.

This guidance outlines Latvijas Banka's expectations for effective sanctions screening systems, including diiferent aspects like quality checks, testing, adjustments, and using third-party vendors. It also shares examples of good and poor practices observed during the review, in light of international best standarts.

 Guidelines for establishing and maintaining effective sanctions screening system