Chargé d’Affaires Paul Poletes
Remarks at ForbesClub Event
Friday, January 24 at 4 p.m. at the Pullman Hotel
Good afternoon. Thank you to Forbes Latvija for inviting me to speak with you today and for the kind introduction.
Before the keynote session today about what to expect in the future of financial markets, I’d like to take to look back at the last year and highlight a few ways Latvia has invested in its future by combating corruption. As this crowd is likely aware, in October 2018, the Council of Europe’s MONEYVAL gave Latvia one year to take steps to combat money laundering, or risk being added to a money laundering “grey list” by the Financial Action Task Force. Similar critiques came from the IMF and OECD. When Prime Minister Karins’ government formed in January 2019 it prioritized anti-money laundering efforts and implementing MONEYVAL’s recommendations.
On Wednesday, just as the government’s first year ended, MONEYVAL published its technical assessment of these reforms. While we do not yet know how the Financial Action Task Force will judge Latvia’s overall progress in a few weeks, we can point to the following concrete ways Latvian institutions are stronger today than one year ago:
- First, Latvia’s Enterprise Registry increases transparency, fights corruption and tax evasion, and builds confidence in Latvia’s business market.
- Second, the Financial Intelligence Unit now plays a stronger role in anti-money laundering investigations.
- Finally, Saeima gave the Financial and Capital Markets Commission more authority to supervise banks and strengthened anti-money laundering laws, including new authorities to enforce sanctions more quickly.
As I mentioned earlier, just this week the MONEYVAL progress report recognized Latvia’s technical progress in strengthening its framework to address money laundering and terrorist financing. In the report, MONEYVAL upgraded Latvia’s rating in eleven categories where it previously found deficiencies. The report specifically credits the Cabinet of Ministers and legislative reforms, but I know the staff in a number of Latvian institutions worked hard to make those reforms possible. However, the report keeps Latvia in enhanced follow-up and requires additional efforts to strengthen implementation of anti-money laundering and counter-terrorist financing measures. Latvia should be proud of the real progress it has made in a short timeframe, while also recognizing there is more to do.
We saw Latvia put these reforms into action after the U.S. Department of Treasury sanctioned Aivars Lembergs under the Global Magnitsky Act last month, holding him accountable for his crimes of money laundering, bribery, and abuse of office. With stronger institutions Latvia was primed to respond quickly to enforce the sanctions, making them more effective, and shielding the economy from the potential for significant disruptions. This is why good governance requires strong institutions, regardless of which political parties make up a coalition government.
The concrete steps Latvia has taken not only help fight corruption and money laundering but strengthen the economy too. The Prime Minister has said it is important for Latvia to act, not because of recommendations from MONEYVAL or allies, but because reforms are vital for Latvia’s future. He is right.
In an op-ed in December, Ambassador Carwile stressed an important message: Money laundering and corruption are not abstract ideas – they are theft of money from the Latvian people. More specifically, a European Parliament study last year found that Latvia loses over 3.4 billion euros annually to corruption. To government officials, that is money that could have answered important issues such as public services, healthcare, and education. As business leaders you know better than most that corruption scares away investors. Just yesterday, Transparency International published its annual Corruption Perceptions Index, which saw Latvia drop several places. Latvia already sits a dozen places behind Lithuania, and almost 30 places behind Estonia – both of which performed better than a year ago. When Latvia’s wealth is transferred abroad due to theft, this undermines the country’s future.
For these reasons, fighting corruption is a top priority for the U.S. Government, and my embassy. The United States in 2019 agreed to provide an additional $2.5 million in funding to further law enforcement and judicial cooperation between the United States and Latvia. Our joint trainings brought together more than 360 Latvian police, prosecutors, and judges, so that Latvia’s institutions are better able to prosecute and hold corrupt individuals accountable.
So as we shift our focus to the year ahead, the United States looks forward to continuing to partner with Latvia to help strengthen its institutions and judiciary – to the benefit of the Latvian economy and all Latvians.
