LATVIA'S FIU REPORTS HISTORIC SUCCESS FOR 2006

C O N F I D E N T I A L RIGA 000422

SIPDIS

SIPDIS

E.O. 12958: DECL: 05/18/2017
TAGS: SNAR EFIN PGOV PTER KCRM LG
SUBJECT: LATVIA'S FIU REPORTS HISTORIC SUCCESS FOR 2006

REF: A. 06RIGA 552


B. RIGA 200

Classified By: A/DCM Tamir Waser for reasons 1.4 b and d


1. (U) Summary: Over the past nine years, the Latvian
Financial Intelligence Unit (FIU) has grown both in size and
experience and is considered on of the most sophisticated in
the region. The number of suspicious activity reports
turned over to the FIU from looking forward has nearly
doubled since 2004 as has the number of cases passed to the
Prosecutor General's office. The FIU is working with the
Parliament to further strengthen their money laundering laws
and remains committed to combating terrorist financing.
Embassy Riga has a positive working relatinoship with the
FIU. End Summary.



2. (U) PolOff met with Viesturs Burkans, Head of Latvia's
FIU, in mid-May to discuss progress on money laundering
issues. Burkans reports that 2006 was their most successful
year since they were first formed in 1998. The number of
suspicious activity reports given to the FIU from local banks
has nearly doubled since 2004. The number of transactions
banks have refused to process and have reported to the FIU
has doubled since 2005. Of those reported to the FIU in
2006, over half were forwarded to the prosecutor's office for
possible prosecution. In 2006, the FIU froze over 6.3
million USD worth of assets. As of May of 2007, the FIU has
already frozen over 2 million USD this year.

Structure of the FIU


3. (U) Established in 1998, the FIU employs 20 people
specialized in handling unusual and suspicious transactions,
international cooperation, and terrorist financing issues.
Most FIU employees have a background working in the police,
the prosecutor's office or various credit and financial
institutions. The FIU reports to the Prosecutor General and
is governed by an advisory board, which the Prosecutor
General also chairs. The Advisory Board coordinates
cooperation between the FIU and other law enforcement
institutions.

Priorities:


4. (U) The FIU has two priorities. First, the FIU focuses on
freezing large volumes of money derived from criminal
activities. The second priority focuses on those cases with
large numbers of individuals or entities (over twenty) or
large amounts of money (over 50,000 USD) involved in alleged
money laundering schemes.


Power to Fight Terror Financing


5. (U) After September 11th, several amendments were made to
the financial crime law to address the issue of terrorism and
the financing of terror. According to these amendments,
financial resources and other property are considered
criminal proceeds whether controlled directly or indirectly
by an individual who is included on a terrorist watch list
complied by a state or international organization as
specified by the Cabinet of Ministers. Additionally,
included are individuals who the Latvian authorities, either
through investigation, pre-trial discovery or other means,
place under suspicion of committing a crime of or is a
participant to terrorism.


6. (U) To their list of indicators of unusual transactions
and reporting procedures, the Latvian government has added an
additional indicator which reads: a transaction shall be
considered as an unusual transaction if it involves a
customer who is suspected of being involved in acts of
terrorism or complicity therein and has been included in the
list of persons about which credit and financial institutions
have been informed by the FIU.


7. (U) Under the law, Latvia recognizes the lists of other
countries who are members of the United Nations, the European
Union, the European Council, the Organization for Security
and Cooperation in Europe, Interpol, Europol, the
International Convention on the Suppression of Terrorist
Financing or the Edgmont Group.


8. (U) Should the FIU identify a case of potential terrorist
financing, or receive a report of such from another financial
institution, the FIU immediately begins its verification
process and issues an order to freeze the funds or property.
The case is then sent to the Prosecutor's office which
decides if a criminal case will be opened. The country or
international organization that has this individual or
company on their terrorist list is informed about the action
taken by the FIU. Of the FIU's twenty employees, two
specialize in terrorist financing.

New Money Laundering Laws


9. (C) According to Burkans, the prosecutor's office will be
putting forward for consideration by the Parliament a new
draft law on money laundering. This new legislation will
bring them into compliance with outstanding EU requirements
and strengthen the overall legal framework for the FIU's
work. However, this new law will not change how the FIU does
its work. Under the new law, the FIU would have the
authority to freeze assets based on the request of another
FIU. However, Burkans anticipates the possibility of
resistance within the Parliament to this clause because the
law does not require reciprocity on the part of the
requesting institution.

Public Interest and Support


10. (C) When asked about the public support for his work,
Burkans responded that it has been surprising how supportive
the general public is on reporting fraud, abuse, and money
laundering. Burkans explained a recent phenomenon in his
office is that he has begun to receive letters from ordinary
citizens writing to him explaining a wrong doing that they
have noticed and providing him with copies of documents.
With one exception, all the information that he has received
form ordinary people through these letters has proven to be
legitimate and has been forwarded to the Prosecutor's office.
Interestingly, these cases that were sent to him via mail
from regular citizens were cases that had not been reported
by any of the banks involved. One particular group of people
he hears from the most often are those individuals and
auditors who have been appointed by the court to oversee
bankruptcy cases. As they begin adjudicating the case, they
recognize money laundering and forward the information to the
FIU. Burkans states that the public is involved and it is a
good thing.


11. (C) Another recent development in the public area is the
interest of the press. Recently, Burkans was approached by a
group of journalists who have formed a committee to aid in
the fight against money laundering. They have committed to
turning over any documents they come across which may be of
interest to the FIU. These are all open source documents
which journalists regularly use such as those from the
Enterprise Registry but, due to shear volume, may not be
normally considered by the law enforcement community. This
group also hopes to shine more light on the issue by
providing greater amounts of coverage.

FIU's future


12. (U) Latvia's law on cross border cash declaration (reftel
B) entered into force July of 2006. As such, the
responsibilities of the FIU have been extended to include the
monitoring of reports sent to the FIU concerning cross-border
cash declaration. As reflected in their statistics,
suspicious activity reporting from institutions who have been
less active in the past, continue to increase, thus the
overall work load of the FIU has dramatically increased. In
response, the FIU will be increasing its staff by ten
positions. (four data input operators and six financial
analysts) and continues to lobby the cabinet for new
facilities


13. (C) Comment: Burkans remains positive about the work of
his unit and seems to be untouched by any outside political
pressures. His staff is very young, idealistic and energetic
and takes their work seriously. Burkans expressed
apprehension to moving to new facilities because currently,
they are in the same building as the prosecutor and this has
helped to facilitate their cooperation, but he recognizes the
need for bigger accommodations for the sake of his staff.
Burkans also reports that the Latvian FIU's relationship with
US Treasury and FINCEN is excellent and praises the
cooperation. However, his praise is less enthusiastic for
the FIUs of western EU countries, stating that they can often
be very challenging to work with. The best working
relationships remains between Latvia and its Baltic
neighbors. End Comment.

BAILEY