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04.06.2019

Ketija Tola: New Requirements for Consumer Credit and Debt Recovery Providers in the Field of Prevention of Money Laundering and Terrorist Financing

On 29 May 2019, senior associate Ketija Tola provided an extensive overview of the new requirements applicable to credit providers and aimed at prevention of money laundering, in the online magazine iTiesības.

The purpose of Cabinet Regulation No 705 Regulations on Requirements for Prevention of Money Laundering and Terrorist Financing for Consumer Credit and Debt Recovery Providers, as stated in the annotation, is to mitigate the ML/TF risks faced by creditors and debt recovery service providers in their activity and to ensure the effectiveness of AML/CTF measures taken. The Regulation was adopted on 13 November 2018, and for the first time the entities subject to the Regulation had to provide information on the development and approval of the internal AML/CTF policies and procedures to the Consumer Rights Protection Centre (the CRPC) by 1 February 2019.

The Regulation applies to:

  • persons engaged in consumer lending and having been granted a special permit (licence) by the CRPC for provision of lending services (in accordance with Cabinet Regulation No 245 Regulations Regarding Special Permits (Licences) for the Provision of Consumer Credit Services). Pawn shops also fall under this category as per Article 8(14) of the Consumer Rights Protection Law;
  • persons engaged in providing debt recovery services and having been granted a special permit (licence) by the CRPC for provision of debt recovery services (in accordance with Cabinet Regulation No 64 Procedures for the Licensing of Providers of Debt Recovery Services).

Each entity subject to the Law must establish an internal control system, i.e., a set of internal mechanisms that ensure the achievement of the statutory objectives, namely, money laundering and terrorist financing are prevented.

Full version of the article in Latvian is available for registered users here.

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