Each of the world’s largest economies in the so-called “Group of Eight” –France, Germany, Italy, Russia, China, the United States, United Kingdom, Japan and Canada were in the highest risk category because of their large economies and banking systems. It also includes small islands and countries that are often referred to as “offshore banking centers.”
Russia, despite making progress in combating financial crimes, has allowed Russian and Eurasian Criminal elements to use the country’s financial system and foreign legal entities to launder money. Porous borders and “chronic under-funding and lack of capacity of regulatory and law enforcement agencies” have left it vulnerable to money laundering, the report said.
Foreigners disproportionately use the Latvian banking system, leaving it vulnerable to money laundering. As of August 2011, non-residential deposits increased by 17 percent to comprise 41 percent of total bank deposits. The country made significant strides in 2011 in its anti-money laundering law, adopting beneficial ownership disclosure amendments requiring shareholders holding over 25 percent of shares to submit data identifying the natural person behind the shareholder.
Other amendments simplified customer due diligence, added payment services providers and electronic money institutions to the list of entities subject to the Law, and clarified the definition of “financial institutions,” says the report. Finally, the AML/CFT Law now extends to EU-owned entities and requires their compliance with the Latvian laws related to customer identification, due diligence, and record keeping.
