The effectiveness of the legislation aimed at combating legalization of illegally obtained funds in Latvia based on the FATF methodology and comparison with practice in Finland

Abstract

Money laundering is a threat for economic stability, the rule of law, and societal well-being. This thesis examines the effectiveness of anti-money laundering legislation in Latvia by comparing it to Finland, a country with a low risk of money laundering and recommendations by the Financial Action Task Force. The research focuses on selected Financial Action Task Force recommendations, including customer due diligence, financial intelligence units, and their integration into the AML system. By analyzing the legal frameworks of both countries, this study aims to address criticisms and evaluate the impact of Latvia's financial system overhaul. The analysis reveals similarities between the two countries' AML laws, both primarily driven by EU directives and FATF guidelines. The findings suggest that Latvian legislation has been significantly improved in the recent overhaul, developing high-effectiveness legislation on customer due diligence, financial intelligence units and reporting of suspicious transactions.