Criminal Money Laundering And Terrorism Financing Risk Management Rules, Regulations

Original Language Title: Noziedzīgi iegūtu līdzekļu legalizācijas un terorisma finansēšanas riska pārvaldīšanas normatīvie noteikumi

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Financial and capital market Commission, the provisions of regulations No 25 2016 in Riga on 27 January (financial and capital market Commission Council meeting Protocol No 5 2. p.)
Criminal money laundering and terrorism financing risk management regulations Issued in accordance with the provisions of the credit institutions act, the fourth part of article 21.3 and criminal money-laundering and terrorist financing Prevention Act 47. the second paragraph of article i. General questions 1. "the Crime of money laundering and terrorism financing risk management regulations" (hereinafter-the rules) defines the crime of money laundering and financing of terrorism (hereinafter NILLTF) risk management minimum requirements and are binding on the Republic of Latvia registered credit institutions (hereinafter referred to as the credit institution). Credit institutions to comply with the requirements of this regulation and the consolidation of individual groups or sub-groups of consolidation level, ensuring the consolidation group or subgroup, as well as all the provisions of the subsidiary requirements NILLTF risk management. 2. The terms used in the following terms: 2.1. NILLTF impact and risk – the risk that the credit institution can be used for criminal money laundering or terrorist financing in connection with financial services rendered, customer base, customer transactions, as well as the geographic profile of the product and service delivery channels; 2.2. private services-financial services provided to credit institutions in the internal legislation of a certain class of customers (high net worth customer) based on certain criteria: 2.2.1. client business turnover per month exceeds credit institutions determine the overall threshold; 2.2.2. a credit institution has established communication with the customer special rules which do not meet the General prescribed communication procedures with other customers; 2.2.3. a credit institution shall provide tax advice to the client; 2.2.4. a credit institution shall give the customer asset management consulting (wealth management) or life style (Concierge) service; 2.2.5. a credit institution shall provide it to the customer-owned asset management services.
II. Prevention of the NILLTF internal control system 3. a credit institution, creating a NILLTF risk management internal control system shall include at least: 3.1. credit institutions NILLTF risk management strategy; 3.2. NILLTF prevention of internal procedures and policies to the requirements of the security and the regular review of the requirements for the changes in the legislation or the functioning of the credit institution given in the processes, services, structure, customer base or activity areas; 3.3. the credit institution's internal procedures and policies that define NILLTF risk management functions of the organization structure and activities, as well as the order in which you perform the authorization of persons; 3.4. the credit institution's internal procedures and policies that define the risk identification and management NILLTF processes, including measurement, assessment, control and risk reporting and submission of credit institutions; 3.5. credit risk NILLTF to cover the necessary capital maintenance requirements; 3.6. the credit institution's internal procedures and policies that define client information and accurate accounting records of transactions; 3.7. a credit institution's risk management NILLTF used in information technology (hereinafter IT) solutions; 3.8. a credit institution's risk management involved in NILLTF information system security requirements; 3.9. the credit institution's internal procedures and policies that define the internal control system of regular review, evaluation and improvement of efficiency, taking into account the changes in the activities of the credit institution and the external conditions that affect credit risks and activities; 3.10. credit risk management NILLTF employee involved in the pay system from the credit operations of the assurance requirements. 4. a credit institution shall establish suitable to your business activities of NILLTF risk management internal control system, taking account of its customer base, financial services and products to the NILLTF level of risk and the amount of the transaction and the delivery channel of the geography level of risk, as well as the NILLTF involved in the risk management units and other factors which significantly affect the level of risk of the credit institution's NILLTF. A credit institution shall ensure NILLTF risk management, taking into account its interaction with the rest of the credit transaction, the inherent risks. NILLTF risk management is conducted continuously throughout the NILLTF in credit risk. 5. A credit institution's risk assessment of NILLTF must be carried out in relation to the credit services and products, customers, operations, geography, delivery channels, as well as the related processes and other factors that may affect NILLTF exposures of a credit institution. 6. to ensure effective risk management, credit NILLTF: 6.1 develop and approve NILLTF risk management strategy and policy, as well as credit management liability NILLTF risk management, ensuring appropriate NILLTF the operation risk management system; 6.2. establish procedures for the timely and accurate risk NILLTF determination of all credit institutions provide financial services and credit products as well as internal processes; 6.3. the development of its economic nature and about the appropriate characteristics for risk assessment of exposure to NILLTF, as well as regularly collect information, assess its development momentum and make the necessary adjustments to credit institutions NILLTF risk management strategy and processes; 6.4. ensure regular (not exceeding 18 calendar months) NILLTF prevention in the internal control system of independent evaluation, using independent and professional third-party fundraising; 6.5. establish and maintain a risk management NILLTF the necessary IT security requirements in accordance with the functional and safety requirements, and financial and capital market Commission recommendations; 6.6. NILLTF provides risk management function for the execution of the necessary human resources and their professional qualifications, taking into account the financial and capital market Commission's recommendations. 7. For the effective management of risk NILLTF is responsible the Council and the Management Board of the credit institution. On the Crime of money laundering and terrorist financing Prevention Act, compliance with the requirements of the accountable executive is responsible for the following areas: 7.1 operation. credit institutions in the inherent risk of sufficient NILLTF and effective management and control; 7.2. credit institutions Council regular information on credit risk management NILLTF strategies for enforcement results, including providing accurate and complete information on risk exposure and NILLTF its dynamics; 7.3. the NILLTF adequacy of risk management measures and timely changes required; 7.4. reporting to the Board on all cases where risk management NILLTF found during situations that do not meet the credit institution's risk management strategy for NILLTF.
III. NILLTF risk management strategies, policies and procedures 8. Credit institution NILLTF risk management strategy will determine the acceptable level of risk NILLTF, defining the qualitative and quantitative risk exposure indicator NILLTF under this provision, the requirements of paragraph 10. Acceptable level of risk and NILLTF characterize indicators based on the NILLTF of the credit institution's ability to take on the risks associated with its current and expected transactions nature as well as NILLTF risk management resources available. 9. a credit institution shall assess their ability to take on the risk of NILLTF, taking into account the right of the credit institution's activities to other risks arising from credit risk strategy. The credit institution shall develop and apply a methodology able to take on the credit risk of NILLTF, which determines the method used, as well as indicators and possible development trends. Given that credit institutions the ability to take the risk of NILLTF is dependent on the possession of credit resources (capital, personnel and technological resources necessary for adequate risk management NILLTF), as well as the credit risk exposure NILLTF and specificity, a credit institution, developing a methodology, guided by the following NILLTF risk exposure of the credit institution representative indicators: 9.1 the previous year and the planned NILLTF to cover the needs of risk capital; 9.2. with previous period credit risk exposure and NILLTF the administration of the related income and expenses, as well as credit risk appetite of the planned NILLTF and its associated with the management of income and expenditure and their possible changes in relation to the activities of the credit institution development forecasts;
9.3. the offset ratio of risk and other types of risk stress test results in accordance with the provisions laid down in chapter VI. 10. a credit institution shall develop NILLTF risk management strategy based on the credit risk exposure, NILLTF formed by the credit institution client base, portfolio of products and services and their delivery channels, as well as the geography of activity inherent risks and their interactions. Credit institutions established in the strategy: 10.1 NILLTF risk exposure of the credit institution, including at least the following indicators: 10.1.1. a credit institution's customer base in the NILLTF inherent risk exposure raksturojošo indicators and threshold below which a credit institution's internal control system is able to provide the NILLTF risk management according to regulatory requirements, including: 10.1.1.1. a client who is the subject of an in-depth study, the proportion of turnover of deposit and credit customer deposits and total turnover, 10.1.1.2. the profit gained from customers who are the subject of an in-depth research, the provision of services, the proportion of the total credit in the amount of profit, customer corresponding 10.1.1.3. the financial and capital market Commission 23.12.2015. regulatory rule Nr. 234 customer "in-depth research and regulations regulations for credit institutions licensed in payment and electronic money institutions ' requirements of paragraph 15.4, deposit and credit institutions of the proportion of turnover total customer deposits and turnover, 10.1.1.4. profits generated from services provided to clients that meet the financial and capital market Commission 23.12.2015. regulatory rule Nr. 234 customer "in-depth research and regulations regulations for credit institutions licensed in payment and electronic money institutions ' requirements of paragraph 15.4, the percentage of the total profit of the credit institution, a credit institution after 20 10.1.1.5. total turnover the largest client group related subject for in-depth research, the proportion of turnover of deposit and credit the customer that the subject of an in-depth study, the total amount of the deposit and the turnover , 10.1.1.6. profits generated from services provided by the credit institution's total turnover in the 20 largest related client groups subject to in-depth research, the percentage of the total profit of the credit institution; 10.1.2. the credit institution's service and product portfolio risk exposure inherent in the NILLTF representative of limit values, including: 10.1.2.1. private service transactions within the scope and proportion of total profit in the credit institution's business and profit, 10.1.2.2. loans to customers that is provided with the financial instrument or other security of public credit institutions guarantees issued, except when the repo are made, about the proportion of total customer loans in the amount of 10.1.2.3. trust or fiduciary, business; 10.1.3. a credit institution's service and product delivery (channel) in the NILLTF inherent risk exposure inherent in the limit values, including: 10.1.3.1. customer identification carried out remotely (client not physically participated in the identification), deposit and about the proportion of turnover total turnover of customer deposits and, customers that 10.1.3.2. identification was made through third parties (agents, intermediaries), deposit and about the proportion of turnover total customer deposits and turnover, transaction 10.1.3.3. made by using service delivery channels with increased risk of NILLTF (e-commerce and its variations), about the proportion of the total business of the credit institution's customers; 10.1.4. a credit institution's risk profile offset for characteristics, including: 10.1.4.1. Lori correspondent credit institution (respondents) turnover by Laura correspondent (respondents) countries broken down by country the groups laid down in the financial and capital market Commission rules, which lay down the requirements for in-depth exploration of clients, 10.1.4.2. credit institutions each offset credit institutions which opened nostro accounts (offset), the extent of these transactions within the proportion of total credit customer transactions made by using the offset account in the offset credit institution; 10.1.5. each of the provisions laid down in point 10.1. credit risk exposure indicators NILLTF credit NILLTF prevention strategy defines the limit values corresponding to the period covered by the strategy NILLTF; 10.2. the principles that guided by the credit institution, ensuring that the Republic of Latvia and international institutions of the sanctions imposed requirements, including: 10.2.1. NILLTF risk of restrictive (de-risking) conditions (such as countries, customer types, the politically important status, economic activity of the client sectors); 10.2.2. NILLTF provided for risk mitigation techniques; 10.2.3. the staff that supports the NILLTF risk management functions, resource adequacy criteria and competency requirements for the financial and capital market Commission's recommendations; 10.2.4. the personnel authority system principles to decisions that affect the level of risk the Authority's NILLTF; 10.2.5. principles for NILLTF risk management functions require the IT security requirements for marking, as well as the IT system that supports the NILLTF risk control function, independent of the order in the financial and capital market Commission's recommendations; 10.2.6. the public and from the databases of the information available on the use of airspace in the customer's operating management objectives; 10.3. NILLTF evaluation of effectiveness of risk management procedures, including: 10.3.1. credit institutions NILLTF internal control system in the field of preventing independent verification arrangements; 10.3.2. the provision of information management strategy for the NILLTF requirements; 10.3.3. reporting principles to the management of the credit institution concerning derogations from the approved NILLTF risk management policies and procedures; 10.4. the expected profit, a credit institution wishes to acquire, taking NILLTF risk management strategy set out in the NILLTF risk; 10.5. NILLTF to cover the needs of risk capital. 11. credit institutions NILLTF risk policies and procedures to ensure the implementation of the strategy of risk NILLTF and defines the powers and rules for effective risk NILLTF identification, assessment, mitigation and management, including providing credit and its employees of liability for NILLTF risk management requirements, as well as the relevant reporting and credit institution binding demand for accurate and timely information. 12. Credit institutions shall comply with the specific NILLTF risk exposure indicator thresholds and adjust them to your business objectives or to satisfy the interests of a client's needs. If the credit institution's policy in cases of emergency provides for the possibility to derogate from certain limits, this resignation approved by the Governing Board, substantial deviations (10 percent above a certain threshold), a report on the financial and capital market Commission. 13. a credit institution shall ensure that all NILLTF risk management measures also in respect of persons associated with the institution, and their transactions. 14. before the introduction of the new financial services or before the start of the new financial services market, a credit institution shall assess the markets with these services and related potential risks of NILLTF and its effect on the NILLTF of the credit institution to cover the needs of risk capital. A credit institution shall assess the need to develop new financial services NILLTF the risk management policies and procedures, or to make amendments to existing policies or procedures. This requirement applies not only to new financial services, but also to the existing financial services whose conditions are significantly changed.
IV. A credit institution's Council and Board responsibilities in the area of prevention NILLTF 15. credit institutions Council is responsible for risk management, and NILLTF it: 15.1. approve the strategy of risk NILLTF that defines the permissible level of risk and NILLTF, which a credit institution plans to be achieved through risk NILLTF subject to transactions; 15.2. approve the strategy of risk NILLTF policy; 15.3. monitor and control as the Board of the credit institution manages the activities of the credit institution, the quintessential NILLTF risk and if this action is in accordance with NILLTF risk management strategies and policies; 15.4. States that the internal audit Department regularly reviews and evaluates the activities of the credit institution's compliance with its NILLTF risk strategy, policies and procedures and to report to the Council on the results of the inspections; 15.5. determines the procedure for the exchange of information between the Council and the Management Board of the credit institution, for example, the Board on a quarterly basis, submit to the Council a report on the credit institution's risk management NILLTF, which collects information on the NILLTF risk management strategy to attain the objectives; 15.6. remuneration determined that credit policy is not contrary to its NILLTF risk management strategy and do not encourage short-term profiteering by carrying out transactions which have or which pose an elevated risk, as well as the NILLTF that the internal control systems Department employee whose role is included in the NILLTF control of risk remuneration does not depend on the economic activities of the credit institution; 15.7. on a regular basis, but not less frequently than once a year, on the basis of the credit institution's financial performance, action plans and taking into account the changes in laws and regulations, economic situation, markets and market development forecasts, as well as new financial services, review the NILLTF risk management strategy and major policies, and evaluates the credit institution's equity capital adequacy NILLTF risk that it has entered into, or take cover. 16. the Board of the credit institution is responsible for the NILLTF of the credit institution approved by the Council in the risk management strategy and risk management, and NILLTF it: 16.1 NILLTF provides risk management policy and procedure development and; 16.2. provide credit risk management strategy NILLTF the objectives defined and NILLTF risk management policies and procedures across all credit departments in the Republic of Latvia and other countries; 16.3. determine the powers, duties and responsibilities of the risk management division of NILLTF between a credit institution's departments and responsible employees; 16.4. ensure risk management NILLTF personnel NILLTF information on the risk management strategy, policies and procedures and responsibilities for the policies and procedures of the credit institution; 16.5. provide the employee association, meet the tasks NILLTF risk management; 10.3. ensure that, when carrying out the risk management NILLTF consistently maintained high ethical standards, including preventing conflicts of interest, which increased or may raise the risk of NILLTF, for example, providing services to persons associated with the credit institution.
V. monitoring of risk exposure NILLTF 17. a credit institution shall determine the risk exposure of the NILLTF intrinsic information gathering and evaluation procedures, including establishing: 17.1. sources of information; 17.2. information gathering and verification procedures; 17.3. the credit institution officials empowered to prepare, evaluate and check the NILLTF risk exposure for targeted information; 17.4. the arrangements and the extent to which the risk exposure inherent in the NILLTF information is provided to the Management Board of the credit institution and the Council, as well as the way in which provided clarification on the risk management strategy NILLTF threshold being exceeded; 17.5. the officials who, through financial and capital market Commission data reporting system: 17.5.1. until the first of each calendar quarter month 15. date financial and capital market Commission submitted in its report on credit risk exposure characteristics of NILLTF; 17.5.2. provide financial and capital market Commission information on each case where there were existing or potential significant non-compliance with the credit institution's risk management strategy NILLTF.
Vi. risk stress testing NILLTF 18. a credit institution regularly but not less frequently than once a year, take the NILLTF risk stress tests on at least the following risk factors: 18.1. offset by the termination of the credit institution's direct correspondents, which are carried out in cooperation with the major currencies of payment (30 percent of the total payments); 18.2. geopolitical events influenced the market segments lost; 18.3. possible administrative sanctions under the limitation of the impact of the lost market segments. 19. The credit institution shall develop these stress test scenarios according to credit action profile the NILLTF inherent risk. 20. Credit institutions shall collect the stress test results, analyse their risks identified and the impact on liquidity, capital and financial indicators, as well as to submit a report to the Executive Board. The Governing Board shall approve, developed the necessary corrective measures or the development of the necessary changes to the NILLTF risk management strategy and submit them for approval to the Board of the credit institution.
21. Stress test results and the decisions about risk management NILLTF, the credit institution shall submit financial and capital market Commission within 30 days of the decision.
VII. final question 22. a credit institution shall ensure that compliance with the requirements of paragraph 17.5.1 from 30 June 2016. Financial and capital market Commission Vice Chairman p. Bird


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