FATF status

Latvia is not on the FATF List of Countries that have been identified as having strategic AML deficiencies

Compliance with FATF Recommendations

The latest Follow-up Mutual Evaluation Report relating to the implementation of anti-money laundering and counter-terrorist financing standards in Latvia was undertaken in 2019. According to that Evaluation, Latvia was deemed Compliant for 7 and Largely Compliant for 33 of the FATF 40 Recommendations. It was also deemed Highly Effective for 0 and Substantially Effective for 1 with regard to the 11 areas of Effectiveness of its AML/CFT Regime

Corruption remains a significant issue in Latvia, as highlighted by its ranking of 36th in the 2023 Corruption Perception Index. The Latvian government has implemented various laws to combat corruption, including the Law on the Prevention of Money Laundering and the Conflicts of Interest Law, which aims to restrict public officials from holding multiple positions. Despite these efforts, the enforcement of anti-corruption laws is limited, and issues such as unfair public procurement processes and demands for bribes continue to hinder business operations.

Latvia's economy is characterized by its strategic position as a transportation and logistics hub between the EU and Central Asia, supported by a well-developed infrastructure including ice-free ports and a robust rail network. Despite a contraction of 0.6% in GDP in 2023 due to external factors like high interest rates and the war in Ukraine, Latvia maintains competitive sectors such as IT, healthcare, and green tech, while also benefiting from low labor costs and favorable tax policies for reinvested profits.

Latvia's investment climate is characterized by its liberal economic policies and strategic positioning as a transportation and logistics hub between the EU and Central Asia. The government actively encourages foreign direct investment (FDI) by providing equal rights to foreign and local investors, along with various incentives such as special economic zones that offer significant tax benefits. However, challenges such as a shortage of skilled workforce and concerns regarding transparency in public procurement processes may affect investor confidence.