At the conference “Banks in a Changing World”, for the first time since the announcement of the “overhaul” of the Latvian financial sector, lawyers and economists in the Great Hall of the University of Latvia spoke directly and openly about mistakes in arranging the financial sector.
The conference was opened on September 29 by the address of the President of Latvia Egils Levits, in which he not only praised the fight against money laundering in the country, but also acknowledged that banks should try to manage risks. In fact, the same opinion was already expressed in more complicated legal language by the Latvian Prosecutor General Juris Stukāns, who stated that Latvian investigators and officials are sufficiently competent and “will be able to apply the laws according to their meaning, not just the letter.” In essence, both government officials indicated that changes were needed in the banking approach, not in legislation.
The speech of the head of the Fiscal Discipline Council, Professor Inna Steinbuka, can be called a starting point for the assessment, because comparing the economic indicators of the Baltic States in 2019, early 2020 and Covid19 crisis clearly showed that our economy has already suffered in 2019. from the impact of the “overhaul” of the financial sector and continues to suffer even now, indicating that it is not possible to measure the consequences when customers are prevented from opening an account in Latvia or that it is closed for reasons incomprehensible to people.
“The bad news is spreading much faster. The overhaul is over and this apartment we have just renovated should be improved so that someone would like to live in it at all,” I. Steinbuka pointed out.
Future challenges in the field of criminal law were outlined by sworn attorney Jānis Rozenbergs – The presumption of innocence and its “folding” in legislation in the articles of the Criminal Procedure Law, where money laundering is separated from crime. This poses a risk of money laundering, but the crime itself is not proven.
Namely, there is a possibility that the money has been confiscated from an innocent person for money laundering, however, the very criminal way in which the funds are obtained is not proven.
Today’s problems from the economic side were briefly described by the Dean of the Faculty of Business Administration and Economics of the University of Latvia Gundars Bērziņš – banks have a heavy financial burden to analyze customer cash flows.
G. Bērziņš mentioned that, for example, in case of opening an account, the most common customer analysis costs the bank about 500 euros, but to open a wealthy customer’s account, the analysis has to spend up to 20 thousand euros.
The economist emphasized that the reluctance of banks to spend money was understandable, because the risk had to be reasonable and it was often clear that the customer would not bring the money spent on his test even for a long period of time. In short, not opening accounts also has pragmatic financial considerations and cannot require a private company to do what it sees as disadvantageous. G. Bērziņš emphasized that without a significant change in the system, the situation will be similar in the future as well.
The excerpt from the letter of the Minister of Defense Artis Pabriks to the Saeima at the conference, where the Minister pointed out the difficulties in co-operation with companies and asks to provide exceptions for defense needs, also indicates that something should be changed in the approach. Namely, companies have difficulties in opening accounts in Latvia. It turns out that the system created by the state has begun to paralyze the operation of the state itself. R. Balodis expressed hope that there will be no exceptions and the problem will be solved equally for everyone.
LU Professor of Civil Law Jānis Kārkliņš analyzed the rights of bank customers from the point of view of the Latvian Constitution. “Bank customers have the right to enjoy the rights to the property, including the deposit, without hindrance! What happened in Latvia when 10 billion non-residents’ money flowed out of the country was that the fight against legalization had to be shown somewhere and it was shown when fighting with residents, ”J. Kārkliņš said at the conference.
He pointed out that banks were unnecessarily given a legal basis to close bank accounts by asking for information about the long past. “The law requires any accounting to be kept for five years, but the bank may request information about the past 15 years, and if it is not, the account may be closed, moreover, the legislation of the Republic of Latvia protects the bank from any consequences of such actions,” said J. Kārkliņš , emphasizing that such practices are not governed by any international instruments, including European directives.
G. Bērziņš pointed out that it will become easier and easier to open accounts in any other European country and our financial sector will start losing good customers.
–
