Latvia's Anti-Money Laundering Laws: A Crucial Reading for Fintech Companies
In the heart of Europe, Latvia is taking significant steps to combat money laundering and terrorism financing within its borders. Businesses operating in the country are now required to adhere to stringent Anti-Money Laundering (AML) regulations, set by both Latvian law and evolving European Union (EU) AML regulations.
Under Latvian AML law, businesses must implement ongoing verification of the accuracy of obtained Know Your Customer (KYC) data. To identify Latvian residents, businesses must obtain their name and personal identity number. For non-residents, more detailed information is required, including name, date of birth, photograph, identification document details, and the country issuing the document.
Customer Due Diligence (CDD) is a crucial process for businesses, involving the collection and verification of information about customers during onboarding and throughout the business relationship. This includes obtaining information on the purpose and intended nature of the business relationship or transaction.
Latvian AML law also mandates that businesses must implement AML policies and procedures, comply with customer identification and verification requirements, conduct ongoing monitoring of customers and transactions, appoint a Money Laundering Reporting Officer (MLRO), report to the Financial Intelligence Unit (FIU), and retain data about customers and transactions.
When it comes to identifying beneficial owners, businesses must obtain identity information from the Enterprise Register or by other means such as customer self-declaration or the EU Beneficial ownership registers interconnection system (BORIS). The legal entity must present documents attesting to its name, legal form, incorporation or legal registration, and registered and actual address. A beneficial owner is a person who directly or indirectly owns more than 25% of a company's capital/voting rights or exercises ultimate control over it.
Enhanced Due Diligence (EDD) is required in situations with a high risk of money laundering, such as correspondent relationships with credit/financial institutions, business relationships and transactions with Politically Exposed Persons (PEP) or family members of a PEP, customers whose beneficial owner is a PEP, customers from high-risk third countries, and remote customer identification if it doesn't comply with Cabinet Regulation No. 392.
Failure to comply with the obligations prescribed by the AML Law may result in fines of up to €5,000,000 or 10 percent of total annual turnover.
Under the EU AML framework effective in 2025, the 6th AML Directive (6AMLD) and the AML Regulation (AMLR) have enhanced AML compliance, expanding predicate offenses, strengthening due diligence, and mandating automated, AI-supported transaction monitoring and immediate suspicious activity reporting. The European AML Authority (AMLA) now coordinates harmonized supervision and reporting standards across EU member states, affecting Latvian institutions by imposing common supervisory benchmarks and centralized reporting platforms for AML/CFT data.
These requirements apply not only to traditional financial institutions but also extend increasingly to non-bank financial entities and newer sectors such as crypto businesses. Latvian AML compliance is thus a mix of national sanctions law, EU directives, and emerging EU-wide supervisory coordination designed to enhance transparency, detection, and prevention of money laundering and terrorism financing risks.
The Financial and Capital Market Commission (FCMC) and the Financial Intelligence Unit (FIU) are the main authorities regulating the AML sector in Latvia. The FCMC provides Latvian businesses with guidelines on the implementation of AML policies and measures in its Recommendations No. 169. The businesses affected by Latvian AML regulations include credit institutions, financial institutions, insurance service providers, investment firms, payment institutions, e-money institutions, and Virtual Assets Service Providers (VASPs).
Latvia hosts over 100 fintech companies, including Mintos, Creamfinance, Twino, Bitfury, and Crasula. These companies, along with others, are playing a significant role in shaping Latvia's financial landscape while adhering to the country's rigorous AML regulations.
In the evolving finance sector of Latvia, fintech companies such as Mintos, Creamfinance, and Bitfury are embracing strict Anti-Money Laundering (AML) regulations while shaping the country's business landscape. To maintain compliance, these companies must implement customer due diligence (CDD) processes, ongoing monitoring, and enhanced due diligence (EDD) in high-risk situations, as mandated by both Latvian AML law and the EU AML framework, which includes the 6th AML Directive (6AMLD) and the AML Regulation (AMLR), effective in 2025. By adhering to these requirements, these companies are contributing to the prevention of money laundering and terrorism financing within Latvia's lifestyle and investing sector.
